Exhibit 10.1
Convertible
Note Subscription Agreement
THIS
CONVERTIBLE NOTE SUBSCRIPTION AGREEMENT (this “Agreement”) is made on June 4, 2021,
BETWEEN
|
1.
|
Lomotif
Private Limited as the ‘Company’ (the “Company”); AND
|
|
|
|
|
2.
|
ZVV
Media Partners, LLC as the ‘Investor’ (the “Investor”)
|
(the
Company and the Investor being the “Parties” or individually a “Party”)
WHEREAS:
The
Company and ZASH Global Media and Entertainment Corp., an affiliate of the Investor (the “Investor Affiliate”), entered
into that certain Securities Purchase Agreement, dated as of February 23, 2021, together with other parties thereto (as amended, the
“SPA”), pursuant to which the Investor Affiliate is obligated to make certain cash payments to the Company in accordance
with the terms thereof.
The
Company, the Investor Affiliate and the Investor are currently negotiating and finalizing a Deed of Variation to the SPA whereby, among
other things, the Investor Affiliate will assign to the Investor, by way of novation, all of the Investor Affiliate’s rights and
benefits pursuant to the SPA.
In
connection with the SPA and in satisfaction of certain of the Investor Affiliate’s obligations thereunder, the Investor hereby
makes payment of the amount set forth in Schedule 1 (the “Principal Amount”) to the Company in cash.
In
consideration for the payment of the Principal Amount, the Company hereby issues this note (this “Note”) to the Investor
with the right to redemption or the conditional right to acquire shares in the capital of the Company under this Agreement.
NOW
IT IS HEREBY AGREED as follows:
|
1.
|
Definitions
and interpretation
|
These
terms have the following meanings.
Business
Day means a day (other than a Saturday, Sunday or public holiday) on which commercial banks are open for business in Singapore.
Companies
Act means the Companies Act (Chapter 50) of Singapore, as amended.
Exit
Event means:
|
|
(a)
|
the
sale of the whole, or substantially the whole, of the assets and undertaking of the Company or its subsidiaries in a single transaction
or a series of related transactions;
|
|
|
|
|
|
|
(b)
|
the
sale of all or substantially all the issued share capital of the Company whether in a single transaction or in a series of related
transactions;
|
|
|
|
|
|
|
(c)
|
an
initial public offering of Shares (or shares in the Company’s holding company) in conjunction with a listing or quotation of
Shares (or shares in the Company’s holding company) on a recognised stock exchange; or
|
|
|
|
|
|
|
(d)
|
any
consolidation or merger of the Company with or into any person, or any other corporate reorganization, scheme of arrangement or similar
transaction involving the Company or its subsidiaries, other than any such transaction in which holders of at least a majority, by
voting power, of the shares of the Company issued and outstanding immediately before such transaction continue to own at least a
majority, by voting power, of the shares of the surviving company issued and outstanding immediately thereafter, or any transaction
effected solely for tax purposes or to change the Company’s domicile.
|
Notwithstanding
the foregoing an Exit Event shall not include the transactions contemplated by the SPA.
Fully
Diluted means the total aggregate number of Shares in the capital of the Company which would be on issue assuming if all securities
issued by the Company convertible into or exercisable for Ordinary Shares were exercised or converted, plus any Shares reserved for issuance,
but not subject to outstanding options or other awards under any equity incentive or similar plan or arrangement of the Company, but
excluding: (a) this Note; or (b) any other convertible notes.
Insolvency
Event means the occurrence of any one or more of the following events:
|
|
(a)
|
a
resolution is passed by the Board of Directors of the Company, or an order is made by any court of competent jurisdiction in a final,
non-appealable order, for the winding up of the Company under any applicable liquidation, insolvency or bankruptcy laws;
|
|
|
|
|
|
|
(b)
|
the
Company enters into an insolvency process of any kind or an arrangement with or assignment for the benefit of its creditors generally;
|
|
|
|
|
|
|
(c)
|
a
receiver, receiver and manager, provisional liquidator, liquidator, administrator or other officer of the court, or other person
of similar function is appointed regarding all or any material assets of the Company; or
|
|
|
|
|
|
|
(d)
|
the
Company is unable to pay its debts generally as they mature.
|
Interest
Rate has the meaning given in Schedule 1, subject to clause 2(a).
Maturity
Date has the meaning given in Schedule 1, subject to clause 2(a).
Ordinary
Share means an ordinary share in the capital of the Company.
Principal
Amount has the meaning given in Schedule 1.
Qualified
Financing Round means an equity financing of the Company occurring after the Principal Amount has been fully received by the Company
at a pre-money valuation of the Company of at least US$xxx million and with total proceeds
to the Company equal to at least US$xxx million for a primary issuance of shares of the
Company, excluding amounts received pursuant to this Note and any other then outstanding convertible notes (unless a lesser amount is
agreed by the Company).
QFR
Shares means such Shares issued at the Qualified Financing Round.
Securities
has the meaning given in Clause 11.2(e).
SFA
has the meaning given in Clause 11.2(e).
Shareholders
Agreement means the shareholders agreement between the Company and its shareholders, as amended from time to time.
Shares
means a share in the capital of the Company and includes Ordinary Shares and QFR Shares.
SIAC
has the meaning given in Clause 14.2.
Termination
Date means the earlier of:
|
|
(a)
|
the
issuance of any Shares to the Investor in accordance with this Agreement; or
|
|
|
|
|
|
|
(b)
|
the
payment of all amounts due to the Investor in accordance with this Agreement.
|
Transaction
means the sale and purchase of certain shares in the share capital of the Company contemplated in the SPA.
US
Securities Act has the meaning given in Clause 11.2(e).
US$/USD
means the legal tender currency of the United States of America.
Valuation
Cap has the meaning given in Schedule 1.
Valuation
Cap Price means the price per share calculated by dividing the Valuation Cap by the number of shares of the Fully Diluted share capital
of the Company immediately prior to the Qualified Financing Round or, in connection with conversion pursuant to clause 5, immediately
prior to giving effect to such conversion of this Note.
|
2.
|
Closing
of the Transaction
|
|
|
(a)
|
In
the event that the Transaction is consummated in accordance with the terms of the SPA, this Note shall no longer be convertible into
any Shares, other than pursuant to clause 5. Effective immediately upon such closing, the conversion terms set out in clause 3 hereof
shall automatically cease to be in effect and, instead, the following terms shall apply:
|
|
|
(i)
|
the
Maturity Date shall become the seven-year anniversary date of the Closing Date (as defined in the SPA);
|
|
|
|
|
|
|
(ii)
|
the
Interest Rate shall become a simple interest rate of 2.0% per annum (which at the election of the Company may be accrued and paid
on the Maturity Date); and
|
|
|
|
|
|
|
(iii)
|
all
other terms of this Note (except for clause 3) shall continue to be in full force and effect.
|
|
|
(b)
|
In
the event that the Transaction is not consummated, this Note shall continue to be convertible into Shares in accordance with the
terms set out in clause 3 hereof.
|
|
3.
|
Qualified
Financing Round
|
|
|
(a)
|
If
there is a Qualified Financing Round on or before the Maturity Date, the outstanding balance of the Principal Amount and any unpaid
accrued interest thereon shall automatically convert in whole without any further action by the Investor into QFR Shares at a conversion
price (the “Conversion Price”) equal to the Valuation Cap Price. The issuance of the Shares pursuant to the conversion
of this Note shall be upon and subject to the same terms and conditions applicable to the QFR Shares, provided that, if the Conversion
Price is less than the price per share at which the QFR Shares are issued in the Qualified Financing Round, the Company may, solely
at its option, elect to convert this Note into shares of a newly created series of preference shares having the same rights, privileges,
preferences and restrictions as the QFR Shares other than with respect to (if applicable): (1) the per share liquidation preference
and the conversion price for purposes of price-based anti-dilution protection, which will equal the Conversion Price; and (2) the
per share dividend, which will be the same percentage of the Conversion Price as applied to determine the per share dividends of
the investors in the Qualified Financing Round relative to the purchase price paid by such investors.
|
|
|
|
|
|
|
(b)
|
The
Company must:
|
|
|
(i)
|
Within
one (1) Business Day of the issuance of the QFR Shares in accordance with clause 3(a), send to the Investor a copy of the updated
electronic register of members of the Company, reflecting the name of the Investor as the registered holder of the QFR Shares; and
|
|
|
|
|
|
|
(ii)
|
within
15 Business Days after the issuance of the QFR Shares in accordance with clause 3(a), send to the Investor a certificate for the
number of QFR Shares issued to the Investor.
|
|
|
(c)
|
Any
such QFR Shares issued in accordance with this clause 3 shall be deemed fully-paid and free from any encumbrances, and save as otherwise
provided in clause 3(a), rank pari passu with all other QFR Shares issued in the Qualified Financing Round.
|
|
|
(d)
|
In
connection with any conversion of this Note into any Shares, the Investor shall surrender this Note to the Company and deliver to
the Company any documentation reasonably required by the Company (including, in the case of a Qualified Financing Round, any financing
documents executed by the Investor in connection with such Qualified Financing Round and, if the Investor is not already a party
to the Shareholders Agreement, a duly executed deed of adherence to the Shareholders Agreement). The Company shall not be required
to issue or deliver any Shares into which this Note may convert until the Investor has surrendered this Note to the Company and delivered
to the Company any such documentation. Upon the conversion of this Note into Shares pursuant to the terms hereof, in lieu of any
fractional shares to which the Investor would otherwise be entitled, the Company shall pay the Investor cash equal to such fraction
multiplied by the price at which this Note converts.
|
If
there is an Exit Event while this Note remains outstanding, the Company shall repay the Investor in cash an amount equal to the sum of
(i) the Principal Amount then outstanding, plus (ii) a repayment premium equal to 20% of the Principal Amount then outstanding, plus
(iii) all unpaid accrued interest, and the Company shall make payment to the Investor within 10 Business Days following the closing of
the Exit Event. The Company shall provide the Investor with at least 5 Business Days’ notice prior to the closing of the Exit Event.
Any repayment pursuant to this clause in connection with an Exit Event shall be subject to any required tax withholdings, and may be
made by the Company (or any party to such Exit Event or its agent) following the Exit Event in connection with payment procedures established
in connection with such Exit Event.
In
the event that this Note remains outstanding on the Maturity Date, all unpaid interest and principal shall be due and payable upon request
of the Investor on or after the Maturity Date. Notwithstanding the foregoing, on or prior to the Maturity Date, the Investor may, by
written notice to the Company, elect to convert the outstanding Principal Amount and any accrued interest at a conversion price equal
to the Valuation Cap Price into ordinary shares of the Company; provided however, if the SPA is terminated by the Company because the
Investor Affiliate (or the Investor on its behalf or as its assignee) has not been able to raise the funds required to complete the transactions
contemplated by the SPA or the Investor Affiliate has otherwise breached its obligations under the SPA then the outstanding Principal
Amount and any accrued interest shall automatically convert at the Maturity Date at a conversion price equal to the Valuation Cap Price
into ordinary shares of the Company. Such ordinary shares issued in accordance with this clause 5 shall be deemed fully-paid and free
from any encumbrances, and rank pari passu with all other ordinary shares of the Company. The Company shall not have the right
to prepay all or any portion of this Note without the prior written consent of the Investor.
|
|
(a)
|
The
Interest Rate shall apply to the outstanding balance of the Principal Amount, from the date hereof and until such outstanding balance
of the Principal Amount is paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual
number of days elapsed.
|
|
|
|
|
|
|
(b)
|
If
a Qualified Financing Round or an Exit Event is consummated, all interest on this Note shall be deemed to have stopped accruing as
of the date of closing of the Qualified Financing Round or the Exit Event.
|
In
the event of an Insolvency Event, subject to law and subject to compliance with the Company’s constitution and Shareholders Agreement,
as applicable, at the option of and upon written notice by the Investor to the Company, this Note shall accelerate and all of the outstanding
Principal Amount and any unpaid accrued interest shall become due and payable immediately. Upon such acceleration, the claim of the Investor
for repayment shall be:
|
|
(a)
|
junior
to repayment in full of all indebtedness of the Company to banks or other lending institutions regularly engaged in the business
of lending money (excluding venture capital, investment banking or similar institutions and their affiliates, which sometimes engage
in lending activities but which are primarily engaged in investments in equity securities), unless expressly subordinated to or made
on a parity with the amounts due under this Note;
|
|
|
(b)
|
on
par with payments for other convertible notes and indebtedness of the Company; and
|
|
|
|
|
|
|
(c)
|
senior
to payments to holders of any equity securities of the Company.
|
This
Agreement will expire and terminate on the Termination Date. Termination of this Agreement does not relieve a Party of any prior breach
of this Agreement.
|
9.
|
Voting
and other rights
|
Until
Shares are issued upon conversion of this Note in accordance with this Agreement, the Investor (in its capacity as a holder of this Note)
shall have no rights as a shareholder of the Company, including any voting, dividend or any related rights in connection with this Note.
The
Company will be obligated to provide the Investor with unaudited quarterly financial statements within 30 days after the end of each
fiscal quarter and unaudited annual financial statements with 90 days after the end of each fiscal year (unless the Company’s financial
statements are audited, in which case the Company will provide the Investors the audited financial statements). In addition, the Company
will provide to the Investor a quarterly summary of business activity and other information as reasonably requested by the Investor.
|
11.1
|
The
Company’s representations
|
The
Company represents to the Investor that as at the date of this Agreement:
|
|
(a)
|
(corporate
status): the Company is a corporation duly incorporated and validly existing under the law of Singapore. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material
adverse effect on the business, assets, liabilities, financial condition, property or results of operation of the Company;
|
|
|
|
|
|
|
(b)
|
(corporate
powers): the Company has full corporate power to perform its obligations as contemplated by this Agreement;
|
|
|
|
|
|
|
(c)
|
(corporate
consents): the Company has procured any consent required for the execution and performance of this Agreement; and
|
|
|
|
|
|
|
(d)
|
(document
validity): this Agreement has been executed in compliance with the Company’s constituent documents and constitutes an unconditional,
valid and enforceable legal liability of the Company. The entry into and execution of this Agreement, and the performance by the
Company of its obligation hereunder will not (i) result in any violation of any term of its constitution and the Shareholders Agreement,
each as in effect on the date of this Agreement, (ii) be in conflict with or constitute a default under any of the foregoing and
will not result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company pursuant to the foregoing, or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority to which the Company or its properties is bound or subject.
|
|
11.2
|
Investor’s
representations
|
The
Investor represents to the Company that as at the date of this Agreement:
|
|
(a)
|
(corporate
status): the Investor is a corporation duly incorporated and validly existing under the law of the country or jurisdiction of
its incorporation or registration;
|
|
|
|
|
|
|
(b)
|
(powers):
the Investor has full power to perform its obligations under this Agreement;
|
|
|
|
|
|
|
(c)
|
(consents):
the Investor has procured any consent required for the execution and performance of this Agreement;
|
|
|
|
|
|
|
(d)
|
(document
validity): this Agreement has been executed and constitutes an unconditional, valid and enforceable legal liability of the Investor;
and
|
|
|
|
|
|
|
(e)
|
(Investor
sophistication): the Investor is an “accredited investor” as such term is defined in (i) Section 4(a) of the Securities
and Futures Act, (Chapter 289) of Singapore (“SFA”) and (ii) Rule 501 under the U.S. Securities Act of 1933 (the
“US Securities Act”). The Investor has been advised that the offering and issuance of this Note and any Shares
issuable upon conversion thereof (collectively, “Securities”) is not accompanied by a prospectus that is registered
with the Monetary Authority of Singapore and, therefore, cannot be resold unless such subsequent offer is made in compliance with
the SFA. The Investor is purchasing the Securities for its own account for investment, not as a nominee or agent, and not with a
view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business
matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such
investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for
an indefinite period of time.
|
|
|
(a)
|
A
notice must be in writing and in English.
|
|
|
|
|
|
|
(b)
|
A
notice may be given on behalf of a person by a solicitor, director or company secretary of the person.
|
|
12.2
|
Means
of giving notices
|
|
|
(a)
|
A
notice may be given to a Party at their address as set out in Schedule 1;
|
|
|
|
|
|
|
(b)
|
by
any of the following means:
|
|
|
(i)
|
delivering
it by hand or via a commercial rapid delivery courier service; or
|
|
|
|
|
|
|
(ii)
|
sending
it by email to the email address of that Party.
|
|
|
(c)
|
If
a Party notifies a change of address, then notices must be to that new address.
|
|
12.3
|
Time
notices are given
|
A
notice is regarded as received by the addressee at the following times:
|
|
(a)
|
if
delivered to the address of the addressee, at the time of delivery; and
|
|
|
|
|
|
|
(b)
|
if
sent by email, at the time the recipient receives the email in readable form.
|
|
13.
|
Additional
Acknowledgments and Agreements
|
In
consideration for the payment of the Principal Amount, the Company hereby acknowledges and agrees as follows:
|
|
(a)
|
the
Investor Affiliate’s obligation to make the Extension Payment (as defined in the SPA) has been satisfied as of the due date
therefor set forth in the SPA; and
|
|
|
(b)
|
the
condition for extension of the Long Stop Date to one hundred twenty (120) days from the signing date of the SPA has been satisfied
as of the due date therefor set forth in the SPA, and the Long Stop Date has been so extended.
|
The
Investor Affiliate shall be an express third party beneficiary to the acknowledgements and agreements made hereunder between the Company
and the Investor, and shall have the right to enforce such acknowledgements and agreements directly to the extent it may deem such enforcement
necessary or advisable to protect its rights pursuant to the SPA.
This
Agreement may only be amended or any right hereunder waived with the written consent of the Company and the Investor.
|
14.2
|
Governing
Law; Dispute Resolution
|
This
Agreement shall be governed by, and construed in accordance with, the laws of Singapore, without giving effect to any principles of the
conflict of laws thereof. Any dispute, whether contractual or not, arising out of or in connection with these Note Conditions (including
any question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration in Singapore
in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC”) for the time being
in force, which rules are deemed to be incorporated by reference in this Condition. The seat of the arbitration shall be Singapore. The
arbitration tribunal shall consist of three (3) arbitrators, one each appointed by the Company and the Investor, respectively, and the
third appointed by the President of the Court of Arbitration for the time being of the SIAC. The language of the arbitration shall be
English. The arbitral award made and granted by the arbitration tribunal shall be final, binding and incontestable, may be enforced by
a Party against the assets of the other Party wherever those assets are located or may be found and may be used as a basis for judgement
thereon in Singapore or elsewhere.
A
waiver of a right or remedy under this Agreement must be in writing. Failure to exercise or a delay in exercising a right or remedy does
not operate as a waiver.
Any
term of this Agreement which is void or unenforceable is severed to the extent that it is void or unenforceable without affecting the
remainder of this Agreement.
The
Company will, at its own expense, do all things necessary (including executing documents) to give effect to this Agreement and the matters
contemplated by it. The Investor agrees and covenants that at any time and from time to time the Investor will promptly execute and deliver
to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to
carry out the full intent and purpose of this Note and to comply with any applicable securities laws or other regulatory approvals.
Neither
Party may assign, transfer or in any other manner deal with its rights under this Agreement without the prior written agreement of the
other Party. Notwithstanding the foregoing, the Investor may assign the rights (or part of the rights) under this Agreement to its related
corporation (within the meaning of the Companies Act) upon written notice to the Company.
The
Company and the Investor shall each bear their own costs and expenses associated with the negotiation and execution of this Agreement.
|
14.8
|
No
third-party rights
|
Except
as set forth in Clause 13, a person who is not party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act
(Chapter 53B of Singapore).
This
Agreement may be signed in any number of counterparts and by the Parties on separate counterparts, each of which, when so executed, shall
be an original, but all counterparts shall together constitute one and the same document. Signatures may be exchanged by e-mail, with
original signatures to follow. Each Party agrees to be bound by its own electronic signature and that it accepts the electronic signature
of the other Party.
[Signature
page follows]
The
Parties have executed this Convertible Note Subscription Agreement as of the date first written above.
|
|
COMPANY:
|
|
|
|
|
|
|
Lomotif
Private Limited
|
|
|
|
|
|
|
By:
/
|
|
|
|
|
|
|
|
Name:
|
Paul
Yang Zhiwen
|
|
|
Title:
|
Director
|
|
|
INVESTOR:
|
|
|
|
|
|
|
ZVV Media Partners, LLC
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
Acknowledged
and Agreed:
|
INVESTOR AFFILIATE:
|
|
|
|
|
|
|
ZASH Global Media and Entertainment
Corp.
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
[Signature
Page to the Convertible Note]
Schedule
1
