aei_ex105
Exhibit
10.5
Alset EHome International Inc.
(fka, HF Enterprises Inc.)
2% conditional convertible Promissory Note
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Principal Amount: $28,653,138.00 U.S. Dollars
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Issuance
Date: March 12, 2021
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FOR VALUE RECEIVED, (1)
Alset EHome International Inc. (fka, HF Enterprises Inc.), a
Delaware company (the “Company”), hereby promise to pay
to the order of Heng Fai Ambrose Chan, a Singaporean individual,
with his primary residence at 8 Cuscaden Walk, #19-01, Four Seasons
Park, Singapore 249692 or his assignee(s) (“Holder”) the amount set out above
as the Principal Amount (the “Principal”) when due, in
accordance with the terms hereof, and to pay interest
(“Interest”) on
any outstanding Principal at the applicable Interest Rate (as
defined below) accrued from the date set out above as the Issuance
Date (the “Issuance Date”) until this convertible
promissory note has been paid in full. This convertible promissory
note, including all promissory notes issued in exchange, transfer
or replacement hereof, is referred to as this “Note”. This Note is delivered
pursuant to the terms of that certain Stock Purchase Agreement (the
“SPA”) dated as
of the Issuance Date by and among the Holder, the Company and
certain other entities thereof for the Company’s purchase of
APB Shares. Certain capitalized terms used herein are defined in
Section 21 hereof or the SPA.
1. PAYMENTS
OF PRINCIPAL. Subject to the conversion of the Note as
described in Section 5, the Principal Amount and accrued Interest
outstanding hereunder shall be payable in full to the Holder on the
Maturity Date.
2.
INTEREST;
INTEREST RATE. Interest shall accrue on the unpaid principal
balance of this Note at the rate of two percent (2%) per annum (the
“Interest
Rate”). Interest shall be calculated from and include
the Issuance Date and shall be calculated on an actual/365-day
basis. All unpaid interest and Principal Amount shall be due and
payable on the Maturity Date.
3.
DEFAULT.
(a) Event
of Default. Each of the following events shall constitute an
“Event of
Default”:
(i) the
Company’s bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for the relief of
debtors shall be instituted by or against the by a third party,
shall not be dismissed within thirty (30) days of their
initiation;
(ii) the
commencement by the Company of a voluntary case or proceeding under
any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the
consent by it to the entry of a decree, order, judgment or other
similar document in respect of the Company in an involuntary case
or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or to
the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal,
state or foreign law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of
their properties, or the making by it of an assignment for the
benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign
proceeding, or the admission by it in writing of its inability to
pay its debts generally as they become due, the taking of corporate
action by the Company in furtherance of any such action or the
taking of any action by any Person to commence a Uniform Commercial
Code foreclosure sale or any other similar action under federal,
state or foreign law; or
(iii) the
entry by a court of (i) a decree, order, judgment or other similar
document in respect of the Company of a voluntary or involuntary
case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or (ii)
a decree, order, judgment or other similar document adjudging the
as bankrupt or insolvent, or approving as properly filed a petition
seeking liquidation, reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable
federal, state or foreign law or (iii) a decree, order, judgment or
other similar document appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of their
property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree, order, judgment or other
similar document or any such other decree, order, judgment or other
similar document unstayed and in effect for a period of thirty (30)
consecutive days.
(b) Notice
of an Event of Default. As soon as possible and in any event
within seven (7) days after the Company becomes aware that an Event
of Default as set forth in Section 3(a)(ii)-(iv) has occurred and
has not been cured, the Company shall notify the Holder in writing
of the nature, extent and time of and the facts surrounding such
Event of Default, and the action, if any, that the Company proposes
to take with respect to such Event of Default.
4. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not
by amendment of its respective Certificate of Incorporation, or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Note, and
will at all times in good faith carry out all of the provisions of
this Note and take all action as may be required to protect the
rights of the Holder of this Note.
5.
PREPAYMENT;
CONVERSION.
(a)
Voluntary
Prepayment. The Company may prepay the outstanding Principal
and accrued but unpaid Interest of this Note at any time before the
Maturity Date, in whole or in part, without penalty or
prepayment.
(b)
Conversion. Upon
the Company’s shareholders’ approval of the conversion
of this Note (the “Shareholder Approval”), at any time
before the Maturity Date, the Holder may convert the unpaid and
outstanding Principal plus any accrued and unpaid Interest into
shares of the Company’s common stock (the “Common Stock”) at a conversion
price (the “Conversion
Price”) of $5.59 per share, subject to certain
adjustments as set forth in Section 5(d). For clarification
purposes, prior to or without the Shareholder Approval, this Note
is and shall remain non-convertible and will be due and payable in
cash by the Company on the Maturity Date if the Company has not
obtained the Shareholder Approval by the Maturity
Date.
(c)
Mechanics of
Conversion.
i. Delivery
of Conversion Stock Upon Conversion. Not later than seven
(7) Business Days (the “Share
Delivery Date”) after receiving a conversion notice
substantially in a form attached herein as Exhibit 1, the Company shall
deliver, or cause to be delivered, to the Holder a certificate or
certificates representing the Conversion Stock or a share report of
the Holder reflecting the issuance of Conversion Stock being
acquired upon the conversion of this Note, in whole or in
part.
ii.
Fractional Shares.
No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of this Note. As to any fraction of a
share which the Holder would otherwise be entitled to receive upon
such conversion, the Company shall at its election, either pay a
cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round
up to the next whole share.
(d)
Certain
Adjustments.
i. Stock
Splits. If the Company, at any time while this Note is
outstanding: (i) subdivides outstanding shares of Common Stock into
a larger number of shares, (ii) combines (including by way of a
reverse stock split) outstanding shares of Common Stock into a
smaller number of shares or (iii) issues, in the event of a
reclassification of shares of the Common Stock, 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 shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section 5(d) shall become effective immediately
after the record date for the determination of stockholders
entitled to receive such distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
ii. Notice
of Adjustment to Conversion Price. Whenever the Conversion
Price is adjusted pursuant to this Section 5(d), the Company or the
Company shall promptly deliver to each Holder a notice setting
forth the new Conversion Price with three (3) Business Days after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Failure to provide such notice shall not
constitute an Event of Default.
6.
COVENANTS. Until so long as no
Principal or accrued but unpaid Interest remains
outstanding:
(a) Preservation
of Existence. The Company shall maintain and preserve
its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by the Company or in
which the transaction of its business makes such qualification
necessary.
(b)
Public Filings. The
Company shall use its best efforts to maintain its periodic filings
required by the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)
and keep its Common Stock listed on the Nasdaq Stock Market or
another United States stock exchange market.
7. BENEFICIAL
OWNERSHIP. In the event that the Holder’s Beneficial
Ownership (as defined below) of the Company’s Common Stock
reaches 5.00% or more, as a result of the Conversion or others, the
Holder has agreed to coordinate with the Company to file certain
disclosure documents as required by Section 13(d) of the 1934
Securities Exchange Act, as amended. For purposes of this
Section 7, the Holder’s Beneficial Ownership shall mean the
number of shares of Common Stock beneficially owned by the Holder
and its Affiliates, as defined and calculated in accordance with
Section 13(d) of the 1934 Securities Exchange Act and the rules and
regulations promulgated thereunder.
8.
AMENDMENTS. No
modification, amendment or waiver of any provision of this Note
shall be effective unless in writing and approved by the Company
and the Holder.
9. RESTRICTIONS
ON TRANSFER.
This Note may not be offered, sold, assigned or transferred by the
Holder without the explicit written consent of the Company, which
may be granted or withheld at the sole discretion of the
Company.
10. REISSUANCE
OF THIS NOTE.
(a) Transfer.
If this Note is to be transferred with the Company’s approval
as provided in Section 9, 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
10(c)), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less
than the entire outstanding Principal is being transferred, a new
Note (in accordance with Section 10(c)) 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 prepayment or conversion of any portion of this Note,
the outstanding Principal represented by this Note may be less than
the Principal stated on the face of this Note.
(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written
certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in
accordance with Section 10(c)) representing the outstanding
Principal.
(c) Issuance
of New Notes. Whenever the Company is required to issue a
new Note pursuant to the terms of this Note, such new Note (i)
shall be of like tenor with this Note, (ii) shall represent, as
indicated on the face of such new Note, the Principal remaining
outstanding (or in the case of a new Note being issued pursuant to
Section 10(a), the Principal designated by the Holder which, when
added to the principal represented by the other new Notes issued in
connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such
issuance of new Notes), (iii) shall have an issuance date, as
indicated on the face of such new Note, which is the same as the
Issuance Date of this Note, (iv) shall have the same rights and
conditions as this Note, and (v) shall represent accrued and unpaid
Interest, from the Issuance Date.
11. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under
this Note and any of the other Transaction Documents at law or in
equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the
Holder’s right to pursue actual and consequential damages for
any failure by the Company to comply with the terms of this
Note.
12. LEGEND.
The Holder understands and agrees that the Conversion Stock upon
issuance shall be restrictive and, if represented by a
certificate(s), shall bear substantially the following legend until
(i) such Conversion Stock shall have been registered under the
Securities Act and effectively disposed of in accordance with a
registration statement that has been declared effective or (ii) in
the opinion of counsel acceptable to the Company, such Conversion
Stock may be sold in reliance on an available exemption without
registration under the Securities Act, as well as any applicable
“blue sky” or state securities laws:
“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED
FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION COVERING SUCH SHARES UNDER THE SECURITIES ACT OR AN
OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
13. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by
the Company and the Holder and shall not be construed against any
Person as the drafter hereof. The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note. Terms used in this Note but defined
in the other Transaction Documents shall have the meanings ascribed
to such terms on the Closing Date in such other Transaction
Documents unless otherwise consented to in writing by the
Holder.
14. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of
the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or
privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving
party.
15. NOTICES;
CURRENCY; PAYMENTS.
(a) Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing sent by mail, facsimile with printed
confirmation, nationally recognized overnight carrier or personal
delivery and shall be effective upon actual receipt of such notice,
to the following addresses until notice is received that any such
address or contact information has been changed:
To the
Company:
Alset EHome International Inc.
4800
Montgomery Lane, Suite 210
Bethesda, Maryland
20814
Attn:
Rongguo Wei
With
another copy
(which
shall not constitute
Notice)
to:
Sichenzia Ross Ference LLP
1185
Avenue of the Americas, 37th Floor
New
York, NY 10036
Facsimile:
212-930-9725
Attn:
Darrin M. Ocasio
To
Holder:
Heng Fai Ambrose Chan
7
Temasek Blvd., # 29-01B
Suntec
Tower One
Singapore
038987
Attention: Heng Fai
Ambrose Chan
(b) Currency.
All dollar amounts referred to in this Note are in United States
Dollars (“U.S.
Dollars”), and all amounts owing under this Note shall
be paid in U.S. Dollars.
(c) Payments.
The Company will make all payments of Principal and Interest under
this Note by wire transfer of immediately available funds to the
bank account specified by the Holder in written notice delivered to
the Company on or before the Maturity Date.
16.
CANCELLATION. After
all Principal, accrued Interest, and other amounts at any time owed
on this Note have been paid in full or converted in full, this Note
shall automatically be deemed canceled, shall be surrendered to the
Company for cancellation and shall not be reissued.
17. WAIVER
OF JURY TRIAL. Each party
hereby waives its right to a jury trial in connection with any
suit, action or proceeding in connection with any matter relating
to this Note.
18. GOVERNING
LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to its principles regarding conflicts of
law.
19.
ATTORNEY
FEES AND COSTS OF COLLECTION. With respect to any dispute
relating to this Note, or in the event that a suit, action,
arbitration, or other proceeding of any nature whatsoever is
instituted to collect the amounts due under the Note or to
interpret or enforce the provisions of this Agreement, including,
without limitation, any proceeding under the U.S. Bankruptcy Code
and involving issues peculiar to federal bankruptcy law or any
action, suit, arbitration, or other proceeding seeking a
declaration of rights or rescission, the prevailing party will be
entitled to recover from the losing party its reasonable attorney
fees, paralegal fees, expert fees, and all other fees, costs, and
expenses, including costs of collection, actually incurred and
reasonably necessary in connection therewith, as determined by the
judge or arbitrator at trial, arbitration, or other proceeding, or
on any appeal or review, in addition to all other amounts provided
by law.
20. MAXIMUM
PAYMENTS. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other
charges in excess of the maximum permitted by applicable law. In
the event that the rate of interest required to be paid or other
charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum shall be credited against
amounts owed by the Company to the Holder and thus refunded to the
Company.
21. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms
shall have the following meanings:
(a) “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405
under the Securities Act.
(b) “Business
Day” means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
(c) “Maturity Date”
shall mean three (3) years from the Issuance Date.
(d) “Person”
means “person” as such term is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, including any individual, corporation, limited liability
company, partnership, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any
other entity or any group of persons.
(e) “Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
(f) “Transaction
Documents” means,
collectively, the Note, the SPA and any other agreements and
instruments entered into or delivered by any of the parties hereto
in connection with the transactions contemplated by the SPA, as may
be amended from time to time.
[signature
page follows]
[SIGNATURE PAGE TO
THE CONVERTIBLE PROMISSORY NOTE]
IN
WITNESS WHEREOF, the Company have caused this Note to be duly
executed as of the Issuance Date set out above.
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COMPANY:
Alset EHome International Inc.
a Delaware corporation
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By: /s/ Ang Hay
Kim
Name: Ang Hay
Kim
Title: Director
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EXHIBIT
1
Form
of Conversion Notice
Alset
EHome International Inc.
4800
Montgomery Lane, Suite 210
Bethesda,
Maryland 20814
Attn: [
]
The
undersigned hereby elects to convert certain outstanding amount as
set forth below of the Convertible Promissory Note of Alset EHome
International Inc., a Delaware corporation (the
“Company”), issuance date
March [ ], 2021, into shares of common stock (the
“Common
Stock”) of the Company, according to the conditions
hereof, as of the date written below. If shares of Common Stock are
to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions
as reasonably requested by the Company and Company in accordance
therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.
The
undersigned agrees to comply with the delivery requirements under
the applicable securities laws in connection with any transfer of
the aforesaid shares of Common Stock.
Conversion
calculations:
Principal Amount of
Note to be Converted: $[ ]
USD
The
Amount of Interest of the Note to be Converted:
$[ ] USD
Conversion Price
per Share after adjustment: $[ ]
USD
Number
of Shares of Common Stock to be Issued upon Conversion:
________
Signature:
Name
(Print):
Mailing
Address:
Phone
number:
Email:
Date: