Document:

Exhibit 4.1

 

SECURITIES
PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of January 16, 2019 (the “Effective Date”) by and
between Luokung Technology Corp., a British Virgin Islands corporation (the “Company”) and Honbridge Holdings
Limited, a Cayman Islands corporation (the “Purchaser”).

 

RECITALS

 

WHEREAS, subject
to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section
5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulations D and S thereunder, the Company desires to issue
and sell to the Purchaser, and the Purchaser desires to purchase from the Company, certain 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 the Purchaser agree as follows:

 

ARTICLE I.

DEFINITIONS

 

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

 

“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.

 

“Assets”
means all of the properties and assets of the Company, whether real, personal or mixed, tangible or intangible, wherever located,
whether now owned or hereafter acquired.

 

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

 

“Business
Day” means any calendar day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States
or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.

 

“Claims”
means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements, assessments, charges, costs
and expenses of any nature or kind.

 

“Closing”
means the Initial Closing and the Subsequent Closing.

 

“Closing
Date” means the day on which the Initial Closing and the Subsequent Closing have been consummated.

 

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

 

“Company
Intellectual Property” means Company Owned Intellectual Property and Company Licensed Intellectual Property.

  

     

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“Company
Licensed Intellectual Property” means any and all the intellectual property licensed to any Group Company necessary for
the business as currently conducted and as presently proposed to be conducted.

 

“Company
Owned Intellectual Property” means any and all the intellectual property owned by any Group Company necessary for the
business as currently conducted and as presently proposed to be conducted.

 

“Consent”
means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or
report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person,
which is necessary in order to take a specified action or actions, in a specified manner and/or to achieve a specific result.

 

“Contract”
means any written or oral contract, agreement, order or commitment of any nature whatsoever, including, any sales order, purchase
order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement, guarantee, management
contract, employment agreement, consulting agreement, partnership agreement, shareholders agreement, buy sell agreement, option,
warrant, debenture, subscription, call or put.

 

“Control”
means the possession, direct or indirect, of the power to direct, or cause the direction of, the management and policies of a Person,
whether through the ownership of 50% or more of voting securities, by contract or otherwise.

 

“Environmental
Requirements” means all Laws and requirements relating to human, health, safety or protection of the environment or to
emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials in the environment (including,
without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or otherwise relating to the
treatment, storage, disposal, transport or handling of any Hazardous Materials.

 

“Equity
Securities” means, with respect to a given Person, any share, share capital, registered capital, ownership interest,
partnership interest, equity interest, joint venture or other ownership interest of such Person, or any option, warrant, or right
to subscribe for, acquire or purchase any of the foregoing, or any other security or instrument convertible into or exercisable
or exchangeable for any of the foregoing, or any equity appreciation, phantom equity, equity plan or similar right with respect
to such Person, or any Contract of any kind for the purchase or acquisition from such Person of any of the foregoing, either directly
or indirectly.

 

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

 

“Financial
Statements” means the audited consolidated balance sheets and profit and loss statements for the Company as of and for
the 12-month period ending December 31, 2017; the unaudited consolidated balance sheets and profit and loss statements for the
Company as of and for the nine-month period ending September 30, 2018; and the unaudited balance sheets, income statements and
statements of cash flow for each Group Company that is a PRC entity as of and for the nine-month period ending September 30, 2018
prepared in accordance with PRC GAAP, of which each Financial Statement is included in Section 3.1(h) of the Disclosure Schedules.

  

     

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“GAAP”
means generally accepted accounting principles, methods and practices set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants, and statements and pronouncements of the Financial
Accounting Standards Board, the SEC or of such other Person as may be approved by a significant segment of the U.S. accounting
profession, in each case as of the date or period at issue, and as applied in the U.S. to U.S. companies.

 

“Governmental
Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court,
agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government.

 

“Group
Companies” means the Company and any direct or indirect Subsidiary of the Company, including and each a “Group
Company”.

 

“Hazardous
Materials” means: (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCB’s); (ii) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,”
“toxic pollutants” or words of similar import, under any Law; and (iii) any other chemical, material, substance, or
waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.

 

“Initial
Closing” shall have the meaning ascribed to such term in Section 2.1

 

“Initial
Closing Date” means the 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 Purchaser’s obligations to pay the Initial Subscription Amount and
(ii) the Company’s obligations to deliver the Initial Shares, in each case, have been satisfied or waived.

 

“Initial
Shares” shall have the meaning ascribed to such term in Section 2.1.

 

“Initial
Subscription Amount” shall have the meaning ascribed to such term in Section 2.1.

 

“Judgment”
means any order, writ, injunction, fine, citation, award, decree, stipulation or determination or any other judgment of any nature
whatsoever of any Governmental Authority.

 

“Key
Employees” means Song Xuesong (宋雪松),
Peng Kegang (彭克刚), Li Baomin (李宝民),
Dong Futian (董福田), Jeff Zeng, Hong Ting (洪婷),
Mao Cheng (毛成), Li Gang (李刚),
Zhao JiAn (赵继安), Fan Zhenhua (范振华),
Patrick Zeng and Zhang Dongpu (张东普).

 

“Law”
means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation of any Governmental
Authority.

 

“Leases”
means all leases for real or personal property.

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right, mortgage, easement, leasehold,
assessment, tax, covenant, restriction, reservation, conditional sale, prior assignment, or any other encumbrance, claim, burden
or charge of any nature whatsoever.

  

     

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“Losses”
means any and all losses, reduction of cost basis for Tax purposes, Claims, damages, diminution in value of the Group or any Group
Company, the Ordinary Shares, liabilities and expenses (joint or several), including reasonable attorneys’ and paralegals’
fees and expenses, court costs, settlement amounts, costs of investigation, preparing, compromising or defending against any litigation,
commenced or threatened, or any Claim whatsoever and interest thereon from the time such amounts are due at the highest non-usurious
rate of interest permitted by applicable Law, to which any of the Indemnified Party (as defined in Section 5.1) may become subject.

 

“Material
Adverse Effect” means with respect to the event, item or question at issue, that such event, item or question would not
have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this
Agreement or any of the Transaction Documents; (ii) a material adverse effect on the results of operations, Assets, business or
condition (financial or otherwise) or prospects of the Company or any of its subsidiaries, either individually or taken as a whole;
(iii) a material adverse effect on the Company’s or its subsidiaries’ ability to perform, on a timely basis, its or
their respective Obligations under this Agreement or any Transaction Documents; or (iv) a material adverse effect on Purchaser’s
ability to sell or dispose of any of the Shares in accordance with applicable securities Laws.

 

“Material
Contract” shall mean any Contract to which any Group Company is a party or by which any Group Company, or any of their
Assets, are bound and which: (i) is relating to the formation, creation, operation, management or Control of a partnership, joint
venture, limited liability company or similar arrangement; (ii) involves a loan (other than accounts receivable from trade debtors
in the ordinary course of business) or advance to (other than travel and entertainment allowances to the employees of any Group
Company extended in the ordinary course of business), or investment in, any Person, of more than US$100,000 in any calendar year
on its face; (iii) involves indebtedness of any Group Company of more than US$100,000; (iv) contains a right of first refusal,
put, call or similar right pursuant to which any Group Company could be required to purchase or sell, as applicable, any equity
interests of any Person or material assets; (v) involves aggregate expenditure of US$100,000 or more to or from any Group Company;
(vi) involves delivery, purchase, licensing or provision, by or to any Group Company following the date of this Agreement, of any
goods, services, assets or other items having a value (or potential value) over the term of such Contract of US$100,000 or more
or is otherwise material to the conduct of any Group Company’s business as now conducted and as contemplated to be conducted
in the future; (vii) involves a Lease; (viii) imposes any guaranty, surety or indemnification Obligations on any Group Company;
(ix) may result in the loss or create more liability of any Group Company or to lose the benefit of any right, licence or privilege
that any Group Company enjoys currently involving an amount of more than US$100,000; (x) prohibits any Group Company from engaging
in any business or competing anywhere in the world; (xi) involves patents, or any other intellectual property that is material
to any Group Company; (xii) contains provisions on exclusivity, “change in control”, rights of first refusal or similar
rights, or grants a power of attorney, agency or similar authority; (xiii) involves the sale, issuance, grant, exercise, award,
purchase, repurchase or redemption of my Equity Securities of any Group Company, or the acquisition or disposition of any assets
or business by any Group Company involving an amount of not less than US$100,000; (xiv) any Contract pursuant to which any Person
obtains Control of any Group Company; (xv) was not made in the Ordinary Course of Business or is otherwise than by way of a bargain
at arm’s length; (xvi) is of a long-term nature (that is to say, unlikely to be fully performed within six months of it being
entered into); (xvii) requires the Group Company to give more than 60 days’ notice to effect its termination; (xviii) involves
the waiver, compromise or settlement of any Proceeding; (xix) is any other agreement or arrangement having or likely to have a
material effect on the financial or trading position or prospects of any Group Company; or (xx) is a bid, tender, proposal or offer
which, if accepted, would result in any Group Company becoming a party to any agreement or arrangement of a kind described in any
of paragraphs (i) to (xix) herein.

  

     

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“Obligation”
means any debt, liability or obligation of any nature whatsoever, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown or obligations under executory Contracts.

 

“Ordinary
Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect
to quantity, quality and frequency).

 

“Ordinary
Share” means the ordinary share of the Company, par value US$0.01 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

“Per
Share Purchase Price” equals US$6.00 per share of Ordinary Share, subject to adjustment for reverse and forward stock
splits, stock combinations and other similar transactions of the Ordinary Share that may occur after the date of this Agreement.

 

“Permit”
means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any Governmental Authority.

 

“Person”
means an individual, 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.

 

“PRC
GAAP” means the PRC generally accepted accounting principles and practices as in effect from time to time.

 

“Principal
Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the
OTC Markets, including the Bulletin Board and Pink Sheets, the NYSE Euronext or the New York Stock Exchange, whichever is at the
time the principal trading exchange or market for the Common Stock.

 

“Proceeding”
means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.

 

“Real
Property” means any real estate, land, building, structure, improvement, fixture or other real property of any nature
whatsoever, including, but not limited to, fee and leasehold interests.

 

“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.

 

“SAFE”
means the State Administration of Foreign Exchange of the PRC and /or its local counterparts.

 

“SAFE
Rules and Regulations” means any and all applicable rules, regulations, guidelines and reporting and registration requirements
issued by SAFE.

 

“Sanctions”
means any sanction from time to time administrated by the Office of Foreign Assets Control of the United States Department of Treasury
(“OFAC”), or by the United States Department of State or by Her Majesty’s Treasury or any sanctions imposed by
the European Union (including under Council Regulation (EC) No.194/2008), the United Nations Security Council or any other relevant
Governmental Authority and any activities sanctionable under the Comprehensive Iran Sanctions, Accountability, and Divestment Act
of 2010, as amended or the Iran Sanctions Act, as amended.

  

     

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

 

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

 

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

 

“Securities
Laws” means, collectively, the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”), the Securities
Act, the Exchange Act, the Rules and Regulations, the auditing principles, rules, standards and practices applicable to auditors
of “issuers” (as defined in Sarbanes-Oxley) promulgated or approved by the Public Company Accounting Oversight Board
and applicable state securities laws and regulations.

 

“Shares”
shall mean the Initial Shares and the Subsequent Shares.

 

“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 the location and/or reservation of borrowable shares of Ordinary Share).

 

“Subscription
Amount” means the amount calculated by multiplying the Shares to be purchased by the Per Share Purchase Price in United
States dollars and in immediately available funds.

 

“Subsequent
Closing” shall have the meaning ascribed to such term in Section 2.1.

 

“Subsequent
Closing Date” means the day on all conditions precedent to (i) the Purchaser’s obligations to pay the Subsequent
Subscription Amount and (ii) the Company’s obligations to deliver the Subsequent Shares, in each case, have been satisfied
or waived.

 

“Subsequent
Shares” shall have the meaning ascribed to such term in Section 2.1.

 

“Subsequent
Subscription Amount” shall have the meaning ascribed to such term in Section 2.1.

 

“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof. For the avoidance of doubt, the Subsidiaries of the Company shall include MMB Limited,
Mobile Media (China) Limited and SuperEngine Holding Limited, Zhong Chuan Tian Xia Information and Technology (Beijing) Limited
(中传天下信息科技(北京)有限公司),
Zhong Chuan Tian Xia Information and Technology (Shenzhen) Limited (中传天下信息科技(深圳)有限公司),
Beijing Zhong Chuan Shi Xun Technology Limited (北京中传视讯科技有限公司),
Jiangsu Zhong Chuan Rui You Information and Technology Limited (江苏中传瑞有信息科技有限公司),
Huoerguosi Luokuang Information and Technology Limited (霍尔果斯箩筐信息科技有限公司),
Shenzhen Zhou Shi Dai Digital and Technology Limited (深圳市九州时代数码科技有限公司)
Suzhou Superengine Graphics Software Technology Development Co., Ltd. (苏州超擎图形软件科技发展有限公司)
and Anhui Superengine Intelligent and Technology Limited (安徽超擎智能科技有限公司).

  

     

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“Tax”
means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use, occupancy, general property,
real property, personal property, intangible property, transfer, fuel, excise, accumulated earnings, personal holding company,
unemployment compensation, social security, withholding taxes, payroll taxes, or any other tax of any nature whatsoever, (ii) any
foreign, federal, state or local organization fee, qualification fee, annual report fee, filing fee, occupation fee, or any other
fee or charge of such nature whatsoever, or (iii) any deficiency, interest or penalty imposed with respect to any of the foregoing.

 

“Tax
Return” means any tax return, filing, declaration, information statement or other form or document required to be filed
in connection with or with respect to any Tax.

 

“Transaction
Documents” means this Agreement, and any other documents or agreements executed between the Company and the Purchaser
in connection with the transactions contemplated hereunder.

 

“Transfer
Agent” means Worldwide Stock Transfer, LLC, the current transfer agent of the Company, with a mailing address of One
University Plaza, Suite 505.Hackensack, NJ 07601, and any successor transfer agent of the Company.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Closing.

 

(a) Upon
the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser agrees to purchase, 2,000,000
shares of Ordinary Shares of the Company (the “Shares”). Upon receiving 50% of the Purchaser’s Subscription Amount
on the Initial Closing Date (the “Initial Subscription Amount”) and the delivery by the Purchaser of the other
items set forth in Section 2.2 deliverable at the Initial Closing, the Company shall deliver the 1,000,000 shares of Ordinary Shares
of the Company (the “Initial Shares”) to the Purchaser on the Initial Closing Date. The Company shall file a
Registration Statement on Form F-3 with the SEC seeking registration of the Shares for resale before the deadline provided in Section
4.5(d) (the “Registration Statement”).

 

(b) Within
five (5) Business Days of the satisfaction or waiver of the conditions set forth in Section 2.3, the Company shall have the right
to require the Purchaser to purchase the Subsequent Shares by delivering to the Purchaser, by facsimile and overnight courier,
an irrevocable written notice that the Company has exercised its right to require the Purchaser to purchase the Subsequent Shares
(the “Subsequent Closing Notice”). The Purchaser shall pay the remaining Subscription Amount (namely, US$6,000,000)
(the “Subsequent Subscription Amount”) by wire transfer to the bank account designated by the Company within
five (5) Business Days of the date receiving the Subsequent Closing Notice and the Company shall deliver the 1,000,000 shares of
the Ordinary Shares of the Company (the “Subsequent Shares”) (without any restrictive legend) to the Purchaser
within three (3) Business Days of the payment of the Subsequent Subscription Amount (the “Subsequent Closing”).
If the SEC only approves the effectiveness of the Registration Statement covering the resale of the Initial Shares, the Purchaser
shall notify the Company in writing or sending a notice via email at yujie@luokung.com whether it will purchase the Subsequent
Shares within seven (7) calendar days of the date on which the restrictive legend on the certificates representing the Initial
Shares is removed. The purchase price shall still be fixed at US$6.00 per Share. The Company shall deliver the Subsequent Shares
to the Purchaser within three (3) Business Days of the payment of the Subsequent Subscription Amount and shall file a Registration
Statement covering the resale of the Subsequent Shares within four weeks after the date of payment of the Subsequent Subscription
Amount by the Purchaser. If the condition set forth in Section 2.3(b)(viii) has not occurred by the date that is nine (9) months
after the Initial Closing Date, the Purchaser’s obligation to purchase the Subsequent Shares shall be terminated. For
the avoidance of doubt, the Company and the Purchaser shall sign a separate agreement if the Purchaser wants to purchase any Ordinary
Share after a period of the nine (9) months from the Initial Closing Date.

  

     

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2.2 Closing
Deliveries.

 

(a) On
or prior to the Initial Closing Date, the Company shall deliver or cause to be delivered to the Purchaser each of the following:

 

(i) this
Agreement duly executed by the Company;

 

(ii) a
copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver the Initial Shares equal to
the Purchaser’s Initial Subscription Amount divided by the Per Share Purchase Price, in the name of the Purchaser.

 

(b) On
or prior to the Initial Closing Date, the Purchaser shall deliver or cause to be delivered to the Company, as applicable, the following:

 

(i) this
Agreement duly executed by the Purchaser; and

 

(ii) the
Purchaser’s Initial Subscription Amount by wire transfer to the bank account directed by the Company.

 

(c) On
or prior to the Subsequent Closing Date, the Company shall deliver or cause to be delivered to the Purchaser a copy of the irrevocable
instructions to the Transfer Agent instructing the Transfer Agent to deliver the Subsequent Shares equal to the Purchaser’s
Subsequent Subscription Amount divided by the Per Share Purchase Price, in the name of the Purchaser. On or prior to the Subsequent
Closing Date, the Purchaser shall deliver or cause to be delivered to the Company, as applicable, the Purchaser’s Subsequent
Subscription Amount by wire transfer to the bank account directed by the Company.

 

2.3 Closing
Conditions.

 

(a) The
obligations of the Company hereunder in connection with a Closing are subject to the following conditions being met at or before
the applicable Closing Date:

 

(i) the
accuracy when made and on such Closing Date of the representations and warranties of the Purchaser 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 the Purchaser required to be performed at or prior to such Closing Date shall have been
performed; and

 

(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b) or (c) (if applicable) of this Agreement on or prior to such
Closing Date.

  

     

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(b) The
obligations of the Purchaser hereunder in connection with a Closing are subject to the following conditions being met at or before
the applicable Closing Date:

 

(i) the
Company having obtained all necessary approval, license, consent, authorization, waiver, order or notice for the entering into
of this Agreement and the transactions contemplated thereunder from Governmental Authority or other parties (including but not
limited to creditors, investors or stakeholders) and such approval, license, consent, authorization, waiver, order or notice has
not been revoked before such Closing Date (if applicable);

 

(ii) the
accuracy when made and on such Closing Date of the representations and warranties of the Company contained herein (unless as of
a specific date therein in which case they will be accurate as of such date). Purchaser shall have received a certificate, executed
by the President of the Company, to the foregoing in the form reasonably acceptable to Purchaser;

 

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

 

(iv) the
delivery by the Company of the items set forth in Section 2.2(a) or (c) (if applicable) of this Agreement on or prior to such Closing
Date;

 

(v) the
Company shall have delivered to Purchaser a certificate evidencing the formation and good standing of the Company in its jurisdiction
of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten
(10) days of such Closing Date;

 

(vi) the
Company shall have delivered to Purchaser a certificate, in the form acceptable to Purchaser, executed by the Secretary of the
Company dated as of each Closing Date, as to (i) the resolutions consistent with Section 3.1(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to Purchaser, (ii) Memorandum of Association and Articles of Association as
in effect at such Closing.

 

(vii) the
Ordinary Shares (I) shall remain listed on the Nasdaq and (II) shall not have been suspended, as of such Closing Date, by the Commission
or the Nasdaq from trading nor shall suspension by the Commission or the Nasdaq have been threatened, as of such Closing Date,
either (A) in writing by the Commission or Nasdaq or (B) by falling below the minimum listing maintenance requirements of the Nasdaq
market;

 

(viii) prior
to the Subsequent Closing Date, the Registration Statement covering the resale of the Shares thereby shall have been declared effective
under the Securities Act by the Commission and shall remain effective, and the Purchaser shall be permitted to utilize the Prospectus
therein to resell such Shares;

 

(ix) if
requested by the Purchaser from and after the date the Registration Statement has been declared effective, the Company shall request
its transfer agent to remove the restrictive legend on the certificates representing the Shares; and

 

(x) no
event shall have occurred which could reasonably be expected to have a Material Adverse Effect.

  

     

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations
and Warranties of the Company. Except as indicated in the SEC Reports or, if not indicated in the SEC Reports, as set forth
and disclosed in the Company’s disclosure schedules (“Disclosure Schedules”) attached to this Agreement
and made a part hereof, the Company hereby represents and warrants to the Purchaser as of the date of this Agreement and as of
the Initial Closing Date and the Subsequent Closing Date, which the Company might provide updates for representations and warranties
before the Subsequent Closing Date, as follows:

 

(a) Organization
and Qualification. The Company and each of the Subsidiaries, if any, is an entity duly incorporated or otherwise organized
and validly existing under the laws of each jurisdiction in which it owns or leases properties or conducts any business so as to
require such qualification, with the requisite power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Each Group Company is qualified to do business in each jurisdiction in which it conducts business.
Each Group Company that is a PRC entity has a valid business license issued by the State Administration for Industry and Commerce
or its local branch or other relevant Governmental Authorities (a true and complete copy of which has been made available to the
Purchaser for inspection), and has, since its establishment, carried on its business in compliance with the business scope set
forth in its business license. Each representation and warranty contained in this Article III or otherwise set forth in this Agreement
shall be deemed to mean and be construed to include the Company and each Group Company, as applicable, regardless of whether each
of such representations and warranties in Article III specifically refers to the Group Companies or not.

 

(b) 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 stockholders in connection herewith
or therewith.

 

(c) 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 governmental authority or 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
or the offer, issue and sale of the Shares, other than: (i) the disclosure filing required for this Agreement, or (ii) such filings
as are required to be made under applicable state securities laws. All Consents which the Company is required to obtain pursuant
to the immediately preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not aware of
any facts or circumstances which might give rise to any of the foregoing.

  

     

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(d) No
Violation. The execution, delivery and performance of this Agreement and the Transaction Documents, and the consummation of
the transactions contemplated hereby and thereby, including the issuance of any of the Shares, will not: (i) constitute a violation
of or conflict with any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents; (ii) constitute a violation of, or a default or breach under (either immediately,
upon notice, upon lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment,
acceleration or cancellation of, any provision of any Contract to which Company is a party or by which any of its Assets or properties
may be bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time,
or both), or conflicts with, any Judgment; (iv) constitute a violation of, or conflict with, any Law (including United States federal
and state securities Laws and the rules and regulations of any market or exchange on which the Ordinary Shares are quoted); or
(v) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Liens with respect to, any Permit
granted or issued to, or otherwise held by or for the use of, Company or any of Company’s Assets. The Company is not in violation
of its Memorandum of Association and Articles of Association or other organizational or governing documents and the Company is
not in default or breach (and no event has occurred which with notice or lapse of time or both could put the Company in default
or breach) under, and the Company has not taken any action or failed to take any action that would give to any other Person any
rights of termination, amendment, acceleration or cancellation of, any Contract to which the Company is a party or by which any
property or Assets of the Company are bound or affected.

 

(e)
Authorization of the Shares. The Shares to be sold by the Company and their issue and sale 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 non-assessable
and free and clear of all Liens with respect to the issue thereof, and will be issued in compliance with all applicable Securities
Laws.

 

(f) Group
Structure and Capitalization. Section 3.1 (f) of the Disclosure Schedules sets forth a complete and accurate structure chart
of the Group immediately after the Closing.

 

(a) As
of the date hereof, each Group Company that is a PRC entity is duly organized and validly existing under the Laws of the PRC. Immediately
prior to the Closing, the authorized capital stock of the Company will consist of 250,000,000 Ordinary Shares, of which 199,317,558
Ordinary Shares are issued and outstanding. Immediately prior to the Closing, the Ordinary Shares is quoted on the Nasdaq under
the trading symbol “LKCO”.

 

(b) All
the share capital or registered capital of each Group Company outstanding as of the date hereof has been validly issued and are
fully paid or contributed and nonassessable. No share capital or registered capital of any Group Company is subject to preemptive
rights or any other similar rights or any Liens.

 

(c) As
of the date hereof: (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any Shares of capital stock of the Company or any of
its subsidiaries, or Contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, any Shares of capital stock of the Company or any of its subsidiaries; (ii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other Contracts or instruments evidencing indebtedness of the Company or any of its subsidiaries,
or by which the Company or any of its subsidiaries is or may become bound; (iii) there are no outstanding registration statements
with respect to the Company or any of its securities; (iv) there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to this
Agreement); (v) there are no financing statements securing obligations filed in connection with any Group Company or any of its
Assets; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this
Agreement or any related agreement or the consummation of the transactions described herein or therein; and (vii) there are no
outstanding securities or instruments of any Group Company which contain any redemption or similar provisions, and there are no
Contracts by which any Group Company is or may become bound to redeem Equity Securities of any Group Company.

  

     

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(d) As
of the date hereof: (i) there is no resolution pending to increase the share capital or registered capital of any Group Company
or cause the liquidation, winding up, or dissolution of any Group Company, nor has any distress, execution or other process been
levied against any Group Company; (ii) there is no outstanding Contract under which any Person purchases or otherwise acquires,
or has the right to purchase or otherwise acquire, any interest in the share capital or registered capital of any Group Company;
(iii) there is no dividend which has accrued or been declared by any Group Company; and (iv) there is no outstanding or authorized
equity appreciation, phantom equity, equity plan or similar right with respect to any Group Company.

 

(e) There
are no stockholders agreements, voting agreements, or other similar agreements with respect to any of the Equity Securities of
any Group Company to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.

  

(g) SEC
Reports. 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, documents incorporated by reference therein, being collectively referred to herein as
the “SEC Reports”). The Company is current with its filing obligations under the Exchange Act and all SEC Documents
have been filed on a timely basis or the Company has received a valid extension of such time of filing and has filed any such SEC
Document prior to the expiration of any such extension. The Company represents and warrants that true and complete copies of the
SEC Documents are available on the Commission’s website (www.sec.gov) at no charge to Purchaser, and Purchaser acknowledges
that it may retrieve all SEC Documents from such website and Purchaser’s access to such SEC Documents through such website
shall constitute delivery of the SEC Documents to Purchaser; provided, however, that if Purchaser is unable to obtain any of such
SEC Documents from such website at no charge, as result of such website not being available or any other reason beyond Purchaser’s
control, then upon request from Purchaser, the Company shall deliver to Purchaser true and complete copies of such SEC Documents.
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and
none of the SEC Documents, at the time they were filed with the Commission, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended or updated under applicable Law (except as such statements have been amended or updated in subsequent
filings prior the date hereof, which amendments or updates are also part of the SEC Documents). To the knowledge of the Company
and its officers, no other information provided by or on behalf of the Company to Purchaser which is not included in the SEC Documents
contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not misleading.

 

(h) Financial
Statements. The Company has delivered to the Purchaser on the date hereof a complete and accurate copy of the Financial Statements.
As of their respective dates, the Financial Statements of the Company complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto.

 

     

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(a) All
of the Financial Statements: (i) have been prepared in accordance with the books and records of relevant Group Company; and in
accordance with GAAP or PRC GAAP with respect to the Group Company that is a PRC entity, consistently applied, during the periods
involved (except: (a) as may be otherwise indicated in such Financial Statements or the notes thereto; or (b) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed or summary statements); (ii) fairly present in
all material respects the consolidated financial position and financial performance of the Group Company as of the dates thereof
and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments); and (iii) are not misleading in any material respect and neither materially overstate the
value of assets nor materially understate the liabilities of the Group Company as of the dates to which they were drawn up and
do not materially overstate the profits of the Group Company in respect of the periods to which they relate.

 

(b) Off-balance
Sheet Transactions. No Group Company has entered into any off-balance sheet transactions or arrangements.

 

(i) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not
be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(j) Absence
of Certain Changes. Since the date the last of the SEC Documents was filed with the SEC, none of the following have occurred:

 

(a) any
event or circumstance of any nature whatsoever that, individually or in the aggregate, has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect;

 

(b) any
transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Company which
constitutes a Material Contract;

 

(c) any
material change or amendment to a Material Contract or any constitutional document of any Group Company;

 

(d) any
increase in the wages, salaries or other payments of the Key Employees by more than 15% in a year;

 

(e) any
declaration, setting aside or payment or other distribution in respect of any of such Group Company’s Equity Securities,
or any direct or indirect redemption, purchase or other acquisition of any of such Equity Securities by such Group Company; or

 

(f) any
change in the accounting methods or practices, of any Group Company. 

 

(k) Absence
of Litigation or Adverse Matters. Except as set forth in Section 3.1(k) of the Disclosure Schedules, (i) There is no Proceeding
or Judgment with a Material Adverse Effect on the execution and performance of this Agreement or other Transaction Documents to
which the Company is a party; (ii) there is no Proceeding before or by any Governmental Authority or any other Person, pending,
or the best of Company’s knowledge, threatened or contemplated by, against or affecting any Group Company, its business or
Assets, and to the knowledge of the Company, there is no event or circumstance that may form a basis for any such Proceeding. The
foregoing includes, without limitation, Proceedings pending or threatened against the Company, any other Group Companies or the
business of the Group Companies (or any basis therefor known to any Group Company) involving the prior employment of any employee
of any Group Company, their use in connection with the business of the Group Companies of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any agreements with former employers; (iii) there is no
outstanding Judgments against or affecting any Group Company, its business or Assets; (iv) there is no Proceeding by any Group
Company that is currently pending or that any Group Company currently intends to initiate; (v) there is no material Proceeding
pending or, to the knowledge of the Company, threatened, against any Group Company or any director, officer or employee with respect
to their business or proposed business activities; (vi) the Group Company is not in breach or violation of any Contract; and (vii)
the Group Company has not received any material complaint from any customer, supplier, vendor or employee.

  

     

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(l) Liabilities
and Indebtedness of the Company. The Company does not have any Obligations of any nature whatsoever, except: (i) as disclosed
in the Financial Statements and in Section 3.1(l) of the Disclosure Schedules; or (ii) Obligations incurred in the Ordinary Course
of Business since the date of the last Financial Statements filed by the Company with the SEC which do not or would not, individually
or in the aggregate, exceed Ten Thousand Dollars ($10,000) or otherwise have a Material Adverse Effect.

 

(m) Title
to Assets. The Company has good and marketable title to, or a valid leasehold interest in, all of its Assets which are material
to the business and operations of the Company as presently conducted, free and clear of all Encumbrances or restrictions on the
transfer or use of same. Except as would not have a Material Adverse Effect, the Company’s Assets are in good operating condition
and repair, ordinary wear and tear excepted, and are free of any latent or patent defects which might impair their usefulness,
and are suitable for the purposes for which they are currently used and for the purposes for which they are proposed to be used.

 

(n) Real
Estate.

 

(a) Real
Property Ownership. The Company does not own any Real Property.

 

(b) Real
Property Leases. Section 3.1(n) of the Disclosure Schedules sets forth a true and complete description of locations that are
the subject of leases, subleases and other agreements under which any Group Company uses or occupies or has the right to use or
occupy any real property (each lease a “Real Property Lease” and the properties governed by such Real Property Leases
are referred to herein as “Leased Properties”), in each case including (i) the address of each such Leased Property
and (ii) the general nature of the current use of each such Leased Property. There is no material breach nor any material non-observance
of any covenant, condition or agreement contained in any Real Property Lease on the part of either the relevant landlord or the
Group Company. There are no restrictions in any Real Property Lease which prevent the Leased Properties from being used for their
present use. With respect to each Real Property Lease: (i) the Group Company has been in peaceful possession of the property leased
thereunder and neither the Group Company nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement
of any of the Obligations thereunder has been granted by the Group Company or landlord thereunder; and (iii) there exists no event,
occurrence, condition or act known to the Group Company which, upon notice or lapse of time or both, would be or could become a
default thereunder or which could result in the termination of the Real Property Leases, or any of them, or have a Material Adverse
Effect on the business of the Group Company, its Assets or its operations or financial results. The Group Company has not violated
nor breached any provision of any such Real Property Leases, and all Obligations required to be performed by the Group Company
under any of such Real Property Leases have been fully, timely and properly performed. If requested by Purchaser, the Group Company
has delivered to Purchaser true, correct and complete copies of all Real Property Leases, including all modifications and amendments
thereto, whether in writing or otherwise. The Group Company has not received any written or oral notice to the effect that any
of the Real Property Leases will not be renewed at the termination of the term of such Real Property Leases, or that any of such
Real Property Leases will be renewed only at higher rents. All the material properties leased or occupied by each Group Company
are under valid and enforceable leases or agreements.

  

     

    Page 15 of 28

    

 

(o) Material
Contracts. Section 3.1(o) of the Disclosure Schedules contains a true and complete list of all Material Contracts, and a copy
of each Material Contract has been provided by the Company to the Purchaser. There are no outstanding offers, bids, proposals or
quotations made by Company which, if accepted, would create a Material Contract with Company. Each Material Contract is in full
force and effect and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof.
Each Material Contract is negotiated on arm’s length basis and is in the Ordinary Course of Business and is not of an unusual
or abnormal nature. To the knowledge of the Company and its officers, all Obligations required to be performed under the terms
of each of the Material Contracts by any party thereto have been fully performed by all parties thereto, and no party to any Material
Contracts is in default with respect to any term or condition thereof, nor has any event occurred which, through the passage of
time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification of
any Obligation of any party thereto or the creation of any Encumbrance upon any of the Assets of the Company. Further, the Company
has received no notice, nor does the Company have any knowledge, of any pending or contemplated termination of any of the Material
Contracts and, no such termination is proposed or has been threatened, whether in writing or orally.

 

(p) Compliance
with Laws. The Company is and at all times has been in material compliance with all Laws, including the anti-corruption laws.
The Company has not received any notice that it is in violation of, has violated, or is under investigation with respect to, or
has been threatened to be charged with, any violation of any Law.

 

(q) Permits.
Each Group Company possesses all Permits necessary to conduct its business, and the Group Company has not received any notice of,
or is otherwise involved in any Proceedings relating to, the revocation or modification of any such Permits. All such Permits are
valid and in full force and effect and the Group Company is in material compliance with the respective requirements of all such
Permits.

 

(r) Intellectual
Property. The Group Companies own or possess adequate and legally enforceable rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now
conducted.

 

(a) To
the knowledge of the Company, the Group Companies own all right, title and interest in and to the Company Owned Intellectual Property,
or has all necessary and valid rights to use in the business under valid and enforceable licenses or agreements under all Company
Licensed Intellectual Property. The license fees, maintenance fees and other fees (if any) in respect of the Company Licensed Intellectual
Property have been paid. All of the Company Intellectual Property is subsisting, valid and enforceable and is free and clear of
all Liens.

 

(b) There
is no notice, claim or assertion challenging the inventorship, validity, ownership, enforceability, or right of the Group Companies
to use, any item of the Company Intellectual Property. There is no actual, pending or, to the knowledge of the Company, threatened
claim, Proceeding, opposition, re-examination, interference, invalidation, or cancellation proceeding with respect thereto.

  

     

    Page 16 of 28

    

 

(c) Section
3.1(r) of the Disclosure Schedules sets forth a complete and accurate list of each item of registered Company Owned Intellectual
Property and each item of registered Company Licensed Intellectual Property. The Group Companies have previously disclosed or made
available to the Purchaser and its agents all material information in its possession that it is aware of related to the Company
Intellectual Property as it relates to the business.

 

(d) All
licenses to Company Intellectual Property licensed to the Group Companies by third parties (the “Intellectual Property Licenses”)
are in full force and effect in accordance with their terms. The Group Companies have made available to the Purchaser correct and
complete copies of all Intellectual Property Licenses.

 

(e) To
the knowledge of the Company, the Group Companies’ conduct of the business has not and does not interfere with, infringe
upon, misappropriate or violate in any material respect any Intellectual Property rights of third parties, none of the Group Companies
engages or has engaged in any such interference, infringement, misappropriation, or violation. None of the Group Companies has
received in writing any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation
or violation.

 

(f) To
the knowledge of the Company, no third party has interfered with, infringed upon, misappropriated or violated any Company Intellectual
Property.

 

(g) The
Group Companies have taken reasonable and appropriate steps that in the judgment of such Group Company are prudent to protect the
title and ownership in the Company Owned Intellectual Property, the secrecy, confidentially, and value of Company Intellectual
Property. All officers, employees, consultants, or contractors who are inventors of inventions or creators of any Company Owned
Intellectual Property have assigned to the Group Companies all of such investors’ respective rights, title and interest in
and to such Intellectual Property. Without limiting the foregoing, the Group Companies have taken all legally required steps to
ensure that it owns all Intellectual Property arising from the activities of its officers, employees, consultants, or contractor
to enter into valid and enforceable agreements (1) imposing obligations to keep the confidential information of the such Group
Company confidential, and (2) providing for the assignment to such Group Company of any Intellectual Property developed or arising
out of such officer’s, employee’s, consultant’s and contractor’s employment , engagement, or contract with
such Group Company.

 

(h) None
of its officers, employees, consultants, or contractors or their respective Affiliates (i) owns, directly or indirectly, in whole
or in part, any interest in any of the Company Owned Intellectual Property, or (ii) to the knowledge of the Company, is obligated
under any Contract, or subject to any Order, that would interfere with the use of such officers’, employees’, consultants’,
or contractors’ best efforts to promote the interests of such Group Company or that would conflict with the Group Companies’
conduct of the business, or that would prevent such officers, employees, consultants, or contractors from assigning to such Group
Company all Intellectual Property conceived, developed or reduced to practice in connection with services rendered to such Group
Company.

 

(s) Labor
and Employment Matters. The Company is not involved in any labor dispute or, to the knowledge of the Company, is any such dispute
threatened. To the knowledge of the Company and its officers, none of the Company’s employees is a member of a union and
the Company believes that its relations with its employees are good. To the knowledge of the Company and its officers, the Company
has complied in all material respects with all Laws relating to employment matters, civil rights and equal employment opportunities.

  

     

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(a)  Each
Group Company (i) has withheld and reported all amounts required by any applicable Law or any Contract to be withheld and reported
with respect to wages, salaries and other payments to employees; (ii) is not liable for any arrear of wages, Tax or penalty for
failure to comply with any of the foregoing; and (iii) other than as required by applicable Laws, is not liable for any payment
to any trust or fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation
benefits, social security or other benefits or obligations for employees.

 

(b) There
is no share incentive, share option or profit sharing arrangement for or affecting any current or former employee or worker of
any Group Company. Except as required by applicable laws and set forth in Section 3.1(s) of the Disclosure Schedules, no Group
Company has or maintains any employee pension plan, medical insurance, or life insurance to which any Group Company contributed
or is obliged to contribute thereunder for current or former employees of any Group Company.

 

(c) To
the knowledge of any of the Company, each Key Employee has entered into an agreement with his or her employer Group Company in
respect of non-competition and non-solicitation undertakings. To the knowledge of any of the Company, no Key Employee intends to
terminate their employment with his or her employer Group Company, nor does such Group Company have a present intention to terminate
such Key Employee. Each Key Employee of the Group Companies is currently devoting his or her full working time to the conduct of
the business. To the knowledge of any of the Company, no Key Employee (i) is planning to work less than full time at a Group Company
in the future, and (ii) currently working for a Person that competes with the business.

 

(t) Tax
Matters. The Company has made and timely filed all Tax Returns required by any jurisdiction to which it is subject, and each
such Tax Return has been prepared in compliance with all applicable Laws, and all such Tax Returns are true and accurate in all
respects. Except and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment
of all unpaid and unreported Taxes, the Company has timely paid all Taxes shown or determined to be due on such Tax Returns, except
those being contested in good faith, and the Company has set aside on its books provision reasonably adequate for the payment of
all Taxes for periods subsequent to the periods to which such Tax Returns 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 know of no basis for any such claim.
The Company has withheld and paid all Taxes to the appropriate Governmental Authority required to have been withheld and paid in
connection with amounts paid or owing to any Person. There is no Proceeding or Claim for refund now in progress, pending or threatened
against or with respect to the Company regarding Taxes.

 

(u) Business
Location. The Company has no office or place of business other than as identified in the SEC Reports and the Company’s
principal places of business and chief executive offices are indicated in the SEC Reports. All books and records of the Company
and other material Assets of the Company are held or located at the principal offices of the Company.

  

(v) Illegal
Payments. Neither the Company, nor any director, officer, agent, employee or other Person acting on behalf of the Company has,
in the course of his actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or employee.

  

     

    Page 18 of 28

    

 

(w) Interested
Party Transactions. Except for arm’s length transactions pursuant to which the Group Company makes payments in the Ordinary
Course of Business upon terms no less favorable than the Group Company could obtain from third parties, none of the officers, directors
or employees of any Group Company, nor any stockholders who own, legally or beneficially, five percent (5%) or more of the issued
and outstanding shares of any class of the Company’s capital stock (each a “Material Shareholder”) (collectively,
the “Interested Party”), is presently a party to any transaction with any Group Company (other than for services
as employees, officers and directors), including any Contract providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments to or from, any Interested Party or, to the best
knowledge of the Company, any other Person in which any Interested Party has a substantial or material interest in or of which
any officer, director or employee of any Group Company or Material Shareholder is an officer, director, trustee or partner. There
are no Claims or disputes of any nature or kind between the any Group Company and any Interested Party, or between any of them,
relating to any Group Company. No Interested Party (i) is indebted to any Group Company nor is any Group Company indebted to any
Interested Party (other than for accrued salaries, reimburse expenses or other standard employee benefits); or (ii) has any direct
or indirect ownership interest, with any Person with which any Group Company has a business relationship or any Person which, directly
or indirectly, competes with any Group Company.

  

(x) Internal
Accounting Controls. Except as set forth in the SEC Documents, the Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP 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.

 

(y) Bad
Actor. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification
Event”) is applicable to the Company or, to the Company’s knowledge, any Company Covered Person, except for a Disqualification
Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable. As used in this Section 6.28, the term “Company
Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under
the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).

 

(z) Brokerage
Fees. There is no Person acting on behalf of the Company who is entitled to or has any claim for any financial advisory, brokerage
or finder’s fee or commission in connection with the execution of this Agreement or the consummation of the transactions
contemplated hereby.

 

(aa) No
Material Breach. The Company has confirmed that the Closing of this transaction is dependent on the representations or
warranties made by the Company in this Agreement. Any untruth, inaccuracy or incompleteness in any representations or
warranties made by the Company in this Agreement which have a Material Adverse Effect on the Group Companies may constitute a
material breach of this Agreement.

  

     

    Page 19 of 28

    

 

(bb) Full
Disclosure. All the representations and warranties made by Company herein or in the Disclosure Schedules hereto, and all
of the statements, documents or other written information and replies pertaining to the transaction contemplated herein made
or given by Company, its officers and employees, agents or representatives during the negotiations prior to this Agreement
and title due diligence and requisition wan, when given, are now true, complete and accurate, and do not omit any information
required to make the statements and information provided, in light of the transaction contemplated herein and in light of the
circumstances under which they were made, not misleading and accurate in all material respects.

  

3.2 Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date
to the Company as follows (unless as made of a specific date stated therein, in which case they shall be accurate as of such date):

 

(a) Organization;
Authority. The 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 the 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 the Purchaser. Each Transaction
Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance
with its terms.

 

(b) Understandings
or Arrangements. The Purchaser is acquiring the Shares for its own account and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of the Shares (this representation and warranty not limiting
the Purchaser’s right to sell the Shares in compliance with applicable federal and state securities laws). The Purchaser
is acquiring the Shares as principal, not as nominee or agent, and not with a view to or for distributing or reselling the Shares
or any part thereof in violation of the Securities Act or any applicable state securities law.

 

(c) Foreign
Investor. The Purchaser hereby represents that it has satisfied itself as to the full observance
by the Purchaser of the laws of its jurisdiction applicable to the Purchaser
in connection with the purchase of the Shares or the execution and delivery by the Purchaser of this Agreement and the Transaction
Documents, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign
exchange restrictions applicable to the purchase, (iii) any governmental or other consents that may need to be obtained, and
(iv) the income tax and other tax consequences, if any, that may be relevant to the Purchaser’s
purchase, holding, redemption, sale, or transfer of the Shares. The Purchaser’s subscription
and payment for, and continued beneficial ownership of, the Shares will not violate any securities or other laws of the Purchaser’s
jurisdiction applicable to the Purchaser.

 

(d) Experience
of Purchaser. The 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 Shares,
and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment
in the Shares and, at the present time, is able to afford a complete loss of such investment.

  

     

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(e) Access
to Information. The Purchaser acknowledges that it has had the opportunity to review the Transaction Documents 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 Shares and the merits and risks of investing
in the Shares; (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. 

 

(f) Regulation
S. The Purchaser is a non-U.S. person (as such term is defined in Rule 902 of Regulation S under the Securities Act) and is
not acquiring the Shares for the account or benefit of a U.S. person. The Purchaser will not, within six (6) months of the date
of the transfer of the Shares to the Purchaser, (i) make any offers or sales of the Shares in the United States or to, or for the
benefit of, a U.S. person (in each case, as defined in Regulation S) other than in accordance with Regulation S or another exemption
from the registration requirements of the Securities Act, or (ii) engage in hedging transactions with regard to the Shares unless
in compliance with the Securities Act. Neither the Purchaser nor any of the Purchaser’s Affiliates or any person acting on
his/her or their behalf has engaged or will engage in directed selling efforts (within the meaning of Regulation S) with respect
to the Shares, and all such persons have complied and will comply with the offering restriction requirements of Regulation S in
connection with the offering of the Shares outside of the United States.

 

(g) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not, nor
has any Person acting on behalf of or pursuant to any understanding with the 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 the Purchaser
first discussed the transaction with the Company or any other Person representing the Company setting forth the material terms
of the transactions contemplated hereunder and ending on the date when this Agreement is publicly disclosed by the Company. The
Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction) except the earlier disclosures on the websites of the Stock Exchange of Hong Kong Purchaser simultaneously
due to the time difference.

 

(h) Purchaser
Status. At the time the Purchaser was offered the Shares, it was, and as of the date hereof it is, an “accredited investor”
as defined in Rule 501(a) under the Securities Act.

 

(i) No
Registration. Subject to Section 4.5(d), the Purchaser understands that the Shares have not been registered under the Securities
Act or applicable securities laws of any state or country and therefore the Shares cannot be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Securities Act and applicable state securities laws or exemptions
from such registration requirements are available.

 

(j) No
General Solicitation. The Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general advertisement.

  

     

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Reservation
of Securities. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Ordinary Share for issuance pursuant to the Transaction
Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents. Each party
shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Article II of this Agreement.

 

4.2 Certain
Transactions and Confidentiality. The Purchaser 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 on the date when this Agreement is publicly disclosed
by the Company.  The Purchaser also covenants that until such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company, the Purchaser will maintain the confidentiality of the existence and terms of this transaction
except the earlier disclosures on the websites of the Stock Exchange of Hong Kong and of the Purchaser simultaneously due to the
time difference.

 

4.3 Legends.
The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares
other than pursuant to an effective registration statement, 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
Shares under the Securities Act. The Purchaser agrees to the imprinting, so long as is required by this Section 4.3, of a legend
on all of the certificates evidencing the Shares in the following form:

 

THIS SECURITY
HAS NOT 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.

 

THESE
SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT. TRANSFER OF THESE SECURITIES IS PROHIBITED,
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT.

  

     

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4.4 Further
Cooperation. The Parties agree to further cooperation going forward, including but not limited to in the following areas:
(i) HD Map, (ii) automatic drive, (iii) intelligent travel, and (iv) intelligent city. The Parties will also consider
purchasing and holding each other’s shares in the future, the purchase price for which shall be negotiated and
determined based upon the fair market value of the shares of the Parties.

 

4.5 Affirmative
Covenants.

 

(a) Reporting
Status; Listing. So long as Purchaser owns, legally or beneficially any of the Shares, the Company shall: (i) file in a timely
manner all reports required to be filed under the Securities Act, the Exchange Act or any securities Laws and regulations thereof
applicable to the Company of any state of the United States, or by the rules and regulations of the Principal Trading Market, and,
to provide a copy thereof to Purchaser promptly after such filing upon Purchaser’s request; (ii) not terminate its status
as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination; (iii) if required by the rules and regulations of the Principal Trading Market, promptly secure
the listing of any of the Shares upon the Principal Trading Market (subject to official notice of issuance) and, take all reasonable
action under its control to maintain the continued listing, quotation and trading of its Ordinary Shares on the Principal Trading
Market, and the Company shall comply in all respects with the Company’s reporting, filing and other Obligations under the
Memorandum of Association and Articles of Association, the Financial Industry Regulatory Authority, Inc. and such other Governmental
Authorities, as applicable. The Company shall promptly provide to Purchaser copies of any notices it receives from the SEC or any
Principal Trading Market, to the extent that any such notices could in anyway have or be reasonably expected to have a Material
Adverse Effect.

 

(b) Rule
144. With a view to making available to Purchaser the benefits of Rule 144 under the Securities Act (“Rule 144”),
or any similar rule or regulation of the SEC that may at any time permit Purchaser to sell any of the Shares to the public without
registration, the Company represents and warrants that: (i) the Company is, and has been for a period of at least ninety (90) days
immediately preceding the date hereof, subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (ii) the
Company has filed all required reports under Section 13 or 15(d) of the Exchange Act, as applicable, during the twelve (12) months
preceding the Closing Date (or for such shorter period that the Company was required to file such reports); (iii) the Company is
not an issuer defined as a “Shell Company” (as hereinafter defined); and (iv) if the Company has, at any time, been
an issuer defined as a Shell Company, the Company has: (A) not been an issuer defined as a Shell Company for at least six (6) months
prior to the Closing Date; and (B) has satisfied the requirements of Rule 144(i) (including, without limitation, the proper filing
of “Form 10 information” at least six (6) months prior to the Closing Date). For the purposes hereof, the term “Shell
Company” shall mean an issuer that meets the description set forth under Rule 144(i)(1)(i). In addition, so long as Purchaser
owns, legally or beneficially, any of the Shares, the Company shall, at its sole expense:

 

(i) Make,
keep and ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144,
is publicly available;

  

     

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(ii) furnish
to Purchaser, promptly upon reasonable request: (A) a written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act; and (b) such other information as may be reasonably requested
by Purchaser to permit Purchaser to sell any of the Shares pursuant to Rule 144 without limitation or restriction;

 

(iii) promptly
at the request of Purchaser and subject to the Securities Laws , give the Company’s transfer agent instructions to the effect
that, upon the transfer agent’s receipt from Purchaser of a certificate (a “Rule 144 Certificate”) certifying
that Purchaser’s holding period (as determined in accordance with the provisions of Rule 144) for any portion of the Shares
which Purchaser proposes to sell or remove the restrictive legend (the “Securities Being Sold”) is not less
than six (6) months, and receipt by the transfer agent of the “Rule 144 Opinion” (as hereinafter defined) from the
Company or its counsel (or from Purchaser and its counsel as permitted below), the transfer agent is to effect the removal of the
restrictive legend and/or transfer of the Securities Being Sold and issue to Purchaser or transferee(s) thereof one or more stock
certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions
on the transferability of such Securities Being Sold on the transfer agent’s books and records. In this regard, upon Purchaser’s
request, the Company shall have an affirmative obligation to cause its counsel to promptly issue to the transfer agent a legal
opinion providing that, based on the Rule 144 Certificate, the Securities Being Sold were or may be sold, as applicable, pursuant
to the provisions of Rule 144, even in the absence of an effective registration statement (the “Rule 144 Opinion”).
If the transfer agent requires any additional documentation in connection with any proposed transfer or removal of restrictive
legend by Purchaser of any Securities Being Sold, the Company shall promptly deliver or cause to be delivered to the transfer agent
or to any other Person, all such additional documentation from the Company as may be necessary to effectuate the transfer of the
Securities Being Sold and the issuance of an unlegended certificate to any transferee thereof, all at the Company’s expense.
In the event the Purchaser removes the restrictive legend and desires to sell any of the Shares during the period six months and
12 months from the Closing Date, the Purchaser shall first confirm with the Company that the Company is current in its filings
under the Exchange Act and comply with the Securities Laws.

 

(c) Matters
with Respect to Securities and Transfer Agent. 

 

(i) Removal
of Restrictive Legends. In the event that Purchaser has any shares of the Company’s Common Stock bearing any restrictive
legends, and Purchaser, through its counsel or other representatives, submits to the Company’s transfer agent (“Transfer
Agent”) any such shares for the removal of the restrictive legends thereon, pursuant to any exemption to
the registration requirements under the Securities Act, and the Company and or its counsel refuses or fails for any reason (except
to the extent that such refusal or failure is based solely on applicable Law that would prevent the removal of such restrictive
legends) to render an opinion of counsel or any other documents or certificates required for the removal of the restrictive legends,
then the Company hereby agrees and acknowledges that Purchaser is hereby irrevocably and expressly authorized to have counsel to
Purchaser render any and all opinions and other certificates or instruments which may be required for purposes of removing such
restrictive legends, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation
or instructions from the Company, issue any such shares without restrictive legends as instructed by Purchaser when such removal
complies with the applicable Law, and surrender to a common carrier for overnight delivery to the address as specified by Purchaser,
certificates, registered in the name of Purchaser or its designees, representing the shares of Common Stock to which Purchaser
is entitled, without any restrictive legends and otherwise freely transferable on the books and records of the Company.

  

     

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(ii) Authorized
Agent of the Company. The Company hereby irrevocably appoints Purchaser and Purchaser’s counsel and its representatives,
each as the Company’s duly authorized agent and attorney-in-fact for the Company for the purposes of authorizing and instructing
the Transfer Agent to process issuances, transfers and legend removals upon instructions from Purchaser, or any counsel or representatives
of Purchaser, consistent with this Section 4.5(c). The authorization and power of attorney granted hereby is coupled with an interest
and is irrevocable so long as Purchaser owns or has the right to receive, any shares of the Company’s Common Stock hereunder.
In this regard, the Company hereby confirms to the Transfer Agent and Purchaser that it can NOT and will NOT give
instructions, including stop orders or otherwise, inconsistent with the terms of this Section 4.5(c) with regard to the matters
contemplated herein, and that Purchaser shall have the absolute right to provide a copy of this Agreement to the Transfer Agent
as evidence of the Company’s irrevocable authority for Purchaser and Transfer Agent to process issuances, transfers and legend
removals upon instructions from Purchaser, or any counsel or representatives of Purchaser, in each case as specifically contemplated
in this Section 4.5(c), without any further instructions, orders or confirmations from the Company. In addition, if requested by
Purchaser, the Company agrees to use its best good faith efforts to get an agreement executed by the Transfer Agent, reasonably
acceptable to Purchaser, pursuant to which the Transfer Agent agrees and confirms that it will act in accordance with the terms
of this Section 4.5(c).

 

(iii) Injunction
and Specific Performance. The Company specifically acknowledges and agrees that in the event of a breach or threatened breach
by the Company of any provision of this Section 4.5(c), Purchaser will be irreparably damaged and that damages at law would be
an inadequate remedy if this Agreement were not specifically enforced.  Therefore, in the event of a breach or threatened
breach of any provision of this Section 4.5(c) by the Company, Purchaser shall be entitled to obtain, in addition to all other
rights or remedies Purchaser may have, at law or in equity, an injunction restraining such breach, without being required to show
any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of this
Section 4.5(c).

 

(d) Completion
of Subsequent Registration. The Company undertakes to the Purchaser that it shall be obliged to, and shall use its best efforts
to have 2,000,000 Shares registered under the Securities Act on Form F-3 (or other comparable applicable form) and applicable state
securities laws as soon as practicable and shall file the Registration Statement within two weeks after either (i) the Initial
Closing Date or (ii) the date of the Company’s publishing its annual report for the year ended December 31, 2018; provided
that, however, the Company shall ensure that, in any event, the date of filing the Registration Statement for the Purchaser (i)
shall not be later than the date of filing the Registration Statement for other shareholders of the Company; and (ii) shall not
be later than April 30, 2019. The Company shall bear all the costs and expenses associated with the registration. If
the Company fails to file the Registration Statement covering the resale of the Shares on or before April 30, 2019 or fails to
file the Registration Statement covering the resale of the Subsequent Shares before the deadline provided in Section 2.1(b), it
shall indemnify the Purchaser US$30,000 per calendar day, subject to a maximum of US$3 million in aggregate, and any compensation
amount shall (i) be deducted from the Subsequent Subscription Amount or (ii) be paid in cash by the Company if the purchase of
the Subsequent Shares by the Purchaser didn’t occur as set forth in Section 2.1(b). The Company hereby acknowledges that
time is of the essence with respect to the filing of the Registration Statement and the effectiveness of the Registration Statement
and if it fails to perform its obligations under this Section, the Purchaser may suffer tremendous losses. The Company and the
Purchaser hereto acknowledge and agree that the sums payable under this Section shall constitute liquidated damages and not penalties.
The parties further acknowledge that (i) the amount of loss or damages likely to be incurred is incapable or is difficult to precisely
estimate, (ii) the amounts specified in this Section bear a reasonable relationship to, and are not plainly or grossly disproportionate
to, the probable loss likely to be incurred in connection with any failure by the Company to obtain or maintain the effectiveness
of a Registration Statement, (iii) one of the reasons for the Company and the Purchaser reaching an agreement as to such amounts
was the uncertainty and cost of litigation regarding the question of actual damages, and (iv) the Company and the Purchaser are
sophisticated business parties and have been represented by sophisticated and able legal counsel and negotiated this Agreement
at arm's length.

  

     

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(e) Use
of Proceeds.

 

(i) The
proceeds from the issuance of the Ordinary Shares to the Purchaser at the Closing shall be used for the working capital of the
Group Company.

 

(ii) The
Company will not directly or indirectly use the proceeds from the issuance of the Ordinary Shares to the Purchaser, or lend, contribute
or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person for the purpose of funding or
facilitating any activities or business of or with any person towards any sales or operations in Cuba, Iran, Libya, Syria, Sudan,
the Democratic People’s Republic of Korea, Myanmar or any other country sanctioned by OFAC from time to time or for the purpose
of funding any operations or financing any investments in, or make any payments to, any Person targeted by or subject to any Sanctions.

 

(iii) The
use of proceeds from the issuance of the Ordinary Shares to the Purchaser will be in compliance with and will not result in the
breach of the Sanctions; and the Company further covenants not to engage, directly or indirectly, in any other activities that
would result in a violation of Sanctions by any Person, including any Person participating in the transactions contemplated by
this Agreement.

 

(f) Compliance
with Laws and Material Contracts. The Company shall, and the Company shall urge each other Group Company and/or relevant Person
to:

 

(i) conduct
its respective business as now conducted and as presently proposed to be conducted in compliance with all Material Contracts and
all applicable Laws in all material respects on a continuing basis, including without limitation the Laws regarding foreign investments,
corporate registration and filing, conduct of the business, foreign exchange (including SAFE Rules and Regulations), environmental
protection, intellectual property rights, labor and social welfare, taxation, accounting, and the anti-corruption Laws, in each
case, to the extent applicable;

 

(ii) take
reasonable and appropriate steps that in the judgment of such Group Company are prudent to protect the title and ownership in the
Company Owned Intellectual Property (including office software), and use such Company Owned Intellectual Property in a legal manner;

 

(iii) make
full and timely payment of statutory contributions, including but not limited to social insurance, and make provisions for such
arrear in respect of social insurance at the Closing in the financial statements for the payment of all accrued and unpaid applicable
social insurance of each Group Company;

 

(iv) take
all reasonable measures as soon as practicable to resolve any non-compliance or deficiency contained in the Disclosure Schedules,
including but not limited to, the completion of the registration of the pledge of equity interests of Beijing Zhong Chuan Shi Xun
Technology Limited (北京中传视讯科技有限公司),
discharge Song Xuesong from the registration as a dishonest person subject to enforcement action (失信被执行人)
and gradually cleaning up loans and receivables (if any) with the related parties and partners in accordance with the regulatory
financial requirements;

  

     

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(v) not,
including procuring any Company Affiliate not to, take any Proceeding, directly or indirectly, that would result in a violation
of or has violated any anti-corruption Laws;

 

(vi) conduct
the operations at all times in compliance with applicable money laundering Laws;

 

(vii) provide
to the Purchaser any information reasonably necessary for the preparation of income Tax Returns by the Purchaser or its Affiliate(s).

 

(g) Non-competition.

 

(i) The
Company shall urge each Key Employee to devote his/her full time and attention to the business of the Group Companies and will
use his/her commercially reasonable best efforts to develop the Business and work for the interests of the Group Companies and
to fulfill his/her non-competition and non-solicitation undertakings during the period of two years from the date that the Key
Employee ceases to be a member or employee of any Group Company (the “Non-Compete Period”);

 

(ii) The
Company hereby undertakes to the Purchaser that during the Non-Compete Period, it shall urge each Key Employee shall not, and shall
cause his/her Affiliates (other than Group Company) not to, (i) induce or attempt to induce directly or indirectly, in his/her
own name or on behalf of any other company, enterprise or organization, any employee of any Group Company as at the relevant time
to leave the employment of or terminate his/her services with a Group Company, or enter into any employment or services agreement
with any Competing Person; or assist or encourage whether by providing advice or information or otherwise, any employee of any
Group Company as at the relevant time to leave the employment or terminate his/her service with a Group Company; or advise or recommend
whether by providing advice or information or otherwise, any company, enterprise or other organization to hire or induce, or cause
or attempt to hire or induce any employee of any Group Company as at the relevant time to leave the employment or terminate his/her
service with a Group Company; or (ii) use a business name deceptively similar to a business name owned or used by any Group Company,
or establish or otherwise create any enterprise, organization or domain name by using such business name.

 

(iii) The
Company acknowledges that, the obligations of each Key Employee under Section 4.5(g) are substantial to this Agreement. Section
4.5(g) shall be an independent undertaking and not be subject to the Purchaser’s performance or failure to perform any of
other obligations under this Agreement.

  

     

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ARTICLE V.

INDEMNIFICATION

 

5.1. Indemnification.
Each Party (as “Indemnifying Party”) hereby agrees to defend and indemnify the other party and its Affiliates
and subsidiaries, and their respective directors, officers, employees, agents and representatives, and the successors and assigns
of each of them (collectively, the “Indemnified Parties”) and the Indemnifying Party does hereby agree to hold
the Indemnified Parties harmless, from and against any and all Claims made, brought or asserted against the Indemnified Parties,
or any one of them, and the Indemnifying Party hereby agrees to pay or reimburse the Indemnified Parties for any and all Losses
payable by any of the Indemnified Parties to any Person through all negotiations, mediations, arbitrations, trial and appellate
levels, as a result of, or arising out of, or relating to: (i) any misrepresentation or breach of any representation or warranty
made by the Indemnifying Party in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated
hereby or thereby; or (ii) any breach of any covenant, agreement or Obligation of the Indemnifying Party contained in this Agreement,
the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby. To the extent that the
foregoing undertaking by parties may be unenforceable for any reason, the Indemnifying Party shall make the maximum contribution
to the payment and satisfaction of each of the Claims covered hereby, which is permissible under applicable Law. The Indemnifying
Party will not be liable to the Indemnified Parties under this indemnity: (i) for any settlement by the Indemnified Parties in
connection with any Claim effected without the Indemnifying Party ’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed; or (ii) to the extent, but only to the extent, that a Claim is attributable to the Indemnified
Parties’ breach of any of the representations, warranties, covenants or agreements made by the Indemnified Parties in this
Agreement or in the other Transaction Documents.

  

ARTICLE VI.

MISCELLANEOUS

 

6.1 Fees
and Expenses. 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.

 

6.2 Entire
Agreement. The Transaction Documents 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.

 

6.3 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 date of transmission, if such notice or communication is delivered
via facsimile at or prior to 5:30 p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of transmission,
if such notice or communication is delivered via facsimile on a day that is not a Business Day or later than 5:30 p.m. (New York
City time) on any Business Day, (c) the second (2nd) Business 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.

 

6.4 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 the Purchaser, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought. 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.

 

6.5 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.

  

     

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6.6 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. No party hereto may assign this Agreement or any rights or obligations hereunder without the prior written consent of
the Company and the Purchaser.

 

6.7 No
Third-Party Beneficiaries. 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 this Section 6.7.

 

6.8 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 suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is 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 suit, 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.

 

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

 

6.10 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 e-mail delivery of a “.pdf” format data file, 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 or “.pdf”
signature page were an original thereof.

 

6.11 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.

 

6.12Saturdays,
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.

 

6.13 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 shares of Ordinary Share in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock combinations and other similar transactions of the Ordinary Share that occur after the date of
this Agreement. The English version of this Agreement, regardless of whether a translation in any other language is or will be
made, shall be the only authentic version.

 

6.14 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.

 

COMPANY

Luokung Technology
Corp. 

  

	By: 	/s/
    Jie Yu	 
	Name:	 Jie Yu	 
	Title: 	Chief Financial Officer	 
	 	 
	Address for Notice:	 
	LAB 32, SOHO 3Q, No 9, Guanghua Road,	 
	Chaoyang District, Beijing	 
	People’s Republic of China, 100020	 
	Email: yujie@luokung.com	 

  

     

     

    

 

Purchaser

Honbridge Holdings
Limited 

   

	By:	/s/
    Liu Wei, William	 
	Name:	Liu Wei, William	 
	Title:	Executive Director and Co-Chief Executive Officer

   

Address for Notice: Unit 5402, 54/F., Central Plaza, 18 Harbour
Road,

Wanchai, Hong Kong. 

Fax: (852) 2827 8233 

Email: yulin@8137.hklmfa-ex101_8.htm

 

EXHIBIT 10.1

 

NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE 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 OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THIS NOTE MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE SECURITIES ACT.  ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 13 HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(ii) OF THIS NOTE.

 

 

LM FUNDING AMERICA, INC.

 

Senior Convertible Promissory Note

 

Issuance Date: January 16, 2019Original Principal Amount: U.S. $3,581,982.16

 

FOR VALUE RECEIVED, LM FUNDING AMERICA, INC., a corporation incorporated and existing under the laws of Delaware (the “Company”), hereby promises to pay to the order of Craven House Capital North America LLC, a Florida limited liability company or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal (as defined below) (as such interest on any outstanding Principal may be reduced pursuant to the terms hereof) at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Promissory Note (this “Note”, including all Notes issued in exchange, transfer or replacement hereof, collectively, the “Notes”) is issued pursuant to the Purchase Agreement (as defined below) on the Closing Date (as defined below). Certain capitalized terms used herein are defined in Section 24.  Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement.

 

1.PAYMENTS OF INTEREST AND PRINCIPAL; PREPAYMENT. 

 

(a)On the Maturity Date and unless this Note is earlier converted pursuant to Section 3 hereof, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 19(c)) on such Principal and Interest).  

 

(b)The Company may not prepay all or any portion of the outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges other than in accordance with this Note or as agreed to in writing by the Holder.

 

2.INTEREST; INTEREST RATE.

 

(a)Interest on this Note shall commence accruing on the Issuance Date, shall accrue daily at the Interest Rate on the outstanding Principal amount from time to time, shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in cash to the Holder on the Maturity Date unless earlier converted pursuant to Section 3.

 

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(b)From and after the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to twelve percent (12.0%) per annum.  In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

 

3.CONVERSION.

(a)Conversion Right.  From and after a Stockholder Approval, the Holder shall have the right at any time on or before the Maturity Date, to convert all or any part of the outstanding and unpaid Principal and accrued and unpaid Interest of this Note into fully paid and non-assessable Common Shares (“Conversion Shares”) at the Conversion Price (a “Conversion”).  Any amounts owed to the Holder pursuant to Section 3(c)(vii) hereof shall be paid in cash. The term “Conversion Price” means, with respect to any Conversion of this Note, $2.41 for each Common Share, subject to adjustment as set forth below.  For the avoidance of doubt, Common Shares shall be deemed to include any shares of capital stock or other securities of the Company into which such Common Shares shall hereafter be changed or reclassified.  In addition, from and after a Stockholder Approval and so long as no Event of Default has occurred and is continuing, the Company shall have the right to effect a Conversion all, but not less than all, of this Note (a “Company Conversion”).

(b)Authorization of Conversion Shares.  The Company covenants that during the period the conversion right exists, the Company will reserve from its authorized and unissued Common Shares a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Shares upon the full conversion of this Note. The Company is required at all times to have authorized and reserved the number of Common Shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time) (the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Company’s obligations hereunder. The Company represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Company shall issue any securities or make any change to its capital structure which would change the number of Common Shares into which this Note shall be convertible at the then current Conversion Price, the Company shall at the same time make proper provision so that thereafter there shall be a sufficient number of Common Shares authorized and reserved, free from preemptive rights, for conversion of this Note. The Company agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Common Shares in accordance with the terms and conditions of this Note.

(c)Method of Conversion.  

(i)Mechanics of Conversion.  Subject to Section 3(b), this Note may be converted by the Holder in whole or in part (or by the Company in whole) at any time on or after the Company has received shareholder approval for the Conversion, by (A) submitting to the other party a notice of conversion (the “Notice of Conversion”) (by facsimile, e-mail or other reasonable means of communication dispatched on the date of Conversion (the “Conversion Date”) prior to 5:00 p.m., New York, New York time) and surrendering this Note at the principal office of the Company.

(ii)Surrender of Note Upon Conversion.  Notwithstanding anything to the contrary set forth herein, upon Conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless the entire unpaid principal amount of this Note is so converted. The Holder and the Company shall maintain records showing the principal amount so converted and the dates of such Conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Company shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, 

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acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

(iii)Payment of Taxes. The Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of Common Shares or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Company shall not be required to issue or deliver any such units or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such units are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that such tax has been paid.

(iv)Delivery of Common Shares Upon Conversion. Upon receipt by the Company from the Holder, or receipt by Holder from the Company, of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 3, the Company shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Shares issuable upon such conversion within two (2) Business Days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof.

(v)Obligation of Company to Deliver Common Shares. Upon receipt by the Company or Holder of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Shares issuable upon such conversion, the outstanding Principal and the amount of accrued and unpaid Interest on this Note shall be reduced to reflect such Conversion, and, unless the Company defaults on its obligations under this Section 3, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Shares or other securities, cash or other assets, as herein provided, on such Conversion. If a Notice of Conversion is delivered as provided herein, the Company’s obligation to issue and deliver the certificates for Common Shares shall be absolute and unconditional irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Company to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Company, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Company before 5:00 p.m., New York, New York time, on such date.

(vi)Failure to Deliver Common Shares Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Shares issuable upon conversion of this Note is not delivered by the Deadline the Company shall pay to the Holder $1,000 per day in cash, for each day beyond the Deadline that the Company fails to deliver such Common Shares. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Company by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Shares in accordance with the terms of this Note. The Company agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify.  Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 3(c)(vi) are justified.

(d)Status as Shareholders.  Upon submission of a Notice of Conversion by the Holder or the Company, (i) the Common Shares covered thereby shall be deemed converted into Common Shares and (ii) the Holder’s rights as a holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such Common Shares and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Company to comply with the terms of this Note. Notwithstanding the foregoing, if the Holder has not received certificates for all Common Shares prior to the tenth (10th) Business Day after the expiration of the Deadline with respect to a conversion of any portion of this Note for 

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any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Shares by so notifying the Company) the Holder shall regain the rights of a holder of this Note with respect to such unconverted portions of this Note and the Company shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted.  In all cases, the Holder shall retain all of its rights and remedies.

 

 

4.RIGHTS UPON EVENT OF DEFAULT.

(a)Event of Default.  Each of the following events shall constitute an “Event of Default”:

 

(i)the Company’s or any of its subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note or any other Transaction Document (as defined in the Note Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least five (5) Business Days;

 

(ii)the occurrence of any default under, redemption of or acceleration prior to maturity of an aggregate of any Indebtedness of the Company or any of its Subsidiaries in excess of $100,000, or the occurrence or existence of any event of default for which the Company has received a notice from the lender under any outstanding loan or credit facility in connection with a breach of a financial covenant set forth in the governing agreement of such loan or credit facility which has not been cured within twenty (20) Business Days;

 

(iii)bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within thirty (30) days of their initiation;

 

(iv)the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under federal, state or foreign law;

 

(v)the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;

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(vi)a final judgment or judgments for the payment of money aggregating in excess of $50,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $50,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;

 

(vii)the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness in excess of $25,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $25,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any material agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, taken as a whole; provided, however, that in the case of foregoing clauses (i) and (ii), only if such failure, circumstance, or breach remains uncured for a period of five (5) consecutive Business Days after receipt of written notice of such breach;

 

(viii)other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any material representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Business Days after receipt of written notice of such breach;

 

(ix)the Company’s issuance, offer, sale, grant of any option or right to purchase, or other disposition (or any announcement in connection with any of the foregoing) of any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act)), or any Convertible Securities, without the prior written consent of the Holder, except to the extent allowed under any existing agreements of the Company.  “Convertible Securities” means any capital stock, note, debenture, preferred stock or other security of the Company or any of its Subsidiaries that is, or may become, at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock, note, debenture or other security of the Company (including, without limitation, Common Shares) or any of its Subsidiaries; or

 

(x)any Change of Control occurs.

 

(b)Remedies Upon Event of Default.  Upon the occurrence of an Event of Default with respect to this Note, Holder may, at Holder’s option, declare the full amount of this Note immediately due and payable without notice or demand.  In the event of the occurrence of an Event of Default and in addition to all other rights and obligations set forth herein, the Company shall be responsible for reasonable attorneys’ fees, and legal and other expenses for the collection thereof.  In addition, the Company hereby waives presentment, demand for payment, notice of dishonor, and all other notices or demands in connection with the delivery, acceptance, performance, default or endorsement of this Note.

 

5.RIGHTS UPON FUNDAMENTAL TRANSACTION.  The Company shall not enter into or be party to a Fundamental Transaction unless the Holder approves the Fundamental Transaction and the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5 pursuant to written agreements in form and substance 

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satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of the Note, in exchange for such Note, a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Note, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Note held by such holder, and having similar ranking to the Note, and satisfactory to the Holder. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 5 to permit the Fundamental Transaction without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions.

 

6.SECURITY INTEREST.  This Note is secured by a security interest in all of the assets of the Company.

 

7.NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its articles of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

 

8.CERTAIN ADJUSTMENTS.  The Conversion Price and number of Conversion Shares issuable upon conversion of this Note are subject to adjustment from time to time as set forth in this Section 8.

 

(a) Common Share Dividends and Splits. If the Company, at any time while this Note is outstanding, (i) pays a dividend on its Common Shares or otherwise makes a distribution on any class of capital stock that is payable in Common Shares, (ii) subdivides its outstanding Common Shares into a larger number of units, (iii) combines its outstanding Common Shares into a smaller number of units, or (iv) otherwise conducts a corporate action or transaction to change the number of outstanding Common Shares, including any reorganization, recapitalization, or other transaction similar to (i) through (iii), then in each such case the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of Common Shares outstanding immediately before such event and the denominator of which shall be the number of Common Shares outstanding immediately after such event. Any adjustment made pursuant to this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution or the effective date of such subdivision or combination, as applicable.

 

(b)Subsequent Rights Offerings.  If the Company, at any time while this Note is outstanding, shall issue rights, options or warrants to all holders of the Common Shares entitling them to subscribe for or purchase Common Shares (the “Purchase Rights”), then, upon any conversion of this Note, the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that the Holder could have acquired if the Holder had held the number of Conversion Shares issued upon such conversion of this Note immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of the Common Shares are to be determined for the grant, issue or sale of such Purchase Rights.

 

(c)Pro Rata Distributions.  If the Company, at any time while this Note is outstanding, shall distribute to all holders of Common Shares evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than Common Shares (a “Distribution”), then, upon any conversion of this Note, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Conversion Shares issued upon such conversion of this Note immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Distribution.

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(d)Fundamental Transactions.  If, at any time while this Note is outstanding  (i) the Company effects any Fundamental Transaction in accordance with Section 5 herein, then the Holder shall have the right thereafter to receive, upon the Conversion, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the Conversion Shares then issuable upon conversion in full of this Note without regard to any limitations on exercise contained herein (the “Alternate Consideration”); provided, however, that such limitations on exercise shall continue to apply upon the occurrence of such Fundamental Transaction.  The provisions of this paragraph (b) shall similarly apply to subsequent transactions analogous to a Fundamental Transaction.

(e)Calculations.  All calculations under this Section 8 shall be made to the nearest cent or the nearest 1/100th of a unit, as applicable. The number of Common Shares outstanding at any given time shall not include units owned or held by or for the account of the Company, and the sale or issuance of any such units shall be considered an issue or sale of Common Shares.

9.VOTING RIGHTS.  The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in this Note.

 

10.COVENANTS.  Until the Note has been redeemed, paid, converted or otherwise satisfied in accordance with its terms:

 

(a)Rank.  All payments due under the Note shall be rank senior in payment to all other unsecured and subsequently secured Indebtedness of the Company and its Subsidiaries.

 

(b)Additional Capital.  The Company shall not, without Holder’s consent, raise additional capital from a third party, including through the sale and issuance of any securities of the Company or any additional Indebtedness of the Company other than in the ordinary course of business consistent with past practice.

 

(c)Fundamental Transactions.  The Company shall not, without the Holder’s consent, enter into a Fundamental Transaction.

 

(d)Restricted Payments.  The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.

 

(e)Restricted Issuances.  The Company shall (i) only incur additional Indebtedness after the Closing Date in accordance with Section 10(a) or (b), above, and (ii) not issue any other securities that would cause a breach or default under this Note.

 

(f)Restriction on Redemption and Cash Dividends.  The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock (other than any obligations to do so outstanding as of the Issuance Date).

 

(g)Restriction on Transfer of Assets.  The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any material assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries in the ordinary course of business and (ii) sales of inventory in the ordinary course of business. 

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Notwithstanding the foregoing, this provision shall not apply to any transactions pursuant to a binding agreement existing on the date hereof.

 

(h)Change in Nature of Business.  The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto.  The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.

 

(i)Preservation of Existence, Etc.  The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

 

(j)Maintenance of Properties, Etc.  The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any material loss or forfeiture thereof or thereunder.

 

(k)Maintenance of Intellectual Property.  The Company will, and will cause each of its Subsidiaries to, take all reasonable action necessary or advisable to maintain all of the Intellectual Property Rights of the Company and/or any of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.

 

(l)Maintenance of Insurance.  The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

 

(m)Material Transactions with Affiliates.  Without the consent of Holder, the Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any material transaction or series of related material transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an affiliate thereto.

 

11.PARTICIPATION.  The Holder, as the holder of this Note, shall not be entitled to any dividends paid or distributions made to the holders of Common Shares.

 

12.AMENDING THE TERMS OF THIS NOTE.  The prior written consent of the Holder shall be required for any change or amendment to this Note.

 

13.TRANSFER.  This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 14(a) below and Section 5 of the  Purchase Agreement.

 

14.REISSUANCE OF THIS NOTE.

 

(a)Transfer.  If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 14(d)), registered as the Holder may request, representing the outstanding Principal being 

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transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 14(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this Section 14(a), following redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.

 

(b)Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 14(d)) representing the outstanding Principal.

 

(c)Note Exchangeable for Different Denominations.  This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 14(d) and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d)Issuance of New Notes.  Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 14(a) or Section 14(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.

 

15.REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note.  The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.

 

16.PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.

 

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17.CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Each and every reference to unit prices, Common Shares and any other numbers in this Note that relate to the Common Shares shall be automatically adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Shares after the date of this Note.  Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.

 

18.FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

 

19.NOTICES; CURRENCY; PAYMENTS.

 

(a)Notices.  Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.

 

(b)Currency.  All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars. 

 

(c)Payments.  Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing, provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due (solely to the extent such amount is not then accruing interest at the Default Rate) shall result in a late charge being incurred and payable by the Company in an amount equal to simple interest on such amount at the rate of twelve percent (12.0%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).

 

20.CANCELLATION.  After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

21.WAIVER OF NOTICE.  To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the  Purchase Agreement.

 

22.GOVERNING LAW; VENUE.  This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Florida. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Hillsborough County, Florida, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the 

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venue of such suit, action or proceeding is improper.    In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

23.MAXIMUM PAYMENTS.  Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

 

24.CERTAIN DEFINITIONS.  For purposes of this Note, the following terms shall have the following meanings:

 

(a)“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.

 

(b)“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into Holder or any affiliate of Holder, (ii) any reorganization, recapitalization or reclassification of the Common Shares in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.

 

(e)“Closing Date” is the date the Company initially issued the Note.

 

(c)“Common Shares” means (i) shares of the Company’s common stock, US$0.0001 par value per share, and (ii) any capital stock into which such common shares shall have been changed or any share capital resulting from a reclassification of such common shares.

 

(d)“Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), 

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directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company. Fundamental Transaction shall not mean any transaction involving the Company and any one or more of its affiliates, Subsidiaries, or any of their respective officers or directors or the affiliates of officers or directors of the Company, and it shall not mean the transactions contemplated by the Purchase Agreement and this Note.

 

(i)“GAAP” means United States generally accepted accounting principles, consistently applied.

 

(j)“Indebtedness” shall have the meaning set forth in the Purchase Agreement.

 

(k)“Interest Rate” means three percent (3%) per annum, simple interest, as may be adjusted from time to time in accordance with Section 2(b).

 

(l)“Maturity Date” shall mean 360 days from the Closing Date; provided, however, the Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity Date.

 

(m)“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person.

 

(n)“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

(o)“Purchase Agreement” means that certain Purchase Agreement, dated as of the Closing Date, by and between the Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.

 

(r)“Purchase Agreement” means that certain Stock Purchase Agreement, dated as of the Closing Date, by and between the Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.

 

(s)“Stockholder Approval” shall mean such approvals by the Company’s stockholders of the transactions contemplated by the Purchase Agreement and this Note as shall be required by Nasdaq Listing Rule 5635 (or any successor rule or provision).

 

(t)“Subsidiaries” means subsidiaries of the Company.

 

(u)“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(v)“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

 

 

[signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Senior Convertible Promissory Note to be duly executed as of the Issuance Date set out above.

 

 

 

	
 
	
LM FUNDING AMERICA, INC.

 
	
 

	
 
	
 
	
 

	
 
	
By:
	
  /s/ Bruce Rodgers                                              
	
 

	
 
	
 
	
Name: Bruce Rodgers
	
 
	
 

	
 
	
 
	
Title:  CEO
	
 
	
 

 

 

 

 

 

[Senior Convertible Promissory Note - Signature Page]

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