Document:

Exhibit 4.7

 

DESCRIPTION
OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT

TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

 

As
of the date of filing of the Annual Report on Form 10-K for the year ended December 31, 2019, GI Dynamics, Inc.’s (the “Company”)
class of common stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

The
following description of the Company;s common stock is a summary and does not purport to be complete. It is subject to and qualified
in its entirety by reference to the Company’s certificate of incorporation, as amended, and the Company’s bylaws,
each of which is incorporated herein by reference as an exhibit to the Annual Report on Form 10-K filed with the Securities and
Exchange Commission, of which this Exhibit 4.7 is a part. We encourage you to read the Company’s certificate of incorporation,
bylaws and the applicable provisions of the Delaware General Corporation law for additional information.

 

Authorized
and Outstanding Capital Stock

 

As
of March 20, 2020, the Company had 75,500,000 authorized shares of capital stock, par value $0.01 per share, of which 75,000,000
were shares of common stock and 500,000 were shares of “blank check” preferred stock.

 

Common
Stock

 

The
holders of the Company’s common stock will be entitled to one vote per share. In addition, the holders of common stock will
be entitled to receive pro rata dividends, if any, declared by the Company’s board of directors out of legally available
funds; however, the Company expects that the board of directors will retain earnings, if any, for operations and growth. Upon
liquidation, dissolution or winding-up, the holders of common stock will be entitled to share ratably in all assets that are legally
available for distribution. The holders of common stock will have no preemptive, subscription, redemption or conversion rights.
The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights
of the holders of any series of preferred stock, which may be designated solely by action of the board of directors and issued
in the future.

 

Anti
- takeover Provisions 

 

As
a foreign company registered in Australia, the Company will not be subject to Chapters 6A, 6B and 6C of the Australian Corporations
Act dealing with the acquisition of shares.

 

Provisions
of the Delaware General Corporation Law, the Company’s certificate of incorporation and bylaws could make it more difficult
to acquire the Company by means of a tender offer (takeover), a proxy contest or otherwise, or to remove incumbent officers and
directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover
bids that the board of directors may consider inadequate and to encourage persons seeking to acquire control of the Company to
first negotiate with the board of directors. The Company believes that the benefits of increased protection of its ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure the Company outweigh the disadvantages
of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in
an improvement of their terms.

 

Delaware
anti-takeover statute — Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging
in a “business combination” with an “interested shareholder” for a period of three years following the
time the person became an interested shareholder, unless the business combination or the acquisition of shares that resulted in
a shareholder becoming an interested shareholder is approved in a prescribed manner. A “business combination” can
include a merger, asset or share sale or other transaction resulting in a financial benefit to an interested shareholder. Generally,
an interested shareholder is a person who, together with its affiliates and associates, owns (or within three years prior to the
determination of interested shareholder status did own) 15% or more of a corporation’s voting shares. The existence of this
provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board
of directors, including discouraging attempts that might result in a premium over the market price for the Company’s common
stock held by shareholders.

 

     

     

    

 

Classified
board — The Company’s certificate of incorporation and bylaws provide that the board of directors is divided into
three classes.

 

Directors
for each class will be eligible for re-election at our annual meeting held in the year in which the term for that class expires
and, if re-elected, will serve for a term of three years. The election of directors will be determined by a plurality of the votes
cast by the shareholders entitled to vote at the election. Under this mechanism, shareholders are effectively not provided with
the option to vote ‘against’ the proposed resolutions to re-elect directors. The two nominees receiving the highest
number of ‘for’ votes will be elected as directors. Shareholders who withhold their vote or vote against a director
being re-elected would not be counted as votes cast and have no effect on the re-election of directors.

 

Under
the classified board provisions, it would take at least two elections of directors for any individual or group to gain control
of the board of directors. Accordingly, these provisions could discourage a third party from initiating a proxy contest, making
a tender offer or otherwise attempting to gain control of us.

 

Removal
of directors — The Company’s bylaws provide that shareholders may only remove directors with cause.

 

Amendment
— The Company’s certificate of incorporation and bylaws provide that the affirmative vote of the holders of at
least a majority of the Company’s voting shares is required to amend either of these documents.

 

Size
of the Board and Board vacancies — The Company’s certificate of incorporation and bylaws provide that the number
of directors on the board of directors is to be fixed exclusively by the board of directors. Newly created directorships resulting
from any increase in the authorized number of directors or any vacancies will be filled by a majority of the remaining directors
in office, unless otherwise required by law or by resolution of the board of directors.

 

Special
shareholder meetings — The Company’s certificate of incorporation and bylaws provide that special meetings of
shareholders may be called by either a majority of the board of directors or by the holders of at least a majority of the Company’s
voting shares.

 

Requirements
for advance notification of shareholder nominations and proposals — The Company’s bylaws establish advance notice
procedures with respect to shareholder proposals and nomination of candidates for election as directors other than nominations
made by or at the direction of the board of directors or a committee of the board of directors.

 

No
cumulative voting — The Delaware General Corporation Law provides that shareholders are denied the right to cumulate
votes in the election of directors unless the Company’s certificate of incorporation provides otherwise. The Company’s
certificate of incorporation does not provide for cumulative voting.

 

Undesignated
preferred stock — The authority possessed by the board of directors (subject to the ASX Listing Rules and Delaware General
Corporation Law) to issue preferred stock could potentially be used to discourage attempts by third parties to obtain control
of the Company through a merger, tender offer, proxy contest or otherwise by making such attempts more difficult or more costly.
The board of directors may (subject to the ASX Listing Rules and Delaware General Corporation Law) issue preferred stock with
conversion rights that, if exercised, could adversely affect the voting power of the shareholders.

 

Authorized
but unissued shares — Subject to the limitations on the issue of securities under the ASX Listing Rules and Delaware
General Corporation Law, the authorized but unissued common stock and preferred stock will be available for future issue without
shareholder approval. The Company may use additional shares of common stock for a variety of purposes, including future public
offerings to raise additional capital, to fund acquisitions and as employee compensation. The existence of authorized but unissued
common stock and preferred stock could render more difficult, or discourage, an attempt to obtain control of the Company by means
of a proxy contest, tender offer, merger or otherwise.

 

    2

     

    

 

CHESS
Depositary Interests, or CDIs

 

In
order for the Company’s common stock to trade electronically on ASX, the Company participates in the electronic transfer
system known as CHESS operated by ASX Settlement.

 

CHESS
cannot be used directly for the transfer of securities of companies domiciled in certain foreign jurisdictions, such as the U.S.
Accordingly, to enable the Company’s common stock to be cleared and settled electronically through CHESS, the Company issues
depositary interests called CHESS Depositary Interests, or CDIs.

 

CDIs
confer the beneficial ownership in foreign securities such as the common stock on the CDI holder, with the legal title to such
common stock being held by an Australian depositary entity. The Company has appointed CDN, a subsidiary of ASX, to act as the
Company’s Australian depositary. Accordingly, by completing an Application Form, an Applicant will apply for shares of common
stock to be issued to CDN, which will in turn issue CDIs to the Applicant.

 

Each
CDI holder will receive a holding statement which sets out the number of CDIs held by the CDI holder and the reference number
of the holding. These holding statements will be provided to a holder when a holding is first established and where there is a
change in the holdings of CDIs.

 

The
Company operates a certificated register of common stock in the U.S. and an uncertificated issuer sponsored sub-register of CDIs
and an uncertificated CHESS sub-register of CDIs in Australia. The Company’s issuer-sponsored sub-register will be maintained
by Link Market Services Limited. The certificated register is the register of legal title (and will reflect legal ownership by
CDN of the shares of common stock underlying the CDIs) and the two uncertificated sub-registers combined will make up the register
of beneficial title of the shares of common stock underlying the CDIs.

 

A
summary of the rights and entitlements of CDI holders in the Company and CDI holders generally is set out below. Further information
about CDIs is available from ASX, any stockbroker or our share registry.

 

CDI:
Common Stock ratio

 

Each
CDI represents an interest in one-fiftieth of a share of common stock.

 

Voting

 

If
holders of CDIs wish to attend and vote at the Company’s general meetings, they will be able to do so. Under the ASX Listing
Rules, the Company, as an issuer of CDIs, must allow CDI holders to attend any meeting of the holders of shares of common stock
unless relevant U.S. law at the time of the meeting prevents CDI holders from attending those meetings.

 

In
order to vote at such meetings, CDI holders have the following options:

 

		a)	instructing
                                         CDN, as the legal owner, to vote the shares of common stock underlying their CDIs in
                                         a particular manner. A voting instruction form will be sent to CDI holders with the notice
                                         of meeting or proxy statement for the meeting and this must be completed and returned
                                         to the Company’s share registry prior to the meeting;

 

		b)	informing
                                         the Company that they wish to nominate themselves or another person to be appointed as
                                         CDN’s proxy with respect to their shares of common stock underlying the CDIs for
                                         the purposes of attending and voting at the general meeting; or

 

		c)	converting
                                         their CDIs into a holding of shares of common stock and voting these at the meeting (however,
                                         if thereafter the former CDI holder wishes to sell their investment on ASX it would be
                                         necessary to convert the shares of common stock back to CDIs). In order to vote in person,
                                         the conversion must be completed prior to the record date for the meeting. See below
                                         for further information regarding the conversion process.

 

    3

     

    

 

As
holders of CDIs will not appear on the Company’s share register as the legal holders of the shares of common stock, they
will not be entitled to vote at the Company’s shareholder meetings unless one of the above steps is undertaken. Proxy forms,
CDI voting instruction forms and details of these alternatives will be included in each notice of meeting sent to CDI holders
by the Company.

 

Converting
from a CDI holding to a direct holding of shares of Common Stock

 

CDI
holders who wish to convert their ASX listed CDIs to shares of common stock can do so by instructing the Company’s share
registry either:

 

		●	directly
                                         in the case of CDIs on the issuer sponsored sub-register operated by the Company. CDI
                                         holders will be provided with a “Notice of Transmutation” for completion
                                         and return to the Company’s share registry; or

 

		●	through
                                         their sponsoring participant (usually their broker) in the case of CDIs which are sponsored
                                         on the CHESS sub-register. In this case, the sponsoring broker will arrange for completion
                                         of the relevant form and its return to the Company’s share registry.

 

The
Company’s share registry will then arrange for the shares of common stock to be transferred from CDN into the name of that
holder and a new share certificate will be issued. This will cause the shares of common stock to be registered in the name of
the holder on the Company’s share register and trading on ASX will no longer be possible. The shares of common stock are
not and will not in the near future be quoted on any market in the U.S. Any shares so issued will bear restrictive legends in
accordance with U.S. law.

 

The
Company’s share registry will not charge an individual security holder a fee for transferring CDI holdings into shares of
common stock (although a fee will be payable by market participants). It is expected that this process will be completed within
2 days, provided that the Company’s share registry is in receipt of a duly completed and valid Notice of Transmutation.
However, no guarantee can be given about the time for this conversion to take place. If the shares of common stock are listed
on a U.S. securities exchange in the future, a fee may be payable for entering the shares of common stock into the Depository
Trust Company or Direct Registration System.

 

If
holders of the shares of common stock wish to convert their holdings to CDIs, they can do so by contacting the Company’s
share registry. The Company’s share registry will not charge a fee to a holder of shares of common stock seeking to convert
such shares to CDIs (although a fee will be payable by market participants).

 

Communication
with CDI holders

 

CDI
holders will receive all notices and company announcements (such as annual reports) that shareholders are entitled to receive
from the Company.

 

Dividends
and other shareholder entitlements

 

The
ASX Settlement Operating Rules have the force of law by virtue of the Australian Corporations Act. These rules grant CDI holders
the right to receive any dividends and other entitlements, which attach to the shares of common stock. Despite legal title to
the shares of common stock being vested in CDN, the ASX Settlement Operating Rules provide that CDI holders are to receive all
direct economic benefits and other entitlements in relation to the underlying shares of common stock (such as the right to receive
the same dividends and entitlement to participate in rights issues and bonus issues).

 

    4

     

    

 

Local
and international trading in CDIs

 

CDI
holders who wish to trade their CDIs will be transferring the beneficial interest in the shares of common stock rather than the
legal title. The transfer will be settled electronically by delivery of the relevant CDI holdings through CHESS. In other respects,
trading in CDIs is essentially the same as trading in other CHESS approved securities, such as shares in an Australian company.

 

Takeovers

 

If
a takeover bid or similar transaction is made in relation to the shares of common stock of which CDN is the registered holder,
under the ASX Settlement Operating Rules, CDN must not accept the offer made under the takeover bid except to the extent that
acceptance is authorized by the relevant CDI holder.

 

Rights
on liquidation or winding up

 

If
the Company liquidates, dissolves or winds up, a CDI holder will be entitled to the same economic benefit on their CDIs as the
Company’s shareholders.

 

Limitations
on Liability, Indemnification of Officers and Directors and Insurance

 

The
Delaware General Corporation Law authorizes corporations to limit or eliminate, subject to specified conditions, the personal
liability of directors to corporations and their shareholders for monetary damages for breach of their fiduciary duties. The Company’s
certificate of incorporation limits the liability of the Company’s directors to the fullest extent permitted by Delaware
law.

 

The
Company has obtained director and officer liability insurance to cover liabilities the Company’s directors and officers
may incur in connection with their services to the Company. The Company’s certificate of incorporation and bylaws also provide
that the Company will indemnify and advance expenses to any of its directors and officers who, by reason of the fact that he or
she is one of the Company’s officers or directors, is involved in a legal proceeding of any nature. The Company will repay
certain expenses incurred by a director or officer in connection with any civil, criminal, administrative or investigative action
or proceeding, including actions by the Company in its name. Such indemnifiable expenses include, to the maximum extent permitted
by law, attorney’s fees, judgments, fines, settlement amounts and other expenses reasonably incurred in connection with
legal proceedings. A director or officer will not receive indemnification if he or she is found not to have acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the Company’s best interests.

 

The
Company has entered into agreements to indemnify its directors to the extent permitted by law and the Company’s certificate
of incorporation and bylaws. The Company believes that these provisions and agreements are necessary to attract and retain qualified
persons as directors.

 

Such
limitation of liability and indemnification does not affect the availability of equitable remedies. In addition, the Company has
been advised that in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public
policy as expressed in the Securities Act and is therefore unenforceable. 

 

Listing

 

GI
Dynamics CDIs, each representing one-fiftieth of one share of GI Dynamics common stock after giving effect to the April 9,
2015 1:10 reverse stock split, have been listed on the ASX under the trading symbol “GID” since September 7,
2011. Prior to such time there was no public market for the Company’s securities.

 

Transfer
Agent and Registrar

 

The
Company’s transfer agent and registrar for its common stock is American Stock Transfer & Trust Company, LLC, 6201 15th
Avenue, Brooklyn, New York 11219. The Company’s registar for its CDIs is Link Market Services Limited, Level 12, 680 George
Street, Sydney NSW 2000.

 

 

5lmfa-ex101_7.htm

Exhibit 10.1

STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT (the “Agreement”) is dated of March 23, 2020 and is by and among LM Funding America, Inc., a Delaware corporation (the “Company”), and the purchaser(s) identified on the signature pages hereto (each a “Buyer” and collectively, the “Buyers”).

RECITALS

 

WHEREAS, concurrently with or following the execution of this Agreement, the Company, Hanfor (Cayman) Limited, a Cayman Island exempted company (“Hanfor”) and BZ Industrial Limited, a British Virgin Islands business company (“BZ”), have entered into a Share Exchange Agreement (as the same may be amended from time to time, the “Exchange Agreement”), providing for, among other things, a business combination pursuant to which the Company will acquire all of the share capital of Hanfor from BZ in exchange for newly issued shares of the Company (the “Acquisition,” and together with the other transactions contemplated by the Exchange Agreement, the “Transactions”);

 

WHEREAS, as a condition to its willingness to enter into the Exchange Agreement, it is required that the Company execute and deliver this Agreement; and

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D promulgated thereunder, the Company desires to offer, issue and sell to the Buyers (the “Offering”), and the Buyers, severally and not jointly, desire to purchase from the Company, shares of the Company’s common stock, par value $0.001 per share (the “Common Stock” or the “Shares”). 

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

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

	
 
	
1.
	
PURCHASE AND SALE.

 

(a)Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall issue and sell to each Buyer, and each Buyer shall, severally and not jointly, purchase from the Company, the number of Shares set forth on such Buyer’s signature page to this Agreement.

 

(b)Closing.  The closing of the purchase of the Shares by the Buyers as contemplated by this Agreement (the “Closing”) shall occur at the offices of Foley & Lardner 

 

LLP, 100 N. Tampa Street, Suite 2700, Tampa, FL 33602 or such other place as the parties may agree on the date hereof.    

 

(c)Payment of Purchase Price; Delivery of Shares.  The purchase price shall be paid, and the Shares shall be delivered, pursuant to Section 1.4 of the Exchange Agreement. At the Closing, (i) each Buyer shall pay its respective purchase price pursuant to the payment schedule set forth in Section 1.4 of the Exchange Agreement, consisting of $2.40 per share of Common Stock (the “Purchase Price”) for the number of shares of Common Stock set forth on such Buyer’s signature page to this Agreement, to the Company by wire transfer of immediately available funds in accordance with the Company’s written wire instructions and (ii) the Company shall issue and cause its transfer agent to deliver to each Buyer one or more stock certificates evidencing the aggregate number of Shares purchased by such Buyers hereunder.

 

2.BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that:

 

(a)Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder.

 

(b)No Public Sale or Distribution. Such Buyer (i) is acquiring the Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares to the public or otherwise in violation of applicable securities laws.  “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(c)Accredited Investor Status.  Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(d)Reliance on Exemptions.  Such Buyer understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Shares.

 

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(e)Information. Such Buyer and its advisors, if any, acknowledge that they have been furnished with, or provided access to, all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by such Buyer, including access via EDGAR to the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (collectively, the “Publicly Available Information”). Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of, and receive answers from, the Company concerning the offer and sale of the Shares and to obtain any additional information such Buyer has requested which is necessary to verify the accuracy of the information furnished to such Buyer concerning the Company and the offering. Such Buyer acknowledges that such Buyer is basing its decision to invest in the Shares on its own due diligence and, except as specifically set forth in this Agreement, has not relied upon any representations made by any Person. Such Buyer understands that its investment in the Shares involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.  

 

(f)No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

 

(g)Transfer or Resale. Such Buyer understands that: (i) the Shares have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to the Company, to the effect that such Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

(h)Validity; Enforcement. The execution and delivery of this Agreement by each Buyer and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action on the part of such Buyer and no further consent or authorization of such Buyer or its members (or shareholders) is required.  This Agreement has been duly executed by such Buyer and, when delivered by such Buyer in accordance with the terms hereof or thereof, will constitute the legal, valid and binding 

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obligations of such Buyer enforceable against such Buyer in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(i)No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

(j)Experience of Such Buyer. Such Buyer, 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. Such Buyer 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.

 

(k)General Solicitation. Such Buyer 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.

 

(l)Foreign Corrupt Practices. None of such Buyer or any of its subsidiaries or, to the knowledge of such Buyer, any director, officer, agent, employee or other Person acting on behalf of such Buyer or any of its subsidiaries has, in the course of its actions for, or on behalf of, such Buyer or any of its subsidiaries or affiliates (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 unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(m)Money Laundering. Such Buyer and its subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations.

 

 

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3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as disclosed in the Company’s Publicly Available Information, the Company hereby makes the following representations and warranties to the Buyers.  For purposes of this Section 3, the phrase “to the knowledge of the Company” or any phrase of similar import shall be deemed to refer to the actual knowledge the Company’s Chief Executive Officer or Chief Financial Officer, as well as any other knowledge that such individual would have possessed had such individual made reasonable inquiry with respect to the matters in question.

 

(a)Organization and Qualification. Each of the Company and each of its Subsidiaries (as defined below) are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or (iii) the authority or ability of the Company to perform any of its obligations under this Agreement. “Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns a majority of the outstanding capital stock or holds a majority of equity or similar interest of such Person or (II) controls or operates all or any material part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.” 

 

(b)Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and to issue the Shares in accordance with the terms hereof. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Company’s board of directors and (other than the Nasdaq Capital Market authorization of the additional listing of the shares of Common Stock issuable under this Agreement, and any other filings as may be required by any state securities agencies (collectively, the “Required Approvals”)), no further filing, consent or authorization is required by the Company, its board of directors or its stockholders or other governing body of the Company. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. 

 

(c)Issuance of Shares. The issuance of the Shares hereunder has been duly authorized and, upon issuance in accordance with the terms of this Agreement, will be validly 

5

 

issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Shares is exempt from registration under the 1933 Act. Upon receipt of the Shares, each Buyer will have good and marketable title to the Shares. 

 

(d)No Conflicts.  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Stock) will not (i) result in a violation of the Certificate of Incorporation (as defined below) or other organizational documents of the Company or any of its Subsidiaries, or bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, (iii) subject to the Required Approvals, result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the Nasdaq Capital Market applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, other than, in the case of clause (ii) above, such conflicts, defaults or rights that could not reasonably be expected to have a Material Adverse Effect. 

 

(e)Consents. The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the filing of the Required Approvals), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under, or contemplated by, this Agreement in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain at or prior to the applicable Closing have been obtained or effected on or prior to Closing, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings contemplated by this Agreement.

 

(f)No General Solicitation; No Placement Agent’s Fees. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other financial agent in connection with the offer or sale of the Shares.

 

(g)No Integrated Offering. None of the Company or its Subsidiaries or, to the knowledge of the Company, any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Shares under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the 

6

 

Shares to require approval of stockholders of the Company under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company or its Subsidiaries or, to the knowledge of the Company, any Person acting on their behalf will take any action or steps that would require registration of the issuance of any of the Shares under the 1933 Act or cause the offering of any of the Shares to be integrated with other offerings of securities of the Company.

 

(h)No Disqualification Events. None of the Company, nor to the knowledge of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.

 

 

	
 
	
4.
	
TRANSFER AGENT INSTRUCTIONS; LEGENDS.

 

(a)Transfer Agent Instructions.  The Company represents and warrants that no instruction other than the stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Shares, and that the Shares shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement. 

 

(b)Legends.  Each Buyer understands that the Shares have been issued pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Shares shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE 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 APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR 

7

 

(IF REQUESTED BY THE COMPANY) TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (II) RULE 144 PROMULGATED UNDER THE SECURITIES ACT. 

 

(c)Removal of Legends. Certificates evidencing Shares shall not be required to contain the legend set forth in Section 4(b) above or any other legend (i) following a sale of such Shares pursuant to a registration statement covering the resale of such Shares under the 1933 Act, (ii) following any sale of such Shares pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company) or (iii) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall use commercially reasonable efforts following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 4(c), as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program, credit the aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Shares that is free from all restrictive and other legends, registered in the name of such Buyer or its designee.

 

5.MISCELLANEOUS.

 

(a)Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State 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, 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 venue of such suit, action or proceeding is improper. 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 to such party at the address for such 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 (i) limit, or be deemed to limit, in any way any right to serve process in any manner permitted by law or (ii) operate, or shall be deemed to operate, to preclude any Buyer or the Company, as applicable, from bringing suit or taking other legal action against any Buyer or the Company, as applicable, in any other jurisdiction to collect on an obligation to such other party or to enforce a judgment or other court ruling in favor of 

8

 

such party. EACH PARTY 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 AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page 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 signature page were an original thereof.

 

(c)Headings; Gender.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

 

(d)Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(e)Entire Agreement; Amendments. This Agreement and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein, and this Agreement, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in 

9

 

the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. Provisions of this Agreement may be amended only with the written consent of the Company and each Buyer. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. 

 

(g)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 the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 

 

(h)Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including, as contemplated below, any assignee or transferee of any of the Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of each of the Buyers (which may be granted or withheld in such Buyer’s sole discretion). A Buyer may assign some or all of its rights hereunder in connection with any permitted assignment or transfer of any of its Shares without the consent of the Company, in which event such assignee or transferee (as the case may be) shall be deemed to be a Buyer hereunder with respect to such assigned rights.

 

(i)No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(j)Survival.  The representations, warranties, agreements and covenants shall survive each Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(k)Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other 

10

 

agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

(l)Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement. 

 

[signature pages follow]

 

11

 

IN WITNESS WHEREOF, the Company has caused its signature page to this Agreement to be duly executed as of the date first written above.

 

			
	
 
	
COMPANY:

	
 
	
 

	
 
	
LM FUNDING AMERICA, INC.

	
 
	
 
	
 

	
 
	
By:
	
/s/ Bruce Rodgers

	
 
	
 
	
Name:  Bruce Rodgers

	
 
	
 
	
Title:  Chief Executive Officer

 

Address and facsimile for notice:

 

 

 

 

Fax: 

 

 

(with a copy to):

 

Foley & Lardner LLP

Attn: Curt P. Creely

100 N. Tampa Street, Suite 2700

Tampa, FL 33602

 

 

 

[BUYER SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

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

 

Name of Buyer: BZ Industrial Limited

 

Signature of Authorized Signatory of Buyer: _/s/ Xueyuan Han

 

Name of Authorized Signatory: Xueyuan Han

 

Title of Authorized Signatory: Authorized Person 

 

Email Address of Authorized Signatory:_________________________________________

 

Facsimile Number of Authorized Signatory: ___ ___________________________________

 

Address for Notice to Buyer:

 

BZ Industrial Limited 

Room 2306, A19 East Third Road North

SOHO Nexus Center, Chaoyang

Beijing, China 100027

Attention: Xueyuan Han 

 

 

Address for Delivery of Shares to Buyer (if not same as address for notice):

___ __________________

 

 

 

 

Subscription Amount: $1,250,000 ($2.40 per share of Common Stock)

 

Number of shares of Common Stock Purchased: 520,833 

 

EIN Number: ___ ____________________

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