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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 6, 2024
PERFECT
MOMENT LTD.
(Exact
name of registrant as specified in its charter)
| Delaware |
|
001-41930 |
|
86-1437114 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
244
5th Ave
Ste 1219
New
York, NY 10001
(Address
of principal executive offices, with zip code)
315-615-6156
(Registrant’s
telephone number, including area code)
(Former name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2.):
| ☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| ☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Common
Stock, par value $0.0001 per share |
|
PMNT |
|
NYSE
American LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405)
or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item
1.01 Entry into a Material Definitive Agreement.
On
December 6, 2024, Perfect Moment Ltd. (the “Company”) entered into Convertible Secured Note Purchase Agreement (the
“Note Purchase Agreement”) with an accredited investor (the “Investor”). In connection with the Note Purchase
Agreement, the Company issued a Convertible Secured Promissory Note (the “Note”) to the Investor in a principal amount of
$2,000,000. Interest on the Note will accrue on the outstanding principal balance at an annual rate equal to 15%, payable semi-annually
in cash. The Note matures on December 6, 2025. The Note is secured by a security interest in favor of the Investor in all tangible
and intangible personal property of the Company. The Note is convertible into shares of common stock at a conversion price
of $1.00 per share. The Note may not be converted by the Investor into shares of common stock if
such conversion would result in the Investor and its affiliates owning in excess of 4.99% of the number of shares of the common stock
outstanding immediately after giving effect to the issuance of all shares issuable upon conversion of the Note. The Note provides for
certain events of default, including, among other things, the Company’s failure to pay to the Investor any amount of principal,
interest, or other amounts when and as due under this Note within five trading days after such payment is due.
The
foregoing descriptions of the Note Purchase Agreement and Note do not purport to be complete and are qualified in their entirety by the
terms and conditions of the Note Purchase Agreement and Note filed as Exhibit 10.1 and Exhibit 10.2, respectively, hereto and incorporated
by reference herein.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
disclosures under Item 1.01 are incorporated here by reference.
Item
3.02 Unregistered Sales of Equity Securities.
The
disclosures under Item 1.01 are incorporated here by reference.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
| |
PERFECT
MOMENT LTD. |
| |
|
|
| Date:
December 12, 2024 |
By: |
/s/
Jeff Clayborne |
| |
|
Jeff
Clayborne |
| |
|
Chief
Financial Officer |
Exhibit
10.1
CONVERTIBLE
SECURED NOTE PURCHASE AGREEMENT
THIS
CONVERTIBLE SECURED Note Purchase Agreement (this “Agreement”) is made
as of December 6, 2024 (the “Effective Date”) by and between Perfect Moment Ltd., a Delaware corporation (the
“Company”), and __________ (the “Investor” together with the Company the “Parties”)
RECITALS
A.
The Parties are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities
Act.
B.
The Company wishes to sell to the Investor, and Investor wishes to purchase, a convertible secured promissory note in the principal amount
of $2.0 million in the form attached to this Agreement as Exhibit A (the “Note”).
NOW
THEREFORE, in consideration of the foregoing recitals and the mutual promises hereafter set forth, the parties hereby agree as follows:
1.
Purchase and Sale of the Note.
Subject to the terms and conditions of this Agreement, the Company agrees to sell to the Investor, and the Investor agrees to
purchase from the Company, the Note. The Note shall be convertible into capital stock of the Company pursuant to the terms and conditions
specified therein
2.
Closing. The purchase and sale of the Note will take place a closing (the “Closing”) virtually, at the offices
of Manatt, Phelps & Phillips, LLP, 695 Town Center Drive, 14th Floor, Costa Mesa, California 92626 or such other location as the
Parties may designate. Concurrent with the Closing, the Investor will deliver to the Company $2.0 Million Dollars ($2,000,000.00) in
the aggregate, by wire transfer of immediately available funds to the Company, and the Company will deliver to the Investor the Note.
3.
Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that the statements
in the following paragraphs of this Section 3 are true as of the date hereof and shall be true and complete as of the Closing:
3.1
Organization, Good Standing and Qualification. The Company is a corporation duly formed, validly existing in good standing under
the laws of the State of Delaware. The Company has the power and authority to own and operate its properties and assets and to carry
on its business as currently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to
do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Company or its business.
3.2
Due Authorization. All action on the part of the Company’s shareholders necessary for the authorization, execution, delivery
of, and the performance of all obligations of the Company hereunder has been taken or will be taken prior to the Closing, and this Agreement,
when executed and delivered, will constitute a valid and legally binding obligation of the Company, enforceable in accordance with its
terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating
to or affecting the enforcement of creditors’ rights generally, and (ii) the effect of rules of law governing the availability
of equitable remedies.
3.3
Power. The Company has the power and authority to execute and deliver the Agreement, and to issue the Note to be purchased by
the Investor hereunder and to carry out and perform all its obligations hereunder.
3.4
Valid Issuance.
(a)
The Note and the Conversion Shares (together, the “Securities”) when respectively issued, sold and delivered in accordance
with the terms of this Agreement for the consideration provided for herein and therein, will be duly and validly issued, fully paid and
nonassessable.
(b)
Based in part on the representations made by the Investor in Section 4 hereof, the offer and sale of the Note to the Investor
in accordance with this Agreement is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the “Securities Act”) and the securities registration and qualification requirements of the currently
effective provisions of the securities laws of the states in which the Investor is a resident based upon its address on the signature
page hereto.
3.5
Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration
or filing with, any federal, state, local or provincial governmental authority on the part of the Company is required in connection with
the consummation of the transaction contemplated by this Agreement, except for certain state- required blue sky filings and the filing
pursuant to Regulation D.
3.6
Litigation. There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened
against the Company that would reasonably be expected to result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership
of the Company or that questions the validity of this Agreement, the right of the Company to enter into this Agreement, or to consummate
the transactions contemplated hereby or thereby, nor is the Company aware that there is any basis for any of the foregoing.
4.
Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company that:
4.1
Authorization. This Agreement constitutes the Investor’s valid and legally binding obligation, enforceable in accordance
with its terms except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies. The Investor represents that it has full power and authority to enter into this Agreement.
4.2
Purchase for Own Account. The Securities will be acquired for investment for the Investor’s own account, not as a nominee
or agent, and not with a view to the public resale or distribution thereof within the meaning of the Securities Act, and the Investor
has no present intention of selling, granting any participation in, or otherwise distributing the same.
4.3
No Solicitation. At no time was the Investor presented with or solicited by any publicly issued or circulated newspaper, mail,
radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Securities.
4.4
Disclosure of Information. The Investor has received or has had full access to all the information it considers necessary or appropriate
to make an informed investment decision with respect to the Securities. The Investor further has had an opportunity to ask questions
of and receive answers from the Company regarding the terms and conditions of the offering of the Securities and to obtain additional
information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary
to verify any information furnished to the Investor or to which the Investor had access. Notwithstanding the foregoing, the Investor
shall rely exclusively on the representations and warranties made by the Company in Section 3 for purposes of liability.
4.5
Investment Experience. The Investor understands that the purchase of the Securities involves substantial risk. The Investor (i)
has experience as an investor in securities of companies in the development stage and acknowledges that the Investor is able to fend
for itself, can bear the economic risk of the Investor’s investment in the Securities and has such knowledge and experience in
financial or business matters that the Investor is capable of evaluating the merits and risks of this investment in the Securities and
protecting its own interests in connection with this investment, or (ii) has a preexisting personal or business relationship with the
Company and certain of its officers, directors or controlling persons of a nature and duration that enables the Investor to be aware
of the character, business acumen and financial circumstances of such persons.
4.6
Accredited Investor Status. The Investor is an “accredited investor” within the meaning of Regulation D.
4.7
Restricted Securities. The Investor understands that the Securities are characterized as “restricted securities” under
the Securities Act and Rule 144 promulgated thereunder since they are being acquired from the Company in a transaction not involving
a public offering, and that under the Securities Act and applicable regulations thereunder the Securities may be resold without registration
under the Securities Act only in certain limited circumstances. Furthermore, the Investor is familiar with Rule 144, as presently in
effect, and understands the limitations imposed thereby and by the Securities Act on resale of the Securities without such registration.
4.8
Legends. The Investor understands and agrees that the Note and the certificates evidencing the Conversion Shares will bear legends
substantially similar to those set forth below in addition to any other legend that may be required by applicable law:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTOR SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The
legend set forth above shall be removed by the Company from any certificate evidencing the Securities upon delivery to the Company of
an opinion of counsel, reasonably satisfactory to the Company, that either (i) a registration statement under the Securities Act is at
that time in effect with respect to the legended security, or (ii) such security can be freely transferred in a public sale (other than
pursuant to Rule 144 or Rule 145 under the Securities Act) without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to which the Company issued the Securities.
5.
Conditions to Closing.
5.1
Conditions to Investor’s Obligations. The obligations of the Investor under Section 2 of this Agreement are subject
to the fulfillment or waiver, on or before the Closing, of each of the following conditions:
(a)
Each of the representations and warranties of the Company contained in Section 3 shall be true and correct on and as of each Closing
with the same effect as though such representations and warranties had been made on and as of the date of such Closing (except for representations
and warranties that speak as of a particular date, which shall be true and correct on such date);
(b)
The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by it on or before each Closing and shall have obtained all approvals, consents and qualifications necessary
to complete the purchase and sale described herein; and
(c)
All proceedings in connection with the transactions contemplated at each Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Investor, and the Investor shall have received all such counterpart original and certified
or other copies of such documents as they may reasonably request.
5.2
Condition to Company’s Obligations. The obligations of the Company to the Investor under this Agreement are subject to the
fulfillment or waiver on or before the Closing of the following conditions:
(a)
Each of the representations and warranties of the Investor contained in Section 4 shall be true and correct on the date of the
Closing; and
(b)
The Investor shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by it on or before the Closing.
6.
General Provisions.
6.1
Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
6.2
Governing Law. This Agreement shall be governed by and construed under the internal laws of the State of Delaware, without reference
to principles of conflict of laws or choice of laws.
6.3
Counterparts; Originals. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This Agreement may be executed and delivered by pdf or facsimile
and upon such delivery the pdf or facsimile signature, as the case may be, will be deemed to have the same effect as if the original
signature had been delivered to the other parties. The original signature copy shall be delivered to the other party(ies) by express
delivery; however, the failure to deliver the original signature copy or the non-receipt of the original signature copy shall have no
effect upon the binding and enforceable nature of this Agreement.
6.4
Headings; Interpretation. In this Agreement, (i) the meaning of defined terms shall be equally applicable to both the singular
and plural forms of the terms defined; (ii) the captions and headings are used only for convenience and are not to be considered in construing
or interpreting this Agreement; and (iii) the words “including,” “includes” and “include” shall be
deemed to be followed by the words “without limitation”. All references in this Agreement to sections, paragraphs, exhibits
and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
6.5
Notices. Unless otherwise provided herein, any notice required or permitted under this Agreement shall be given in writing and
shall be deemed effectively given (i) at the time of personal delivery, if delivery is in person; (ii) one (1) business day after deposit
with an express overnight courier for United States deliveries, or three (3) business days after such deposit for deliveries outside
of the United States, with proof of delivery from the courier requested; or (iii) four (4) business days after deposit in the United
States mail by certified mail (return receipt requested) for United States deliveries when addressed to the Investor to be notified at
the address indicated on Schedule A attached hereto or, in the case of the Company, at the Company’s principal executive
offices or at such other address as any respective party may designate by giving ten (10) days’ advance written notice to all other
parties in accordance with the provisions of this Section.
6.6
No Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s or broker’s
fee or commission in connection with this transaction. The Investor agrees to indemnify and to hold harmless the Company from any liability
for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability) for which the
Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless
the Investor from any liability for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted
liability) for which the Company or any of its officers, employees or representatives is responsible.
6.7
Indemnity; Costs, Expenses and Attorneys’ Fees. Each party shall indemnify and hold each other party hereto harmless from
any loss, cost, liability and legal or other expense, including attorneys’ fees of such party’s counsel, which such party
may directly or indirectly suffer or incur by reason of any breach of a representation or warranty on the part of a party or a party’s
failure to perform any of its obligations under this Agreement or any agreement executed in connection herewith or therewith, provided,
however, the indemnity agreement contained in this section shall not apply to liabilities which a party may directly or indirectly suffer
or incur by reason of such party’s own gross negligence or willful misconduct.
6.8
Amendments and Waivers. Any term of this Agreement or the Note may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent
of the Company and the Investor. Any amendment or waiver effected in accordance with this Section 6.8 shall be binding upon each
holder of the Note outstanding at the time, each future holder thereof, the Company, and any other person claiming a right under this
Agreement.
6.9
Severability. If one or more provisions of this Agreement is (are) held to be unenforceable under applicable law, such provision(s)
shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded
and shall be enforceable in accordance with its terms.
6.10
Entire Agreement. This Agreement, together with all exhibits and schedules hereto, constitutes the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes, merges, and voids any and all prior negotiations, correspondence,
agreements, understandings duties or obligations between the parties with respect to such subject matter.
6.11
Further Assurances. From and after the date of this Agreement, upon the request of the Investor or the Company, the Company and
the Investor shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm,
carry out and to fully effectuate the intent and purposes of this Agreement.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| COMPANY: |
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| PERFECT MOMENT LTD. |
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| Name: |
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| Title: |
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| INVESTOR |
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EXHIBIT
A
FORM
OF CONVERTIBLE SECURED PROMISSORY NOTE
Exhibit
10.2
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
perfect
moment ltd.
convertible
secured promissory note
Original Principal Amount: $2,000,000
Issuance
Date: December 6, 2024
Note
No. 1
FOR
VALUE RECEIVED, PERFECT MOMENT LTD., an entity organized under the laws of the State of Delaware (the “Company”),
hereby promises to pay to the order of _________________, or its registered assigns (the “Holder”), the amount set
out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to repayment, conversion or otherwise, the
“Principal”) when due, and to pay interest (“Interest”) on any outstanding Principal at the applicable
Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until the
same becomes due and payable, whether upon the Maturity Date or acceleration, conversion or otherwise (in each case in accordance with
the terms hereof). Certain capitalized terms used herein are defined in Section (8). The Issuance Date is the date of the first
issuance of this Convertible Secured Promissory Note (the “Note”) regardless of the number of transfers and regardless
of the number of instruments, which may be issued to evidence such Note.
(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 December 6, 2025, as may be extended at the option of the Holder.
(b)
Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal
to 15% (“Interest Rate”), payable semi-annually in cash. Interest shall be calculated based on a 365-day year and
the actual number of days elapsed, to the extent permitted by applicable law.
(c)
Required Prepayment Prior to Maturity Date. The Company intends to effect an offering of up to $10.0 million of its preferred
stock stock and warrants further to Regulation A+ (the “Offering”). The Company agrees that 33% of all net proceeds received
from the Offering after the first $2.0 million in net proceeds shall be used to repay outstanding amounts under this Note.
(d)
Payment Dates. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(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
within five (5) Trading 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, any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty
one (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 all or substantially all 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 of all or
substantially all of its assets 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 Company or any Subsidiary of the Company shall default, in any of its obligations under any debenture, mortgage, credit agreement
or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may
be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the
Company or any Subsidiary of the Company in an amount exceeding $500,000, other than any such defaults in existence on the Issuance Date,
whether such indebtedness now exists or shall hereafter be created and such default is not cured within the time prescribed by the documents
governing such indebtedness or if no time is prescribed, within ten (10) Trading Days, and as a result, such indebtedness becomes or
is declared due and payable;
(iv)
The Common Shares shall cease to be quoted or listed for trading, as applicable, on any Primary Market for a period of ten (10) consecutive
Trading Days;
(v)
The Company or any Subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section (8))
unless in connection with such Change of Control Transaction this Note is retired;
(vi)
The Company’s (A) failure to deliver the required number of Common Shares to the Holder within three (3) Trading Days after the
applicable Share Delivery Date or (B) notice, written or oral, to any holder of the Note, including by way of public announcement, at
any time, of its intention not to comply with a request for conversion of any Note into Common Shares that is tendered in accordance
with the provisions of the Note;
(vii)
The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within five (5) Business
Days after such payment is due;
(viii)
The Company’s failure to timely file with the Commission any Periodic Report on or before the due date of such filing as established
by the Commission, it being understood, for the avoidance of doubt, that due date includes any permitted filing deadline extension under
Rule 12b-25 under the Exchange Act; or
(ix)
The Company shall fail to observe or perform any 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), which is not cured or remedied within the time prescribed or if no time is prescribed within ten (10) Business Days.
(b)
During the time that any portion of this Note is outstanding, if any Event of Default has occurred (other than an event with respect
to the Company described in Section (2)(a)(ii)), 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 given by notice pursuant to
Section (6), immediately due and payable in cash; provided that, in the case of any event with respect to the Company described
in Section (2)(a)(ii), the full unpaid Principal amount of this Note, together with interest and other amounts owing in respect
thereof to the date of acceleration, shall automatically become due and payable, in each case without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company. Furthermore, in addition to any other remedies, the Holder shall
have the right (but not the obligation) to convert, on one or more occasions all or part of the Note in accordance with Section (3)
(and subject to the limitations set out in Section (3)(c)(i) and Section (3)(c)(ii)) at any time after (x) an Event of Default
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 the Holder in writing 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)
CONVERSION OF NOTE. This Note shall be convertible into shares of the Company’s Common Shares, on the terms and conditions
set forth in this Section (3).
(a)
Conversion Right. Subject to the limitations of Section (3)(c), 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 into fully paid and nonassessable Common Shares
in accordance with Section (3)(b), at the Conversion Price. The number of Common Shares issuable upon conversion of any Conversion
Amount pursuant to this Section (3)(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price. The
Company shall not issue any fraction of a share of Common Shares upon any conversion. All calculations under this Section (3) shall
be rounded to the nearest $0.001. If the issuance would result in the issuance of a fraction of a share of Common Shares, the Company
shall round such fraction of a share of Common Shares up to the nearest whole share. The Company shall pay any and all transfer, stamp
and similar taxes that may be payable with respect to the issuance and delivery of Common Shares upon conversion of any Conversion Amount.
(b)
Mechanics of Conversion.
(i)
Optional Conversion. To convert any Conversion Amount into Common Shares 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 I (the “Conversion Notice”)
to the Company and (B) if required by Section (3)(b)(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 (3rd) Trading 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
certificates of Common Shares and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”)
Fast Automated Securities Transfer Program, credit such aggregate number of Common Shares to which the Holder shall be entitled to the
Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and 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 Common Shares to which
the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to rules and regulations
of the Commission. 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
three (3) 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 the Common Shares issuable upon a conversion of this Note
shall be treated for all purposes as the record holder or holders of such Common Shares upon the transmission of a Conversion Notice.
(ii)
Company’s Failure to Timely Convert. If within three (3) Trading Days after the Company’s receipt of an email copy
of a Conversion Notice 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 Common Shares to which the Holder is entitled upon such holder’s conversion of any Conversion Amount
(a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction
or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Common Shares issuable upon such conversion that the
Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days
after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the Common Shares so purchased (the
“Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common
Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such
Common Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number
of Common Shares, times (B) the Closing Price on the Conversion Date.
(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.
(c)
Limitations on Conversions.
(i)
Beneficial Ownership. The Holder shall not have the right to convert any portion of this Note to the extent that after giving
effect to such conversion, 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% (which may be increased to 9.99% at Holder’s
sole discretion) of the number of Common Shares outstanding immediately after giving effect to such conversion or receipt of shares as
payment of interest. Since the Holder will not be obligated to report to the Company the number of Common Shares it may hold at the time
of a conversion hereunder, unless the conversion at issue would result in the issuance of Common Shares in excess of 4.99% (or 9.99%
at Holder’s sole discretion) of the then outstanding Common Shares without regard to any other 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. If the Holder has delivered a Conversion Notice for a Principal amount of this Note that,
without regard to any other 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 prior notice to the Company. Other Holders shall be unaffected
by any such waiver.
(ii)
Principal Market Limitation. Notwithstanding anything in this Note to the contrary, the Company shall not issue any Common Shares
upon conversion of this Note, or otherwise, if the issuance of such Common Shares would exceed the aggregate number Common Shares that
the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of the NYSE
American (the “NYSE”) and shall be referred to as the “Exchange Cap,” except that such limitation
shall not apply if the Company’s stockholders have approved such issuances on such terms in excess of the Exchange Cap in accordance
with the rules of the NYSE.
(d)
Other Provisions.
(i)
All calculations under this Section (3) shall be rounded to the nearest $0.001 or whole share.
(ii)
So long as this Note remains outstanding, the Company shall have reserved from its duly authorized share capital, and shall have instructed
its transfer agent to irrevocably reserve, the maximum number of Common Shares issuable upon conversion of this Note (the “Required
Reserve Amount”), provided that at no time shall the number of Common Shares reserved pursuant to this Section (3)(d)(ii)
be reduced other than proportionally with respect to all Common Shares in connection with any conversion (other than pursuant to the
conversion of this Note in accordance with their terms) and/or cancellation, or reverse stock split. If at any time the number of Common
Shares authorized but unissued and not otherwise reserved for issuance (including (i) in relation to equity or debt securities convertible
into or exchangeable or exercisable for or that can be settled in Common Shares (other than the Note) and (ii) Common Shares remaining
available for issuance under the Company’s equity incentive plans) is not sufficient to meet the Required Reserve Amount, the Company
will promptly take all corporate action necessary to propose to its general meeting of shareholders an increase of its authorized share
capital necessary to meet the Company’s obligations pursuant to this Note, recommending that shareholders vote in favor of such
an increase. If at any time the number of Common Shares that remain available for issuance under the Exchange Cap is less than 100% of
the maximum number of shares issuable upon conversion of the Note then outstanding (assuming for purposes hereof that (x) the Note is
convertible at the Conversion Price then in effect, and (y) any such conversion shall not take into account any limitations on the conversion
of the Note, the Company will use commercially reasonable efforts to promptly call and hold a shareholder meeting for the purpose of
seeking the approval of its shareholders as required by the applicable rules of the Principal Market, for issuances of shares in excess
of the Exchange Cap. The Company covenants that, upon issuance in accordance with conversion of this Note in accordance with its terms,
the Common Shares, when issued, will be validly issued, fully paid and nonassessable.
(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 Common 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.
(iv)
Legal Opinions. The Company is obligated to cause its legal counsel to deliver legal opinions to the Company’s transfer
agent in connection with any legend removal upon the expiration of any holding period or other requirement for which the Underlying Shares
may bear legends restricting the transfer thereof. To the extent that a legal opinion is not provided (either timely or at all), then,
in addition to being an Event of Default hereunder, the Company agrees to reimburse the Holder for all reasonable costs incurred by the
Holder in connection with any legal opinions paid for by the Holder in connection with sale or transfer of Underlying Common Shares.
The Holder shall notify the Company of any such costs and expenses it incurs that are referred to in this section from time to time and
all amounts owed hereunder shall be paid by the Company with reasonable promptness.
(e)
Adjustment of Conversion Price upon Subdivision or Combination of Common Shares. 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 shares of its Common Shares or any other
equity or equity equivalent securities payable in Common Shares, (b) subdivide outstanding Common Shares into a larger number of shares,
(c) combine (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, or (d) issue by reclassification
of Common Shares any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding before such event and of which the denominator
shall be the number of Common Shares outstanding after such event. 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.
(f)
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 Common Shares are entitled to receive securities or other assets with respect to
or in exchange for Common Shares (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 Common Shares receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with
respect to such Common Shares had such Common 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 Common Shares otherwise receivable
upon such conversion, such securities or other assets received by the holders of Common Shares 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 Common Shares) at a conversion rate for such consideration commensurate with
the Conversion Price. 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.
(g)
Whenever the Conversion Price is adjusted pursuant to Section (3) hereof, the Company shall promptly provide the Holder with a written
notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(h)
In case of any (1) merger or consolidation of the Company or any Subsidiary of the Company with or into another Person, 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,
a Holder shall have the right to (A) exercise any rights under Section (2)(a)(ix), (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 of
Common Shares 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 Common Shares 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 Note was issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred
stock or convertible debentures shall be based upon the amount of securities, cash and property that each Common Shares 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.
(4)
GRANT OF SECURITY INTEREST. The Company hereby grants to the Holder a valid, continuing security interest in all of the personal
property of the Company including the following, in each case whether now or hereafter existing, whether tangible or intangible, whether
now owned or hereafter acquired and wherever the same may be located (together with clause (a), the “Collateral”):
(i) all Accounts; (ii) all Chattel Paper; (iii) all Money and all Deposit Accounts, together with all amounts on deposit from time to
time in such Deposit Accounts; (iv) all Documents; (v) all General Intangibles (including patents, trademarks, service marks, copyrights,
and other intellectual property), Payment Intangibles and Software; (vii) all Goods, including Inventory, Equipment, Vehicles (including
title documents with respect to Vehicles) and Fixtures; (viii) all Instruments and all Contracts (together with all Contract Rights and
including all leases of personal property); (ix) all Investment Property; (x) all letters of credit, Letter-of-Credit Rights and other
Supporting Obligations; (xi) all Records; (xii) all Commercial Tort Claims, if any; and (xiii) all Proceeds and Accessions with respect
to any of the foregoing Collateral (including any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Company
from time to time with respect to any of the foregoing). Capitalized terms used in the foregoing clauses (b)(i)-(xiii) and not defined
herein shall have the meaning set forth in Articles 1, 8 or 9 of the Uniform Commercial Code. The security interest described in the
foregoing clauses (a) and (b) is granted in order to secure prompt, full, faithful and timely payment and performance of the obligations
under this Note, including without limitation, all accrued and unpaid interest owing hereunder and any other obligations arising hereunder.
The Company hereby authorizes the Holder to file one or more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral (including any financing statement indicating that it covers “all assets” or “all
personal property” of the Company). Upon the payment in full of the total outstanding principal and accrued interest under this
Note or conversion into equity, (A) the security interest described herein shall be extinguished and cancelled in full, and be of no
further force or effect, (B) Holder shall execute all documents and take all actions reasonably necessary requested by the Company in
connection therewith, and (C) the Company shall be permitted to file any required termination statements to terminate any financing or
continuation statements, and amendments thereto, filed by Holder in connection with this Note.
(5)
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with Section (5)(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 (5)(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 (3)(b)(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 (5)(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 (5)(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 hereof, 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)(a) or Section (5)(c), the Principal designated by the Holder
which, when added to the Principal represented by the other new Note issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Note), (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.
(6)
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: |
Perfect
Moment Ltd. |
|
244
5th Ave., Suite 1219
New
York, NY 10001 |
|
Attn:
Email: |
|
|
with
a copy (which shall not constitute notice) to:
|
Manatt,
Phelps & Phillips, LLP
695
Town Center Drive, 14th Floor
Costa
Mesa, CA 92626
Attn:
Thomas J. Poletti, Esq.
E-mail: tpoletti@manatt.com
|
| |
|
| If
to the Holder: |
|
| |
|
| |
Attention: |
| |
Email: |
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.
(7)
CHOICE OF LAW; WAIVER OF JURY TRIAL
(a)
Governing Law. This Note and the rights and obligations of the Parties hereunder shall, in all respects, be governed by, and construed
in accordance with, the laws (excluding the principles of conflict of laws) of the State of Delaware (including all matters of construction,
validity and performance.
(b)
THE PARTIES MUTUALLY WAIVE ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS OF ANY KIND ARISING OUT OF OR BASED UPON THIS NOTE OR ANY MATTER
RELATING TO THIS NOTE. THE PARTIES ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT THE PARTIES EACH MAKE THIS WAIVER VOLUNTARILY
AND KNOWINGLY AFTER CONSULTATION WITH COUNSEL OF THEIR RESPECTIVE CHOICE. THE PARTIES AGREE THAT ALL SUCH CLAIMS SHALL BE TRIED BEFORE
A JUDGE OF A COURT HAVING JURISDICTION, WITHOUT A JURY.
(c)
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.
(d)
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.
(e)
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.
(8)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
“Bloomberg” means Bloomberg Financial Markets.
(b)
“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.
(c)
“Buy-In” shall have the meaning set forth in Section (3)(b)(ii).
(d)
“Buy-In Price” shall have the meaning set forth in Section (3)(b)(ii).
(e)
“Calendar Month” means one of the months as named in the calendar.
(f)
“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 power 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.
(g)
“Closing Price” means the price per share in the last reported trade of the Common Shares on a Primary Market or on
the exchange which the Common Shares are then listed as quoted by Bloomberg.
(h)
“Commission” means the Securities and Exchange Commission.
(i)
“Common Shares” means the shares of common stock, par value $0.001, of the Company and stock of any other class into
which such shares may hereafter be changed or reclassified.
(j)
“Conversion Amount” means the portion of the Principal, Interest, or other amounts outstanding under this Note to
be converted, redeemed or otherwise with respect to which this determination is being made.
(k)
“Conversion Date” shall have the meaning set forth in Section (3)(b)(i).
(l)
“Conversion Failure” shall have the meaning set forth in Section (3)(b)(ii).
(m)
“Conversion Notice” shall have the meaning set forth in Section (3)(b)(i).
(n)
“Conversion Price” means $1.00. The Conversion Price shall be adjusted from time to time pursuant to the other terms
and conditions of this Note.
(o)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(p)
“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 Common Shares are permitted to tender or exchange their shares for other securities,
cash or property, or (4) the Company effects any reclassification of the Common Shares or any compulsory share exchange pursuant to which
the Common Shares is effectively converted into or exchanged for other securities, cash or property.
(q)
“Periodic Reports” shall mean the Company’s (i) Annual Report on Form 10-K for the fiscal year ending March
31, 2025, (ii) any current report to be filed on Form 10-Q and (iii) all other reports required to be filed by the Company with the Commission
under applicable laws and regulations (including, without limitation, Regulation S-K) for so long as any amounts are outstanding under
this Note or any Other Note; provided that all such Periodic Reports shall include, when filed, all information, financial statements,
audit reports (when applicable) and other information required to be included in such Periodic Reports in compliance with all applicable
laws and regulations.
(r)
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government
or political subdivision thereof or a governmental agency.
(s)
“Primary Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq
Global Market or the Nasdaq Global Select Market, and any successor to any of the foregoing markets or exchanges.
(t)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(u)
“Share Delivery Date” shall have the meaning set forth in Section (3)(b)(i).
(v)
“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity
of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such
Person; or (iii) one or more Subsidiaries of such Person.
(w)
“Trading Day” means a day on which the Common Shares are quoted or traded on a Primary Market on which the Common
Shares are then quoted or listed; provided, that in the event that the Common Shares are not listed or quoted, then Trading Day shall
mean a Business Day.
(x)
“Underlying Shares” means the Common Shares issuable upon conversion of this Note or as payment of interest in accordance
with the terms hereof.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Convertible Secured Promissory Note to be duly executed by a duly authorized officer
as of the date set forth above.
| |
COMPANY:
|
| |
|
| |
PERFECT MOMENT LTD. |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
EXHIBIT
I
CONVERSION
NOTICE
(To
be executed by the Holder in order to Convert the Note)
TO:
PERFECT MOMENT LTD.
Via
Email:
The
undersigned hereby irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Note No. [XXXX]
into Common Shares of Perfect Moment Ltd. according to the conditions stated therein, as of the Conversion Date written below.
| Conversion
Date: |
|
| Principal
Amount to be Converted: |
|
| Accrued
Interest to be Converted: |
|
| Total
Conversion Amount to be converted: |
|
| Applicable
Conversion Price: |
|
| Number
of Common Shares to be issued: |
|
| |
|
| Please
issue the Common Shares in the following name and deliver them to the following account: |
| Issue
to: |
|
| Broker
DTC Participant Code: |
|
| Account
Number: |
|
| |
|
| Authorized
Signature: |
|
| Name: |
|
| Title: |
|
v3.24.3
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| X |
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| X |
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| X |
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|
| X |
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dei_EntityFileNumber |
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dei_ |
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dei:fileNumberItemType |
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na |
| Period Type: |
duration |
|
| X |
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dei_ |
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dei:edgarStateCountryItemType |
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-Publisher SEC
-Name Exchange Act
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-Publisher SEC
-Name Securities Act
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dei_ |
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|
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