Document:

Exhibit 10.2

 

COOTEK (CAYMAN) INC.

 

CONVERTIBLE NOTE

 

	
Principal Amount:
    	
$20,000,000
    
	
Note Issuance Date:
    	
March 19, 2021
    
	
Note Number: CTK-
    	
2
    

 

FOR VALUE RECEIVED, COOTEK (CAYMAN) INC., a Cayman Island corporation (the “Company”), hereby promises to pay to the order of YA II PN, Ltd., or its registered assigns (the “Holder”) the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate from the date set out above as the Note Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon a the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Note (including all notes issued in exchange, transfer or replacement hereof, this “Note”) was originally issued pursuant to the Securities Purchase Agreement dated March 19, 2021 (the “Securities Purchase Agreement”) between the Company and the Buyers listed on the Schedule of Buyers attached thereto.  Certain capitalized terms used herein are defined in Section (14).

 

(1)                                 GENERAL TERMS

 

(a)                                 Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Note. The “Maturity Date” shall be March 19, 2022, or as may be extended at the option of the Holder as contemplated upon an Event of Default. Other than as specifically permitted by this Note, the Company may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest, and the Holder may not require the payment of Interest prior to the Maturity Date.

 

(b)                                 Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal to 5 % (“Interest Rate”), which Interest Rate shall increase to an annual rate of 15% for the remainder of the term for so long as any Event of Default remains uncured. Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. For the avoidance of doubt, no Interest shall accrue on the Principal balance that is not outstanding at the Maturity Date.

 

(c)                                  Triggering Event.  If, any time after the Issuance Date, and from time to time thereafter, the daily VWAP is less than the Floor Price for a period of 5 consecutive Trading Days (each such occurrence, a “Triggering Event”), then the Interest Rate shall increase to an annual rate of 15%. The Interest Rate shall return to the rate set forth in Clause 1(b) if any time after a Triggering Event the daily VWAP is greater than the Floor Price for a period of 5 consecutive Trading Days, unless a subsequent Triggering Event occurs.

 

 

(2)                                 EVENTS OF DEFAULT.

 

(a)                                 An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 

(i)                                     the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note or any other Transaction Document within five (5) Business Days after such payment is due;

 

(ii)                                  The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

 

(iii)                               The ADSs shall cease to be quoted or listed for trading, as applicable, on any Primary Market for a period of 10 consecutive Trading Days;

 

(iv)                              The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section (14)) unless in connection with such Change of Control Transaction this Note is retired;

 

(v)                                 the Company’s (A) failure to cure a Conversion Failure by delivery of the required number of ADSs within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to any holder of the Notes, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Notes into Ordinary Shares, the deposit of such Ordinary Shares with the Depositary and the issuance of the ADSs representing such Ordinary Shares that are tendered in accordance with the provisions of the Notes, other than pursuant to Section (5)(d);

 

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(vi)                              The Company shall fail to observe or perform any other material covenant, agreement or warranty contained in, or otherwise commit any material breach or default of any provision of this Note (except as may be covered by Section (2)(a)(i) through (2)(a)(viii) hereof) or any Transaction Document (as defined in Section (14)) which is not cured within the time prescribed.

 

(vii)                           The depositary agreement between the Depositary and the Company shall be amended or changed in any manner that is materially disadvantageous to ADS holders in general or to the Holder, or such agreement, or the ADS facility, is terminated.

 

(viii)                        any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

 

(b)                                 During the time that any portion of this Note is outstanding, if any Event of Default has occurred and is continuing, the full unpaid Principal amount of this Note, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder’s election, immediately due and payable in cash.  Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note (subject to the beneficial ownership limitations set out in Section (4)(e)) at any time after (x) an Event of Default (provided that such Event of Default is continuing) or (y) the Maturity Date at the Conversion Price. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

(3)                                 REDEMPTIONS

 

(a)                                 Monthly Principal Cash Redemptions. The Company shall, at its own option, (i) redeem in cash each Redemption Amount (as defined in Section (14)) set forth on the Redemption Schedule (as defined in Section (14)) (a “Company Redemption”) on each applicable Redemption Date (as defined in Section (14)), subject to the provisions of Section (3)(a) and (3)(b), (ii) allow such Redemption Amount to be Converted by the Holder in accordance with Section (4)(c), or (iii) redeem in a combination of cash and ADSs. On or prior to the date which is the third (3rd) Trading Day prior to each Redemption Date (each, a “Redemption Notice Due Date”), the Company shall deliver written notice in the form attached hereto as Exhibit II (each, an “Company Redemption Notice”) to the Holder which Company Redemption Notice shall either: (i) confirm that the applicable Redemption Amount may be converted by the Holder in whole, or in part, pursuant Section (4)(c) anytime after the applicable Redemption Date; or (ii) state that the Company elects to redeem, in whole or in part, the applicable Redemption Amount in cash pursuant to a Company Redemption. If the Company does not timely deliver a Company Redemption Notice in accordance with this Section (3)(a), then the Company shall be deemed to have delivered a Company Redemption Notice confirming that the applicable Redemption Amount may be converted by the Holder in accordance with Section (4)(c). Notwithstanding the foregoing, (i) in the event that there is an Equity Conditions Failure with respect to the conversion in full of a Redemption Amount then the Company shall be required to redeem in cash the portion of the applicable Redemption Amount that would be subject to an Equity Conditions Failure, and (ii) in the event that the daily VWAP on each of the five consecutive Trading Days immediately prior to the Redemption Date exceeds a price equal to 108% of the Fixed Conversion Price and no Equity Conditions Failure has occurred during such period then no cash redemption shall be due on such Redemption Date.  The amounts of any conversions made by the Holder at the Fixed Conversion Price or any Optional Redemptions made by the Company pursuant to this Note contemporaneous with or prior to any Redemption Date shall have the effect of adjusting the Redemption Schedule by reducing the Redemption Amount of each payment coming due by a pro rata amount.

 

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(b)                                 Company Redemption. If the Company elects a Company Redemption in cash in accordance with Section (3)(a), then the Redemption Amount which is to be paid to the Holder on the applicable Redemption Date shall be paid by the Company on or before such Redemption Date, by wire transfer of immediately available funds, in an amount in cash equal to the Redemption Amount. If the Company fails to redeem the full Redemption Amount on the applicable Redemption Date, then the Company shall be deemed to have delivered a Company Redemption Notice confirming that the unpaid portion of the applicable Redemption Amount may be converted by the Holder.

 

(c)                                  Company Additional Early Redemption. The Company shall have the right, but not the obligation, to redeem (“Optional Redemption”) early in cash a portion or all amounts outstanding under this Note as described in this Section; provided that (i) the Company provides the Holder with at least 10 Business Days’ prior written notice (each, a “Optional Redemption Notice”) of its desire to exercise an Optional Redemption, and (ii) the trading price of the ADS is less than the Fixed Conversion Price at the time of the delivery of the Optional Redemption Notice. Each Optional Redemption Notice shall be irrevocable and shall specify the outstanding balance of the Convertible Debentures to be redeemed and the applicable Redemption Amount. The “Optional Redemption Amount” shall be equal to the outstanding Principal balance being redeemed by the Company times the Redemption Premium, plus all accrued and unpaid interest. On the 11th Business Day after the Optional Redemption Notice, the Company shall deliver to the Holder the Optional Redemption Amount with respect to the Principal amount redeemed after giving effect to conversions effected pursuant to the terms of this Note during the 10 Business Day period.

 

(4)                                 CONVERSION OF NOTE.  This Note shall be convertible into the Company’s Ordinary Shares, which would be deposited for delivery of ADSs so long as the conversion is effected pursuant to an effective registration statement or in compliance with Rule 144 promulgated under the Securities Act, on the terms and conditions set forth in this Section (4).

 

(a)                                 Conversion Right.  Subject to the limitations of Section (4)(e), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable Ordinary Shares in accordance with Section (4)(b) and (4)(c), at the Conversion Rate (as defined below). The Company will deposit such Ordinary Shares and cause the delivery of ADSs to the Holder. The number of ADSs issuable upon conversion of any Conversion Amount pursuant to this Section (4)(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”) and the underlying Ordinary Shares to be issued shall be determined by multiplying the resulting number of ADSs by the then applicable Ordinary Share-to-ADS conversion ratio, which is set at one (1) ADS representing fifty (50) Ordinary Shares as of the date hereof. No fraction of an ADS will be delivered upon any conversion. All calculations under this Section (3) shall be rounded to the nearest $0.0001. If the issuance would result in the issuance of a fraction of an ADS, the Company shall round such fraction of a share up to the nearest whole share. The Company shall bear all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of shares upon conversion of any Conversion Amount as well as any conversion or issuance  fees of the Depositary in respect of the ADSs.

 

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(i)                                     “Conversion Amount” means the portion of the Principal, accrued Interest, and Premium Payment (if applicable) to be converted, redeemed or otherwise with respect to which this determination is being made.

 

(ii)                                  “Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination (A) with respect to a Conversion pursuant to Section (4)(b), $5.00 per ADS (the “Fixed Conversion Price”), and (B) with respect to a Conversion pursuant to Section (2)(b) or Section (4)(c), the lower of (i) the Fixed Conversion Price, or (ii) 100% of the lowest daily VWAP during the 10 consecutive Trading Days immediately preceding the Conversion Date (the “Variable Conversion Price”), but not lower than the Floor Price. The Conversion Price shall be adjusted from time to time pursuant to the other terms and conditions of this Note.

 

(b)                                 The Holder may at any time and from time to time, elect to convert any Principal amount which is outstanding, and any accrued and unpaid interest, at a Conversion Price equal to the Fixed Conversion Price by serving a Conversion Notice on the Company in accordance with Section (4)(d).

 

(c)                                  Only in respect of any Redemption Amount subject to a Company Redemption Notice confirming (or deemed to pursuant to Section (3)(a) or (3)(b)) that the applicable Redemption Amount may be converted by the Holder, may the Holder, at any time and from time to time after such applicable Redemption Date, convert a Conversion Amount up to the applicable Redemption Amount (or any portion thereof) at a Conversion Price based on the Variable Conversion Price by serving a Conversion Notice on the Company, and subject to, and in accordance with, Section (4)(d).

 

(d)                                 Mechanics of Conversion.

 

(i)                                     Optional Conversion.  To convert any Conversion Amount into Ordinary Shares to be converted into ADSs on any date (a “Conversion Date”), the Holder shall (A) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit III (the “Conversion Notice”) to the Company and the Depositary, and (B) if required by Section (4)(d)(iii), surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Note in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be placed on the ADS certificates and provided that the Depositary is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, issue and deposit Ordinary Shares and instruct the Depositary to credit the ADSs to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal and Custodian system, as specified in the Conversion Notice or (Y) if the Depositary is not participating in the DTC Fast Automated Securities Transfer Program, issue and deposit Ordinary Shares and instruct the Depositary to deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of ADSs specified in the Conversion Notice.  If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than five (5) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted.  The Person or Persons entitled to receive ADSs issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such ADSs upon the transmission of a Conversion Notice.

 

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(ii)                                  Company’s Failure to Timely Convert.  If within three (3) Trading Days after the Company’s receipt of a Conversion Notice and any other documentation required by the Depositary, the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the number of ADSs to which the Holder is entitled upon such holder’s conversion of any Conversion Amount, such event shall constitute a conversion failure, subject to the limitations on conversion outlined in Sections 4(c)(i) and (ii) below (a “Conversion Failure”), provided however, the Company shall get an extension of two Trading Days in the event that a delay occurs through no fault of the Company.

 

(iii)                               Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note.  The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

 

(e)                                  Limitations on Conversions.

 

(i)                                     Beneficial Ownership.  The Holder shall not have the right to convert any portion of this Note or otherwise receive ADSs or Ordinary Shares hereunder to the extent that after giving effect to such conversion or receipt of such ADSs or Ordinary Shares, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of Ordinary Shares outstanding immediately after giving effect to such conversion. Since the Holder will not be obligated to report to the Company the number of ADSs or Ordinary Shares it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of ADSs representing beneficial ownership in excess of 4.99% of the then outstanding Ordinary Shares without regard to any other ADSs or Ordinary Shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal amount of this Note is convertible shall be the responsibility and obligation of the Holder, provided however, upon the request of the Company, the Holder shall report its holdings in ADSs and Ordinary Shares to the Company.  If the Holder has delivered a Conversion Notice for a Principal amount of this Note that, without regard to any other ADSs or Ordinary Shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum Principal amount permitted to be converted on such Conversion Date in accordance with Section 3(a) and any Principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Note.  The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

 

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(ii)                                  Principal Market Limitation. Notwithstanding anything in this Note to the contrary, the Company shall not issue any Ordinary Shares or ADSs upon conversion of this Note, or otherwise, if the issuance of such Ordinary Shares or ADSs, together with any Ordinary Shares or ADSs issued in connection with any related transactions that may be considered part of the same series of transactions, would exceed the aggregate number of Ordinary Shares or ADSs that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of New York Stock Exchange (the “NYSE”) and shall be referred to as the Exchange Cap (as defined in the Securities Purchase Agreement), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the NYSE for issuances of shares in excess of such amount or (B) invokes the home country exemption and obtains a written opinion from outside counsel to the Company, to the extent required by the NYSE, that it may follow its home country practice, and therefore, such approval is not required. The Exchange Cap shall be appropriately adjusted for any stock dividend, stock split, reverse stock split or similar transaction.

 

(iii)                               Sales Limitations. The Holder shall not sell such number of ADSs in any calendar month (being the 1st of the month through the last day of the same month) that would result in gross proceeds received by the Holder in excess of the greater of (a) 30% of the dollar trading volume of the Ordinary Shares during such calendar month, of (b) $3,290,000. This limitation shall not apply (i) at any time after the occurrence of an Event of Default, and (ii) with respect to any sales of ADSs at prices greater than or equal to the Fixed Conversion Price. This limitation may be waived with the consent of the Company.

 

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(f)    Other Provisions.

 

(i)            The Company shall at all times reserve and keep available out of its authorized Ordinary Shares the full number of Ordinary Shares issuable upon conversion of all outstanding amounts under this Note; and within five (5) Business Days following the receipt by the Company of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall promptly reserve a sufficient number of shares to comply with such requirement.

 

(ii)           All calculations under this Section (3) shall be rounded to the nearest $0.00001 or whole share.

 

(iii)          Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (2) herein for the Company’s failure to deliver certificates representing shares upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

(5)           Adjustments to Conversion Price

 

(a)   RESERVED

 

(b)   Adjustment of Conversion Price upon Subdivision or Combination of ADSs.  If the Company, at any time while this Note is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on its Ordinary Shares or any other equity or equity equivalent securities payable in shares which results in an increase in the number of outstanding ADSs, (b) subdivide its outstanding Ordinary Shares or ADSs into a larger number of Ordinary Shares of ADSs, (c) combine (including by way of reverse share split) outstanding Ordinary Shares or ADSs into a smaller number of Ordinary Shares or ADSs, or (d) issue additional Ordinary Shares or ADSs by reclassification of ADSs or Ordinary Shares or any shares of capital stock of the Company, then each of the Fixed Conversion Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares or ADSs (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of Ordinary Shares or ADSs outstanding after such event, provided however, the Floor Price shall not be adjusted upon any event described in subpart (c) of this Section. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(c)   Other Events.  If any event occurs of the type contemplated by the provisions of this Section (5) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features, changing the number of Ordinary Shares represented by each ADS, or issuing Convertible Securities with a variable conversion formula that is more favorable than this Note), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Note; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section (5).

 

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(d)   Other Corporate Events.  In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of Ordinary Shares or ADSs are entitled to receive securities or other assets with respect to or in exchange for Ordinary Shares or ADSs (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option, (i) in addition to the Ordinary Shares or ADSs receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such Ordinary Shares or ADSs had such shares been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the Ordinary Shares or ADSs otherwise receivable upon such conversion, such securities or other assets received by the holders of Ordinary Shares or ADSs in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to the Ordinary Shares or ADSs) at a conversion rate for such consideration commensurate with the Conversion Rate.  Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders.  The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

 

(e)   Whenever the Conversion Price is adjusted pursuant to Section (5) hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

(f)    In case of any (1) merger or consolidation of the Company or any subsidiary of the Company controlling more than one-half of the assets of the Company with or into another Person not affiliated with the Company, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, the Holder shall have the right to (A) exercise any rights under Section (2)(b), (B) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders Ordinary Shares or ADSs following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the ADSs into which such aggregate Principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a Convertible Note with a Principal amount equal to the aggregate Principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued Convertible Note shall have terms identical (including with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of Convertible Notes shall be based upon the amount of securities, cash and property that each Ordinary Share would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

 

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(6)           REISSUANCE OF THIS NOTE.

 

(a)           Transfer.  This Note may be transferred to a party affiliated with the Holder at any time and may be transferred to a party not affiliated with the Holder only after the reasonable determination by the Company that such transfer would not cause the Company to be out of compliance any of the requirements of the applicable securities laws and regulations. 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 (6)(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest thereof) and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Section (6)(d)) to the Holder representing the outstanding Principal not being transferred.  The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section (4)(d)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.

 

(b)           Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section (6)(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 (6)(d)) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d)           Issuance of New Notes.  Whenever the Company is required to issue a new Note pursuant to the terms 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 5(6)(a) or Section 5(6)(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 from the Issuance Date.

 

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(7)           NOTICES.             Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and e-mail addresses for such communications shall be:

 

	
If to the Company, to:
    	
COOTEK (CAYMAN) INC.
    
	
 
    	
9-11 Floors,   No.16, Lane 399, Xinlong Road, Minhang District, 
   Shanghai 201101, People’s Republic of China  
 Telephone:    +86 021 6485 6352 
   Attention:  Robert Cui, CFO 
   E-Mail:  ir@cootek.cn
    
	
 
    	
 
    
	
If to the Holder:
    	
YA II PN, Ltd
    
	
 
    	
c/o Yorkville   Advisors Global, LLC  
 1012 Springfield Avenue
    
	
 
    	
Mountainside, NJ   07092
    
	
 
    	
Attention: Mark   Angelo
    
	
 
    	
Telephone:   201-985-8300
    
	
 
    	
Email: Legal@yorkvilleadvisors.com
    

 

or at such other address and/or email and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s email service provider containing the time, date, recipient email address or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(8)           Except as expressly provided herein, no provision of this Note shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the Principal of, interest and other charges (if any) on, this Note at the time, place, and rate, and in the coin or currency, herein prescribed.  This Note is a direct obligation of the Company. As long as this Note is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its ADSs, Ordinary Shares or other equity securities; (iii) terminate its ADS facility, or (iv) enter into any agreement with respect to any of the foregoing.

 

(9)           This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into ADSs in accordance with the terms hereof.

 

11

 

(10)         This Note shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the Supreme Court of the State of New York located in the City of New York, Borough of Manhattan, and the U.S. District Court for the Southern District of New York in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.  THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

 

(11)         If the Company fails to strictly comply with the terms of this Note, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Note, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

 

(12)         Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 

(13)         If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

12

 

(14)         CERTAIN DEFINITIONS For purposes of this Note, the following terms shall have the following meanings:

 

(a)           “ADSs” mean American Depositary Shares, each representing 50 Ordinary Shares of the Company.

 

(b)           “Bloomberg” means Bloomberg Financial Markets.

 

(c)           “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

 

(d)           “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company (other than as due to the death or disability of a member of the board of directors) which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c). No transfer to a wholly-owned subsidiary shall be deemed a Change of Control Transaction under this provision.

 

(e)           “Closing Bid Price” means the price per share in the last reported trade of the ADSs on a Primary Market or on the exchange which the ADS is then listed as quoted by Bloomberg.

 

(f)            “Commission” means the Securities and Exchange Commission.

 

(g)           “Company Redemption” shall have the meaning assigned in Section (3)(a).

 

(h)           “Company Redemption Notice” shall have the meaning assigned in Section (3)(a).

 

13

 

(i)            “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Ordinary Shares or ADSs.

 

(j)            “Depositary” means Deutsche Bank Trust Company Americas or its successor as the depositary for the ADS facility.

 

(k)           “Equity Conditions Failure” means that any of the following conditions are not satisfied: (i) all applicable ADSs issuable upon conversion of Ordinary Shares to be issued in connection with the event requiring determination shall be eligible for sale without restriction under any applicable federal or state securities laws; (ii) the ADSs are designated for quotation on the Primary Market and shall not have been suspended from trading on such exchange nor shall delisting or suspension by such exchange been threatened or pending; (iii) any applicable ADSs issuable upon conversion of Ordinary Shares to be issued in connection with the event requiring determination may be issued in full without the rules or regulations of the Primary Market; (iv) there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; (v) the daily VWAP is greater than 125% of the Floor Price for each of the five (5) consecutive Trading Days immediately prior to the date of the event requiring determination; and (vi) the Company shall have no knowledge of any fact that would cause any Ordinary Shares to be issued in connection with the event requiring determination not to be eligible for sale without restriction under any applicable federal or state securities laws.

 

(l)            “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(m)          “Floor Price” means $0.75 per ADS.

 

(n)           “Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly owned subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares are effectively converted into or exchanged for other securities, cash or property.

 

(o)           “Optional Redemption” shall have the meaning assigned in Section (3)(c).

 

(p)           “Optional Redemption Amount” shall have the meaning assigned in Section (3)(c).

 

(q)           “Optional Redemption Notice” shall have the meaning assigned in Section (3)(c).

 

14

 

(r)                                    “Ordinary Shares” means the Company’s shares of class A ordinary shares, par value $0.00001 per share, and any capital stock into which such shares shall have been changed or any share capital resulting from a reclassification of such ordinary shares.

 

(s)                                   “Other Notes” means any other Notes issued pursuant to the Securities Purchase Agreement and any other notes, debentures, or other instruments issued in exchange, replacement, or modification of the foregoing.

 

(t)                                    “Payment Premium” means 8% of the Principal amount of each Redemption as set forth in the Redemption Schedule.

 

(u)                                 “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

 

(v)                                 “Primary Market” means the NYSE and any successor to any of the foregoing markets or exchanges.

 

(w)                               “Redemption Amount” means the total of the amount of Principal, Interest, and Payment Premium set out under the column ‘Redemption Amount” in the Redemption Schedule.

 

(x)                                 “Redemption Date” means the first date of each calendar month beginning on June 1, 2021 and continuing thereafter through January 2022.

 

(y)                                 “Redemption Notice Due Date” shall have the meaning assigned in Section (3)(a).

 

(z)                                  “Redemption Premium” means 15% of the Principal amount being redeemed.

 

(aa)                          “Redemption Schedule” means the schedule of redemptions as set out on Exhibit I, or such other schedule of repayments as the parties may agree in writing from time to time.

 

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

 

(cc)                            “Trading Day” means a day on which the ADSs are quoted or traded on a Primary Market on which the shares are then quoted or listed; provided, that in the event that the ADSs are not listed or quoted, then Trading Day shall mean a Business Day.

 

(dd)                          “Transaction Document(s)” shall mean this Note, along with the Securities Purchase Agreement, and any other documents or agreements entered into in connection with the foregoing.

 

(ee)                            “Underlying Shares” means the Ordinary Shares or ADSs issuable upon conversion of this Note in accordance with the terms hereof.

 

15

 

(ff)                              “Underlying Shares Registration Statement” means a registration statement meeting the requirements set forth in the Securities Purchase Agreement, covering among other things the issuance of the Note and the sale of the Underlying Shares by the Holder.

 

(gg)                            “VWAP” means, for the ADSs as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices — Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg.

 

[Signature Page Follows]

 

16

 

IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.

 

	
 
    	
COMPANY:
    
	
 
    	
COOTEK (CAYMAN) INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Karl Kan Zhang
    
	
 
    	
Name:
    	
Karl Kan Zhang
    
	
 
    	
Title:
    	
Chairman of the Board of Directors and Chief Technology Officer
    

 

 

EXHIBIT I
  REDEMPTION SCHEUDLE(1)

 

	
Redemption 
   Date
    	
 
    	
Principal 
   Amount
    	
 
    	
Payment 
   Premium
    	
 
    	
Interest(2)
    	
 
    	
Redemption 
   Amount
    	
 
    
	
6/1/21
    	
 
    	
$
    	
2,000,000
    	
 
    	
$
    	
160,000
    	
 
    	
$
    	
166,667
    	
 
    	
$
    	
2,326,667
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
7/1/21
    	
 
    	
$
    	
2,000,000
    	
 
    	
$
    	
160,000
    	
 
    	
$
    	
75,000
    	
 
    	
$
    	
2,235,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
8/1/21
    	
 
    	
$
    	
2,000,000
    	
 
    	
$
    	
160,000
    	
 
    	
$
    	
66,667
    	
 
    	
$
    	
2,226,667
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
9/1/21
    	
 
    	
$
    	
2,000,000
    	
 
    	
$
    	
160,000
    	
 
    	
$
    	
58,333
    	
 
    	
$
    	
2,218,333
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
10/1/21
    	
 
    	
$
    	
3,000,000
    	
 
    	
$
    	
240,000
    	
 
    	
$
    	
50,000
    	
 
    	
$
    	
3,290,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
11/1/21
    	
 
    	
$
    	
3,000,000
    	
 
    	
$
    	
240,000
    	
 
    	
$
    	
37,500
    	
 
    	
$
    	
3,277,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
12/1/21
    	
 
    	
$
    	
3,000,000
    	
 
    	
$
    	
240,000
    	
 
    	
$
    	
25,000
    	
 
    	
$
    	
3,265,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1/1/22
    	
 
    	
$
    	
3,000,000
    	
 
    	
$
    	
240,000
    	
 
    	
$
    	
12,500
    	
 
    	
$
    	
3,252,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
20,000,000
    	
 
    	
$
    	
1,600,000
    	
 
    	
$
    	
491,667
    	
 
    	
$
    	
22,091,667
    	
 
    

 

(1)                                 The amounts shown in the table below shall be subject to adjustment in accordance with Section (3)(a) to reflect the conversion or redemption otherwise effected pursuant to this Convertible Note contemporaneous with or prior to the scheduled redemption provided in the schedule.

 

(2)                                 Note: Interest is estimated and will be calculated based on the actual accrued and unpaid interest as of each Redemption Date.

 

 

EXHIBIT II

 

COMPANY REDEMPTION NOTICE

 

Date: [                        ]

 

VIA E-MAIL:  trading@yorkvilleadvisors.com and [                                                 ]

 

This letter shall serve as Company Redemption Notice by CooTek (Cayman) Inc, (“Company”) in accordance with Section (3)(a) of the Convertible Note issued to YA II PN, Ltd. (the “Holder”) on March 19, 2021 (the “Note”). Unless otherwise specified, capitalized terms used in this letter shall have the meaning assigned to them in the Note.

 

	
Note Number:
    	
 
    	
CTK-2
    
	
Applicable Redemption Date:
    	
 
    	
[                                   ]
    
	
                   Principal   Amount:
    	
 
    	
[$                                 ]
    
	
                  Payment   Premium:
    	
 
    	
[$                                 ]
    
	
                                     Interest:
    	
 
    	
[$                                 ]
    
	
Total Redemption Amount:
    	
 
    	
[$                                 ]
    

 

The Company hereby elects the following in respect of the above referenced Redemption Amount:

 

·                                          The applicable Redemption Amount may be converted by the Holder in whole, or in part, pursuant Section 4(c) anytime after the applicable Redemption Date; or

 

·                                          The Company elects to redeem in cash the applicable Redemption Amount pursuant to a Company Repayment.1

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Authorised Signatory,
    

 

1   If the Company elects a Company Redemption, then the Redemption Amount which is to be paid to the Holder on the applicable Redemption Date shall be repaid by the Company on or before such Redemption Date, and the Company shall pay to the Holder on or before such Redemption Date, by wire transfer of immediately available funds, in an amount in cash equal to the Redemption Amount. If the Company fails to redeem the full Redemption Amount on the applicable Redemption Date, then the Company shall be deemed to have delivered a Company Redemption Notice confirming that the unpaid portion of the applicable Redemption Amount may be converted by the Holder at the lower of the Fixed Conversion Price or the Variable Conversion Price.

 

 

EXHIBIT III
  CONVERSION NOTICE

 

(To be executed by the Holder in order to convert the Note)

 

Via Email

 

	
TO:
    	
COOTEK (CAYMAN) INC.
    
	
 
    	
 
    
	
 
    	
9-11 Floors, No.16, Lane 399, Xinlong Road,   Minhang District, Shanghai 201101, People’s Republic of China
    
	
 
    	
Attention: Robert Cui, CFO; Yeting Cai,   General Legal Counsel
    
	
 
    	
E-Mail: robert.cui@cootek.cn;   yeting.cai@cootek.cn
    
	
 
    	
 
    
	
CC:
    	
DEUTSCHE BANK TRUST COMPANY AMERICAS, as   Depositary
    
	
 
    	
 
    
	
 
    	
60 Wall   Street
    
	
 
    	
New York,   NY 10005
    
	
 
    	
United   States of America
    
	
 
    	
Fax:   +1-732-544-6346, Email: adr@db.com
    

 

The undersigned registered holder of Note No. CTK-2 (the “Note”) hereby irrevocably elects to convert the Note or a portion of the outstanding and unpaid Conversion Amount of the Note into Class A Ordinary Shares of COOTEK (CAYMAN) INC. (the “Company”) to be deposited by the Company with the Depositary for the issuance of American Depositary Shares (“ADSs”) in accordance with the conditions stated in the Note and the delivery instructions below. The ADSs will be issued pursuant to the terms and conditions of the Deposit Agreement dated as of September 27, 2018, among the Company, the Depositary, and holders and beneficial owners from time to time of ADSs issued thereunder (as amended from time to time, the “Deposit Agreement”).

 

In connection with the conversion of the Note, or the portion hereof below designated, the undersigned acknowledges, represents to and agrees with the Company and the Depositary that the undersigned is not an “affiliate” (as defined in Rule 144 under the Securities Act of 1933) of the Company and has not been an “affiliate” (as defined in Rule 144 under the Securities Act of 1933) of the Company during the three months immediately preceding the date hereof.

 

The undersigned acknowledges that the undersigned (and any such other account) may not continue to hold or retain any interest in ADSs if the undersigned (or such other account) becomes an “affiliate” (as defined in Rule 144 under the Securities Act of 1933) of the Company.

 

 

The undersigned confirms the following conversion information:

 

Conversion Date:

Principal Amount to be Converted:

Payment Amount (if applicable):

Accrued Interest to be Converted:

Total Conversion Amount to be converted:

Fixed Conversion Price: 

Variable Conversion Price (if applicable): 

Conversion Price: 

Number of ADSs to be issued:

 

Upon confirmation by the Company to the Depositary of the above information, the undersigned instructs the Depositary to deliver the above noted Number of ADSs to the following account:

 

	
Issue to:
    	
 
    
	
 
    	
 
    
	
Authorized Signature:
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
	
Broker DTC Participant Code:
    	
 
    
	
Account Number:
    	
 
    

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    	
 
    

 

	
 
    	
 
    	
NOTICE:   The above signature(s) of the Holder(s) hereof must correspond with   the name as written upon the face of the Note in every particular without   alteration or enlargement or any change whatever.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social   Security or Other Taxpayer Identification NumberExhibit 10.1

 

 

	Principal
    Amount: $509,148.00	Date
    of Note: March 15, 2021

 

PROMISE
TO PAY. SINTX Technologies. In c. (“ Borrower” ) promises to pay to First State Community Bank (“
Lender” ), or order, in lawful money of the United States of America, the principal amount of Five Hundred Nine
Thousand One Hundred Forty-eight & 00/100 Dollars ($ 509,148.00), together with interest on the unpaid principal
balance from March 15, 2021, calculated as described in the “INTEREST CALCULATION METHOD” paragraph using an
interest rate of 1.000 % per annum based on a year of 360 days, until paid in full. The interest rate may change under the
terms and condition s of the “INTEREST AFTER DEFAULT” section.

 

PAYMENT.
Borrow er will pay this loan in accordance with the following payment schedule:

 

Borrower
understands and agrees that the repayment terms set out in this section are subject to the terms of the Act and Rules and
Regulations (as defined in the document titled SBA Protection Program) including, without limitation, those related to
payment deferral. As of the date of this Note, Borrower is not required to make any payments on this Note until the earlier
of: (1) the date that the SBA remits any forgiveness amount to Lender (or notifies the Lender that no forgiveness is
granted), or (2) ten months after the end of the Borrower’s Covered Period, as such term is defined under the Act,
Rules and Regulations (the “Deadline”) if the Borrower fails to submit its application for forgiveness by the
Deadline. Given the foregoing, Borrower understands and agrees that the payment dates and amounts will be subject to the
timing of receipt of forgiveness proceeds and the amount forgiven, and is subject to changes in the Act and Rules and
Regulations and, as such, may be modified in the future.

 

If
Borrower submits a loan forgiveness application by the Deadline, Lender will notify Borrower of remittance by SBA of the forgiveness
amount (or notify Borrower that SBA determined no loan forgiveness is allowed) when received and if there is a balance remaining,
the date the first payment is due and the amount which will be based on the remaining term of the loan with the final payment
due 60 months from the Loan Date.

 

If
Borrower does not submit a loan forgiveness application by the Deadline, Borrower will begin making payments based on the remaining
term of the loan with the final payment due 60 months from the Loan Date.

 

Unless
otherwise agreed or required by applicable law, payments will be applied first to any escrow or reserve account payments as required
under any mortgage, deed of trust, or other security instrument or security agreement securing this Note; then to any accrued
unpaid interest; then to principal; and then to any late charges. Borrower will pay Lender at Lender’ s address shown above
or at such other place as Lender may designate in writing.

 

INTEREST
CALCULATION METHOD. Interest on this Note is computeded on a 365/360 basis; that is, by applying the ratio of the interest
rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual numb er of days the principal
balance is outstanding. All interest payable under this Note is computed using this method. This calculation method results in
a higher effective interest rate than the numeric interest rat e stated in this Note.

 

PREPAYMENT.
Borrow er may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower’ s obligation to continue to make payments under the payment
schedule. Rather, early payments will reduce the principal balance due and may result in Borrower’s making fewer payments.
Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language.
If Borrow er sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender. All written communication s concerning disputed amounts, including
any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount
ow ed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: First State Community Bank, Columbia Branch, 300 Diego Drive, Columbia, MO 65203.

 

LATE
CHARGE. If a payment is more than 15 days late, Borrower will be charged 5.000 % of the regularly scheduled payment or $50.00, whichever is greater.

 

INTEREST
AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased
by 5.000 percentage points. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable
law.

 

DEFAULT.
Each of the following shall constitute an event of default (“Event of Default”) under this Note:

 

Payment
Default. Borrow er fails to make any payment when due under this Note.

 

Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note
or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Borrower.

 

Default
in Favor of Third Part es. Borrower or any Granter defaults under any loan, extension of credit, security agreement, purchase
or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrow
er’ s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or
any of the related documents.

 

False
Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf
under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

Insolvency.
The dissolution or termination of Borrow er’ s existence as a going business, the insolvency of Borrower, the appointment
of a receiver tor any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout,
or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrow er or by any governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default
shall not apply if there is a good faith dispute by Borrow er as to the validity or reasonableness of the claim which is the basis
of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposit s with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender,
in its sole discretion, as being an adequate reserve or bond tor the dispute.

 

Events
Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party
of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes
or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

 

Change
In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse
Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment
or performance of this Note is impaired.

 

Insecurity.
Lender in good faith believes itself insecure.

 

LENDER’S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.

 

    	 

    	Loan No: 9536368504	PROMISSORY NOTE
(Continued)
	Page 2

    

 

ATTORNEYS’
FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount This includes, subject 10 any limits under applicable law, Lender’ s attorneys’
fees and Lender’s legal expenses whether or not there 1s a lawsuit, including attorneys’ fees and expenses for bankrupt
cy proceedings (including efforts 10 modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable
law, Borrower also will pay any court costs, in addition to all other sums provided by law.

 

GOVERNING
LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws
of the State of Missouri without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State
of Missouri.

 

CHOICE
OF VENUE. If there 1s a lawsuit, Borrower agrees upon Lender’ s request to submit to the jurisdiction of the courts of
Boone County, State of Missouri

 

DISHONORED
ITEM FEE. Borrower will pay a fee to Lender of $31.50 i f Borrower makes a payment on Borrower’s loan and the check or preauthorized
charge with which Borrow er pays is later dishonored.

 

RIGHT
OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with
Lender (whether checking, savings, or some other account). This includes all accounts Borrow er holds jointly with someone else
and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law Borrow er authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the debt against any and all such accounts, and, at Lender’s option, to administratively freeze
all such accounts to allow Lender to protect Lender’s charge and set off rights provided in this paragraph.

 

ADDITIONAL
TERMS CLAUSE. Notwithstanding the oral agreement s clause below, in addition to the terms contained in this document ii is also
agreed that the terms of any documents pursuant 10 which the loan is made or which secures the loan are also binding on the undersigned.

 

SUCCESSOR
INTERESTS. The terms of this Note shall be binding upon Borrow er, and upon Borrower’s heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

GENERAL
PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees
or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no part y who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize
upon or perfect Lender’ s security interest in the collateral; and take any other action deemed necessary by Lender without
the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice
to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.

 

ORAL
OR UNEXECUTED AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED
THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR
DISAPPOINTMENT ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

 

JURY
WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrow er against the other.

 

PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER:

 

	SINTX TECHNOLOGIES, INC.	 
	 	 
	By:	 	 
	 	-Dr.
    Bhajanjit S Bal, Chief Executive Officer of SINTX Technologies. Inc.	 

 

    	 

    	 

    

 

 

SBA
PAYCHECK PROTECTION PROGRAM. The loan by Lender and this Note are being made pursuant to the Small Business Administration’s
(the “SBA”) Paycheck Protection Program (“PPP”), created under Sections 1102 and 1106 of the Coronavirus
Aid, Relief and Economic Security Act (the “Act”) and administered pursuant to the rules, regulations and guidance
issued by the Department (defined below) and the SBA (collectively, the “Rules and Regulations ” ). Borrower understands,
acknowledges and agrees that : (1 ) the Note is subject to the Act, the Rules and Regulations and the requirements of the U.S.
Department of the Treasury (the “Department”) and the SBA, as modified or amended from time to time; (2) Borrower
will at all times comply with the Act, the Rules and Regulations and all requirements of Lender, the Department and the SBA related
to the PPP and this Note; (3) Borrower will not reorganize, merge, consolidate or otherwise change its ownership or business structure
without Lender’s prior written consent and without complying with the Act, the Rules and Regulations and all applicable
requirements of Lender, the Department and the SBA; (4) Immediately upon Lender’ s request, Borrower will deliver to Lender
all information and documentation, and execute any further documentation, required by Lender, the Department, and /or the SBA
in relation to the PPP and this Note; (5) Borrower will use the proceeds of this Note only for those purposes permitted under
the Act and Rules and Regulations, as amended from time to time; (6) Lender has made no representations or warranties, or provided
any advice, to Borrower regarding the PPP, the Act and Rules and Regulations, this Note, Borrow er’ s eligibility under
the PPP, or Borrower’ s eligibility for loan forgiveness, and Borrower is responsible for consulting with those persons
Borrower deems necessary to assist it in making such determinations.

 

Borrower
represents and warrants to Lender that: (1) All statements, information and documentation provided to Lender in connection with
this Note are complete and accurate, and Borrower has not made or provided any false statement or information to Lender; (2) Borrower
has complied with all of Borrower’s certifications and obligations as set out in the Act and Rules and Regula t ion s; and
(3) Borrower is an eligible borrower under the Act and Rules and Regulations.

 

Borrow
er acknowledges that the terms of this Note are subject to change from time to time based upon amendments or modifications to
the Act and/or Rules and Regulations. To the extent any further modification to the Loan Documents is necessitated by such amendments
or modifications, Borrower hereby authorizes Lender to so modify this Note and any Related Documents without Borrower’s
consent and signature, provided however, that (1) such modification does not exceed what is required by such amendments or modifications,
and (2) Lender sends written notice to Borrower of such modification. Otherwise, all modifications to the Loan Documents must
be in writing and signed by both Borrower and Lender.

 

Without
limiting the generality of the foregoing, Borrower understands and agrees that the payment terms set out in the section
titled “Payment” are subject to the terms of the Act and Rules and Regulations including, without limitation,
those related to payment deferral. As of the date of this Note, Borrower 1s not required to make any payments on this Note
until the earlier of: (1) the date that the SBA remits any loan forgiveness amount to Lender (or notifies Lender that no
forgiveness is granted), or (2) ten months aft er the end of the Borrower’s Covered Period, as such term is defined
under the Act and Rules and Regulations (the “ Deadline”), if the Borrower fails to submit its application for
forgiveness by the Deadline. Given the foregoing, Borrower understands and agrees that the payment dates and amounts set out
in this Note are subject to change and, as such, may be modified as further provided in this Note.

 

The
principal and accrued interest due and owing under this Note may be partially or completely forgiven in accordance with the Act
and the Rules and Regulations. Borrow er acknowledges and agrees that any such forgiveness is specifically conditioned on Borrower’
s compliance with the Act and Rules and Regulations, including, without limitation, Borrower’s submission to Lender of the
proper forgiveness application and supporting documentation. Borrower shall remain obligated for repayment of this Note in full
until the request for loan forgiveness is approved by the SBA. Borrower acknowledges and agrees that the denial of forgiveness
with respect to any portion of the principal or interest on this Note by the SBA shall result in Borrower remaining obligated
to repay such amounts as provided in this Note. Upon forgiveness by the SBA of some or all of this Note, Lender shall recalculate
any remaining amounts of principal and interest due and owing under this Note and shall provide Borrower with a revised monthly
payment to repay such amounts over the remaining term of the Note in substantially equal payments of principal and interest. Borrower
acknowledges and agrees that no modification to this Note shall be required for Lender to recalculate the payments due and owing.

 

Borrower
releases and holds harm less Lender and its officers, directors, agents, employees, representatives, shareholders, affiliates,
successors and assigns, from and against all liability, claims, damages, costs or expenses of every kind and nature arising out
of or related to the PPP and any of Lender’ s actions or inactions up to the date hereof with respect to the making or
administration of the loan.

 

    	 

    	Loan No: 9536368504	SBA
                                         PROTECTION PROGRAM
(Continued)
	Page 2

    

 

	BORROWER:	 
	 	 	 
	SINTX TECHNOLOGIES, INC.	 
	 	 	 
	By	_____________________=___________________	 
	 	Dr.
    Bhajanjit S Bal, Chief Executive Officer of SINTX Technologies, Inc.	 
	 	 	 
	LENDER:	 
	 	 	 
	 	 	 
	FIRST STATE COMMUNITY BANK	 
	 	 	 
	X	 	 
	 	Authorized
Signer	 

 

LaNrPro,
Vo,, 20.3.10.002 Copr. Finar.11a USA Corporation 1997, 2021. All R,ghll R11orvod. • MO C:\CFI\LPI.\G60.FC TR-104803 Pll-145

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