UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of January 2024
Commission File Number: 001-41362
Ostin Technology Group Co., Ltd.
(Translation of registrant’s name into
English)
Building 2, 101
1 Kechuang Road
Qixia District, Nanjing
Jiangsu Province, China 210046
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form
40-F ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Securities Purchase
Agreement
On January 19, 2024, Ostin
Technology Group Co., Ltd. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”)
with Streeterville Capital, LLC, a Utah limited liability company (the “Buyer”) relating to the issuance and sale of a senior
unsecured convertible note (the “Note”) in the principal amount of $550,000, at a purchase price of $500,000. The Note is
convertible into ordinary shares, par value $0.0001 per share, of the Company.
On
January 22, 2024, the Company completed its issuance and sale to the Buyer of the Note pursuant to the Securities Purchase Agreement.
The gross proceeds from the sale of the Note were $500,000, prior to deducting transaction fees and estimated expenses.
Note
The
Note bears a simple interest at a rate of 7% per annum. All outstanding principal and accrued interest on the Note will become due and
payable on January 22, 2025 (the “Maturity Date”), which is twelve (12) months after the purchase price of the Note is delivered
by the Buyer to the Company. The Note includes an original issue discount of $40,000, along with $10,000 for the Buyer’s legal fees,
accounting costs, due diligence, monitoring, and other transaction costs incurred in connection with the purchase and sale of the Note.
The
Note has a redemption conversion price (the “Conversion Price”) equal to eighty percent (80%) of the lowest daily VWAP (the
dollar volume-weighted average price for ordinary shares on the Nasdaq Capital Market) during the ten (10) consecutive trading days immediately
preceding the conversion date or other date of determination, but not lower than US$0.1436 (or such lower amount as permitted, from time
to time, by Nasdaq or other principal market) per ordinary share (the “Floor Price”). Beginning on the date that is six (6)
months from the Purchase Price Date until the Outstanding Balance (each as defined in the Note) has been paid in full, the Buyer may convert
the Note at its option into ordinary shares at the Conversion Price up to the Maximum Monthly Redemption Amount (as defined in the Note),
provided that, in no event shall there be an Equity Conditions Failure Amount on the applicable Redemption Date (each as defined in the
Note), and such failure is not waived in writing by the Buyer; or shall the Conversion Price be less than the Floor Price. The Company
may, at its election, prepay all or any portion of the Outstanding Balance under the Note prior to the Maturity Date at a cash price equal
to 120% of the portion of the Outstanding Balance to be prepaid.
Upon
the occurrence of a Trigger Event (as defined in the Note), the Buyer shall have the right to increase the balance of the Note by 15%
for Major Trigger Event (as defined in the Note) and 5% for Minor Trigger Event (as defined in the Note), which are at 25% in the aggregate.
In addition, the Note provides that upon the occurrence of an Event of Default (as defined in the Note), the interest rate shall accrue
on the Outstanding Balance at the rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law.
The
issuance of the Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933,
as amended and Regulation D promulgated thereunder.
The
foregoing summaries of the Securities Purchase Agreement and the Note do not purport to be complete and are subject to, and qualified
in their entirety by, the full text of, as applicable, the exhibits to this Current Report on Form 6-K, which are incorporated herein
by reference.
Exhibit Index
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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Ostin Technology Group Co., Ltd. |
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By: |
/s/ Tao Ling |
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Name: |
Tao Ling |
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Title: |
Chief Executive Officer |
Date: January 26, 2024
3
Exhibit
4.1
CONVERTIBLE
PROMISSORY NOTE
| Effective Date:
January 19, 2024 |
U.S.$550,000.00 |
FOR
VALUE RECEIVED, Ostin Technology Group Co., Ltd., a Cayman Islands exempted company (“Borrower”),
promises to pay to Streeterville Capital, LLC, a Utah limited liability company, or its
successors or assigns (“Lender”), $550,000.00 and any interest, fees, charges, and late fees accrued hereunder on
the date that is twelve (12) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms
set forth herein and to pay interest on the Outstanding Balance at the rate of seven percent (7%) per annum simple interest from the
Purchase Price Date until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a 360-day year
comprised of twelve (12) thirty (30) day months and shall be payable in accordance with the terms of this Note. This Convertible
Promissory Note (this “Note”) is issued and made effective as of the date set forth above (the “Effective
Date”). This Note is issued pursuant to that certain Securities Purchase Agreement dated January 19, 2024, as the same may
be amended from time to time, by and between Borrower and Lender (the “Purchase Agreement”). Certain capitalized terms
used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.
This
Note carries an OID of $40,000.00. In addition, Borrower agrees to pay $10,000.00 to Lender to cover Lender’s legal fees, accounting
costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note (the “Transaction
Expense Amount”). The OID and the Transaction Expense Amount are included in the initial principal balance of this Note and
are deemed to be fully earned and non-refundable as of the Purchase Price Date. The purchase price for this Note shall be $500,000.00
(the “Purchase Price”), computed as follows: $550,000.00 original principal balance, less the OID, less the Transaction
Expense Amount. The Purchase Price shall be payable by Lender by wire transfer in immediately available funds.
1.
Payment; Prepayment.
1.1.
Payment. All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares (as defined
below), as provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments
shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest,
and thereafter, to (d) principal.
1.2.
Prepayment. Borrower shall have the right to prepay all or any portion of the Outstanding Balance earlier than it is due (less
such portion of the Outstanding Balance for which Borrower has received a Redemption Notice (as defined below) from Lender where the
applicable Conversion Shares have not yet been issued); provided that in the event Borrower elects to prepay all or any portion
of the Outstanding Balance, it shall pay to Lender in cash 120% of the portion of the Outstanding Balance Borrower elects to prepay.
Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s remaining obligations hereunder
until such time as the Outstanding Balance is paid in full.
2.
Security. This Note is unsecured.
3.
Borrower Redemptions.
3.1.
Redemption Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Redemption Conversion
shall be the Redemption Conversion Price.
3.2.
Redemption Conversions. Beginning on the date that is six (6) months from the Purchase Price Date (the “Redemption Start
Date”), Lender shall have the right, exercisable at any time in its sole and absolute discretion, to redeem all or any portion
of the Note up to the Maximum Monthly Redemption Amount (such amount, the “Redemption Amount”) per calendar month
by providing Borrower with a notice substantially in the form attached hereto as Exhibit A (each, a “Redemption Notice”,
and each date on which Lender delivers a Redemption Notice, a “Redemption Date”). For the avoidance of doubt, Lender
may submit to Borrower one (1) or more Redemption Notices in any given calendar month so long as the aggregate amount being redeemed
in such month does not exceed the Maximum Monthly Redemption Amount. Payments of each Redemption Amount may be made, at the Borrower’s
election but subject to the timeframe set forth in Section 3.3, (a) in cash, or (b) by converting such Redemption Amount into Ordinary
Shares (each, a “Redemption Conversion”) per the following formula: the portion of the applicable Redemption Amount
being converted divided by the Redemption Conversion Price (the “Conversion Shares”), or (c) by any combination of
the foregoing, so long as the cash is delivered to Lender on the third (3rd) Trading Day immediately following the applicable
Redemption Date and the Redemption Conversion Shares are delivered to Lender on or before the applicable Delivery Date (as defined below).
Notwithstanding the foregoing, Borrower will not be entitled to elect a Redemption Conversion with respect to any portion of any applicable
Redemption Amount and shall be required to pay the Redemption Amount in cash, if (a) on the applicable Redemption Date there is an Equity
Conditions Failure, and such failure is not waived in writing by Lender, or (b) the Redemption Conversion Price is below the Floor Price.
Notwithstanding that failure to repay this Note in full by the Maturity Date is an Event of Default (as defined below), the Redemption
Dates shall continue after the Maturity Date pursuant to this Section 3.2 until the Outstanding Balance is repaid in full. At the
end of each calendar month following the Redemption Start Date, if the aggregate Redemption Amount paid in such month is less than the
Minimum Monthly Amortization Amount, then by the fifth (5th) day of the following month, Borrower must pay in cash to Lender
the difference between the Minimum Monthly Amortization Amount and the aggregate Redemption Amount paid for the applicable month.
3.3.
Allocation of Redemption Amounts. Following its receipt of a Redemption Notice, Borrower may either ratify Lender’s proposed
allocation in the applicable Redemption Notice or elect to change the allocation by written notice to Lender by email or fax within twenty-four
(24) hours of its receipt of such Redemption Notice, so long as the sum of the cash payments and the amount of Redemption Conversions
equal the applicable Redemption Amount. If Borrower fails to notify Lender of its election to change the allocation prior to the deadline
set forth in the previous sentence, it shall be deemed to have ratified and accepted the allocation set forth in the applicable Redemption
Notice prepared by Lender. Borrower acknowledges and agrees that the amounts and calculations set forth thereon are subject to correction
or adjustment because of error, mistake, or any adjustment resulting from an Event of Default or other adjustment permitted under the
Transaction Documents (an “Adjustment”). Furthermore, no error or mistake in the preparation of such notices, or failure
to apply any Adjustment that could have been applied prior to the preparation of a Redemption Notice may be deemed a waiver of Lender’s
right to enforce the terms of any Note, even if such error, mistake, or failure to include an Adjustment arises from Lender’s own
calculation. Borrower shall deliver the Redemption Conversion Shares from any Redemption Conversion to Lender in accordance with Section
7 below on or before each applicable Delivery Date.
4.
Trigger Events, Defaults and Remedies.
4.1.
Trigger Events. The following are trigger events under this Note (each, a “Trigger Event”): (a) Borrower fails
to pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) a receiver, trustee or other similar
official shall be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20)
days or shall not be dismissed or discharged within sixty (60) days; (c) Borrower becomes insolvent or generally fails to pay, or admits
in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; (d) Borrower makes a general
assignment for the benefit of creditors; (e) Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic
or foreign); (f) an involuntary bankruptcy proceeding is commenced or filed against Borrower; (g) the occurrence of a Fundamental Transaction
without Lender’s prior written consent, provided, however, that no consent will be required if the Note is paid in full
in connection with such Fundamental Transaction; (h) Borrower fails to timely establish and maintain the Share Reserve (as defined in
the Purchase Agreement); (i) Borrower fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement; (j)
Borrower fails to deliver any Conversion Shares in accordance with the terms hereof; (k) Borrower defaults or otherwise fails to observe
or perform any covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document (as defined
in the Purchase Agreement) in any material respect, other than those specifically set forth in this Section 4.1 and Section 4 of the
Purchase Agreement; (l) any representation, warranty or other statement made or furnished by or on behalf of Borrower to Lender herein,
in any Transaction Document, or otherwise in connection with the issuance of this Note is false, incorrect, incomplete or misleading
in any material respect when made or furnished; (m) Borrower effectuates a reverse split of its Ordinary Shares without twenty (20) Trading
Days prior written notice to Lender, other than a reverse split of the Ordinary Shares to maintain compliance with the minimum bid price
requirements of Nasdaq or other principal market; (n) any money judgment, writ or similar process is entered against Borrower or any
subsidiary of Borrower or any of its property or other assets for more than $500,000.00, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) calendar days unless otherwise consented to by Lender; (o) Borrower fails to be DWAC Eligible; or (p) Borrower
or any subsidiary of Borrower, breaches any covenant or other term or condition contained in any Other Agreements in any material respect.
4.2.
Trigger Event Remedies. At any time following the occurrence of any Trigger Event, Lender may, at its option, increase the Outstanding
Balance by applying the Trigger Effect (subject to the limitation set forth below).
4.3.
Defaults. At any time following the occurrence of a Trigger Event, Lender may, at its option, send written notice to Borrower
demanding that Borrower cure the Trigger Event within five (5) Trading Days following the date of transmission of such written notice
by Lender. If Borrower fails to cure the Trigger Event within the required five (5) Trading Day cure period, the Trigger Event will automatically
become an event of default hereunder (each, an “Event of Default”).
4.4.
Default Remedies. At any time and from time to time following the occurrence of any Event of Default, Lender may accelerate this
Note by written notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default
Amount. Notwithstanding the foregoing, upon the occurrence of any Trigger Event described in clauses (b) – (f) of Section 4.1,
an Event of Default will be deemed to have occurred and the Outstanding Balance as of the date of the occurrence of such Trigger Event
shall become immediately and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required
by Lender for the Trigger Event to become an Event of Default. At any time following the occurrence of any Event of Default, upon written
notice given by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default
occurred at an interest rate equal to the lesser of twenty-two percent (22%) per annum simple interest or the maximum rate permitted
under applicable law (“Default Interest”). For the avoidance of doubt, Lender may continue making Redemption Conversions
at any time following an Event of Default until such time as the Outstanding Balance is paid in full, subject to the Maximum Monthly
Redemption Amount and Section 9 (Ownership Limitation) hereof. In connection with acceleration described herein, Lender need not provide,
and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable
law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender shall have all rights
as a holder of the Note until such time, if any, as Lender receives full payment. No such rescission or annulment shall affect any subsequent
Trigger Event or Event of Default or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any
other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief with respect to Borrower’s failure to timely deliver Conversion Shares upon Conversion of the Note as required pursuant
to the terms hereof.
5.
Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now
has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments or Conversions called for herein
in accordance with the terms of this Note.
6.
Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting
the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent
to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit
a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
7.
Method of Conversion Share Delivery. On or before the close of business on the third (3rd) Trading Day following each
Redemption Date (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible at such time and such Conversion
Shares are eligible for delivery via DWAC, deliver or cause its transfer agent to deliver the applicable Conversion Shares electronically
via DWAC to the account designated by Lender in the applicable Redemption Notice and to update the register of members of the Borrower;
provided that on up to three (3) occasions while this Note is outstanding, the Delivery Date may be the seventh (7th) Trading
Day following a Redemption Date. If Borrower is not DWAC Eligible or such Conversion Shares are not eligible for delivery via DWAC, it
shall deliver to Lender or its broker (as designated in the Redemption Notice), via reputable overnight courier, a certificate representing
the number of Ordinary Shares equal to the number of Conversion Shares to which Lender shall be entitled, registered in the name of Lender
or its designee in the register of members of the Borrower. For the avoidance of doubt, Borrower has not met its obligation to deliver
Conversion Shares by the Delivery Date unless Lender or its broker, as applicable, has actually received the certificate representing
the applicable Conversion Shares no later than the close of business on the relevant Delivery Date pursuant to the terms set forth above.
Moreover, and notwithstanding anything to the contrary herein or in any other Transaction Document, in the event Borrower or its transfer
agent refuses to deliver any Conversion Shares without a restrictive securities legend to Lender on grounds that such issuance is in
violation of Rule 144 under the Securities Act of 1933, as amended (“Rule 144”), Borrower shall deliver or cause its
transfer agent to deliver the applicable Conversion Shares to Lender with a restricted securities legend, but otherwise in accordance
with the provisions of this Section 7. In conjunction therewith, Borrower will also deliver to Lender a written explanation from its
counsel or its transfer agent’s counsel opining as to why the issuance of the applicable Conversion Shares violates Rule 144.
8.
Conversion Delays. If Borrower fails to deliver Conversion Shares in accordance with the timeframe stated in Section 7, Lender
may at any time prior to receiving the applicable Conversion Shares rescind in whole or in part such Conversion, with a corresponding
increase to the Outstanding Balance (any returned amount will tack back to the Purchase Price Date for purposes of determining the holding
period under Rule 144). In addition, for each Conversion, in the event that Conversion Shares are not delivered by the Delivery Date,
a late fee equal to 2% of the applicable Conversion Share Value rounded to the nearest multiple of $100.00 but with a floor of $500.00
per day (but in any event the cumulative amount of such late fees for each Conversion shall not exceed 200% of the applicable Conversion
Share Value) will be assessed for each day after the Delivery Date until Conversion Share delivery is made; and such late fees will be
added to the Outstanding Balance (such fees, the “Conversion Delay Late Fees”).
9.
Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, Borrower
shall not effect any conversion of this Note to the extent that after giving effect to such conversion would cause Lender (together with
its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of Ordinary Shares outstanding on such date (including
for such purpose the Ordinary Shares issuable upon such issuance) (the “Maximum Percentage”). For purposes of this
section, beneficial ownership of Ordinary Shares will be determined pursuant to Section 13(d) of the 1934 Act. Notwithstanding the forgoing,
the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization is less than
$10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%”
pursuant to the preceding sentence, such increase to “9.99%” shall remain at 9.99% unless decreased or waived in writing
by Lender as set forth below. By written notice to Borrower, Lender may increase (up to a maximum of 9.99%) or decrease or waive the
Maximum Percentage as to itself but any such increase or decrease will not be effective until the 61st day after delivery
thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and
assigns of Lender.
10.
Restriction on Equity Sales. If at any time after the date that is six (6) months from the Purchase Price Date, Borrower is unable
to issue Ordinary Shares to Lender as result of any lock-up or other agreement or restriction prohibiting the issuance of Ordinary Shares
for a certain period of time (the “Lock-Up”), then, at Lender’s option, the Outstanding Balance will be increased
by three percent (3%) for each thirty (30) day period that Borrower is prohibited from issuing Ordinary Shares (which increase shall
be pro-rated for any partial period). For the avoidance of doubt, if Lender elects to increase the Outstanding Balance as set forth in
the previous sentence, Lender shall be deemed to have waived its right to call an Event of Default for failure to issue Conversion Shares
as a result of the Lock-Up.
11.
Sales Limitation. Lender agrees that so long as no Trigger Event has occurred, Lender will limit its sales of Conversion Shares
on the open market in any given calendar week to fifteen percent (15%) of the weekly trading volume of the Ordinary Shares on Borrower’s
principal trading market for such week (the “Sales Limitation”), unless otherwise authorized by Borrower in writing.
In the event Lender breaches such covenant, Borrower’s sole and exclusive remedy shall be the reduction of the Outstanding Balance
in an amount equal to the net proceeds Lender received from excess sales in any given week (or payable in cash if this Note has been
satisfied in full; provided that Lender’s violation of the Sales Limitation occurred prior to the date that is thirty (30) days
after the date the Note is fully satisfied). For the avoidance of doubt, both the Sales Limitation and Borrower’s remedy related
to such limitation shall expire thirty (30) days after satisfaction in full of the Note.
12.
Opinion of Counsel. In the event that an opinion of counsel is needed for conversion of this Note, Lender has the right to have
any such opinion provided by its counsel. Lender shall be responsible to cover costs of all applicable legal opinions and representation
letters from its brokers, as may be required to complete the conversion of this Note.
13.
Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine
the proper venue for any disputes are incorporated herein by this reference.
14.
Arbitration of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
15.
Cancellation. After repayment or conversion of the entire Outstanding Balance, this Note shall be deemed paid in full, shall automatically
be deemed canceled, and shall not be reissued.
16.
Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.
17.
Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note and any Ordinary Shares
issued upon conversion of this Note may be offered, sold, assigned or transferred by Lender without the consent of Borrower, so long
as such transfer is in accordance with applicable federal and state securities laws.
18.
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given
in accordance with the subsection of the Purchase Agreement titled “Notices.”
19.
Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of
this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’
inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Lender
and Borrower agree that any fees, balance adjustments, Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated damages (under Lender’s and Borrower’s expectations
that any such liquidated damages will tack back to the Purchase Price Date for purposes of determining the holding period under Rule
144). Lender shall make no claims for liquidated damages other than those set forth herein.
20.
Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the
objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date.
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BORROWER: |
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Ostin Technology Group Co., Ltd. |
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By: |
/s/
Tao Ling |
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Tao Ling, Chief Executive Officer |
| ACKNOWLEDGED,
ACCEPTED AND AGREED: |
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| LENDER: |
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| Streeterville
Capital, LLC |
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| By: |
/s/
John M. Fife |
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John M. Fife, President |
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[Signature
Page to Secured Convertible Promissory Note]
ATTACHMENT
1
DEFINITIONS
For
purposes of this Note, the following terms shall have the following meanings:
A1.
“Closing Bid Price” and “Closing Trade Price” means the last closing bid price and last closing
trade price, respectively, for the Ordinary Shares on its principal market, as reported by Bloomberg, or, if its principal market begins
to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then
the last bid price or last trade price, respectively, of the Ordinary Shares prior to 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if its principal market is not the principal securities exchange or trading market for the Ordinary Shares, the last closing
bid price or last trade price, respectively, of the Ordinary Shares on the principal securities exchange or trading market where the
Ordinary Shares is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade
price, respectively, of the Ordinary Shares in the over-the-counter market on the electronic bulletin board for the Ordinary Shares as
reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for the Ordinary Shares by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of any market makers for the Ordinary Shares as reported by OTC Markets
Group, Inc., and any successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be calculated for the Ordinary Shares
on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of the Ordinary
Shares on such date shall be the fair market value as mutually determined by Lender and Borrower. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
A2. “DTC”
means the Depository Trust Company or any successor thereto.
A3. “DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer program.
A4. “DWAC”
means the DTC’s Deposit/Withdrawal at Custodian system.
A5. “DWAC
Eligible” means that (a) Borrower’s Ordinary Shares is eligible at DTC for full services pursuant to DTC’s operational
arrangements, including without limitation transfer through DTC’s DWAC system; (b) Borrower has been approved (without revocation)
by DTC’s underwriting department; (c) Borrower’s transfer agent is approved as an agent in the DTC/FAST Program; (d) the
Conversion Shares are otherwise eligible for issuance via DWAC; and (e) Borrower’s transfer agent does not have a policy prohibiting
or limiting issuance of the Conversion Shares via DWAC.
A6. “Equity
Conditions Failure” means that any of the following conditions has not been satisfied on any given Redemption Date: (a) with
respect to the applicable date of determination all of the Conversion Shares would be freely tradable pursuant to an effective registration
statement, under Rule 144 or without the need for registration under any applicable federal or state securities laws (in each case, disregarding
any limitation on conversion of this Note); (b) the applicable Conversion Shares would be eligible for immediate resale by Lender; (c) no
Trigger Event shall have occurred or be continuing hereunder; (d) the average and median daily dollar trading volume of the Ordinary
Shares on its principal market for the previous twenty (20) Trading Days is greater than $20,000.00; and (e) the Ordinary Shares are
trading on Nasdaq or NYSE.
A7. “Floor
Price” means $0.1436 (or such lower amount as permitted, from time to time, by Nasdaq or other principal market).
Attachment
1 to Secured Convertible Promissory Note, Page 1
A8. “Fundamental
Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is the surviving corporation) any
other person or entity, or (ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets
to any other person or entity, provided that the value of such properties or assets exceeds 25% of the total assets of Borrower and its
subsidiaries on a consolidated basis, or (iii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more
related transactions, allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of
more than 50% of the outstanding shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the
person or persons making or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender
or exchange offer), or (iv) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than 50% of the
outstanding shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the other persons or entities
making or party to, or associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement
or other business combination), or (v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, reorganize or recapitalize the Ordinary Shares which would materially adversely affect Borrower’s ability to repay
the Note, other than an increase in the number of authorized shares of Borrower’s Ordinary Shares and reclassification of the Ordinary
Shares that does not result in either a change in management or control of Borrower, or (b) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder)
is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of Borrower.
A9. “Major
Trigger Event” means any Trigger Event occurring under Sections 4.1(a) - 4.1(i).
A10. “Mandatory
Default Amount” means the Outstanding Balance following the application of the Trigger Effect.
A11. “Market
Capitalization” means a number equal to (a) the average VWAP of the Ordinary Shares for the immediately preceding fifteen (15)
Trading Days, multiplied by (b) the aggregate number of issued and outstanding Ordinary Shares as reported on Borrower’s most recently
filed Form 20-F or other SEC filings containing the number of issued and outstanding Ordinary Shares.
A12. “Maximum
Monthly Redemption Amount” means the lower of (i) $200,000.00 per calendar month, or (ii) the Outstanding Balance as of such
Redemption Date.
A13. “Minor
Trigger Event” means any Trigger Event that is not a Major Trigger Event.
A14. “Minimum
Monthly Amortization Amount” means $90,000.00.
A15. “Other
Agreements” means, collectively, all existing and future agreements and instruments between, among or by Borrower (or it subsidiary),
on the one hand, and Lender (or an affiliate), on the other hand.
A16. “Outstanding
Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as the case may be, pursuant to
the terms hereof for payment, Conversion, offset, or otherwise, the Transaction Expense Amount, accrued but unpaid interest, collection
and enforcements costs (including reasonable attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes and
fees related to Conversions, and any other fees or charges (including without limitation Conversion Delay Late Fees) incurred under this
Note.
A17. “Purchase
Price Date” means the date the Purchase Price is delivered by Lender to Borrower.
A18. “Redemption
Conversion Price” means eighty percent (80%) multiplied by the lowest daily VWAP during the ten (10) Trading Days immediately
preceding the applicable measurement date, subject to the Floor Price.
A19. “Trading
Day” means any day on which Borrower’s principal market is open for trading.
A20. “Trigger
Effect” means multiplying the Outstanding Balance as of the date the applicable Trigger Event occurred by (a) fifteen percent
(15%) for each occurrence of any Major Trigger Event, or (b) five percent (5%) for each occurrence of any Minor Trigger Event, and then
adding the resulting product to the Outstanding Balance as of the date the applicable Trigger Event occurred, with the sum of the foregoing
then becoming the Outstanding Balance under this Note as of the date the applicable Trigger Event occurred; provided that the Trigger
Effect may only be applied three (3) times hereunder with respect to Major Trigger Events and three (3) times hereunder with respect
to Minor Trigger Events; and provided further that the Trigger Effect shall not apply to any Trigger Event pursuant to Section 4.1(j)
hereof. Notwithstanding the foregoing, the application of the Trigger Effects will be capped at twenty-five (25%) in the aggregate.
A21. “VWAP”
means the volume weighted average price of the Ordinary Shares on the principal market for a particular Trading Day or set of Trading
Days, as the case may be, as reported by Bloomberg.
[Remainder
of page intentionally left blank]
Attachment
1 to Secured Convertible Promissory Note, Page 2
EXHIBIT
A
Streeterville
Capital, LLC
303
East Wacker Drive, Suite 1040
Chicago,
Illinois 60601
| Ostin Technology
Group Co., Ltd. |
Date:__________ |
| Attn: Tao Ling, Chief Executive
Officer |
|
| Building 2, 101/201 |
|
| 1 Kechuang Road |
|
| Qixia District, Nanjing |
|
| Jiangsu Province, China 210046 |
|
REDEMPTION
NOTICE
The
above-captioned Lender hereby gives notice to Ostin Technology Group Co., Ltd., a Cayman Islands exempted company (the “Borrower”),
pursuant to that certain Convertible Promissory Note made by Borrower in favor of Lender on January 19, 2024 (the “Note”),
that Lender elects to redeem a portion of the Note in Redemption Conversion Shares or in cash as set forth below. In the event of a conflict
between this Redemption Notice and the Note, the Note shall govern, or, in the alternative, at the election of Lender in its sole discretion,
Lender may provide a new form of Redemption Notice to conform to the Note. Capitalized terms used in this notice without definition shall
have the meanings given to them in the Note.
REDEMPTION
INFORMATION
| A. | Redemption
Date: ____________, 202_ |
| B. | Redemption
Amount: ____________ |
| C. | Portion
of Redemption Amount to be Paid in Cash: ____________ |
| D. | Portion
of Redemption Amount to be Converted into Ordinary Shares: ____________ (B minus C) |
| E. | Redemption
Conversion Price: _______________ |
| F. | Redemption
Conversion Shares: _______________ (D divided by E) |
| G. | Remaining
Outstanding Balance of Note: ____________ * |
*
Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined in
the Purchase Agreement), the terms of which shall control in the event of any dispute between the terms of this Redemption Notice and
such Transaction Documents.
Please
transfer the Redemption Conversion Shares, if applicable, electronically (via DWAC) to the following account:
| Broker: _______________________ |
|
Address: |
______________________ |
| DTC#: _______________________ |
|
|
______________________ |
| Account #: ___________________ |
|
|
______________________ |
| Account Name: ________________ |
|
|
|
To
the extent the Redemption Conversion Shares are not able to be issued to Lender electronically via the DWAC system, issue and deliver
all such certificated shares to Lender via reputable overnight courier after receipt of this Redemption Notice (by facsimile transmission
or otherwise) to:
_____________________________________
_____________________________________
_____________________________________
Exhibit
A to Secured Convertible Promissory Note, Page 1
| Sincerely, |
|
| |
|
|
| Lender: |
|
| |
|
|
| Streeterville
Capital, LLC |
|
| |
|
|
| By: |
|
|
| |
John M. Fife, President |
|
Exhibit
A to Secured Convertible Promissory Note, Page 2
Exhibit
10.1
Securities Purchase Agreement
This
Securities Purchase Agreement (this “Agreement”), dated as of January 19, 2024, is entered into by and between
Ostin Technology Group Co., Ltd., a Cayman Islands exempted company (“Company”),
and Streeterville Capital, LLC, a Utah limited liability company, its successors and/or
assigns (“Investor”).
A. Company
and Investor are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the Securities
Act of 1933, as amended (the “1933 Act”), and the rules and regulations promulgated thereunder by the United States
Securities and Exchange Commission (the “SEC”).
B. Investor
desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a Convertible Promissory
Note, in the form attached hereto as Exhibit A, in the original principal amount of $550,000.00 (the “Note”),
convertible into ordinary shares, $0.0001 par value per share, of Company (the “Ordinary Shares”), upon the terms and
subject to the limitations and conditions set forth in such Note.
D. This
Agreement, the Note, and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in
connection with this Agreement, as the same may be amended from time to time, are collectively referred to herein as the “Transaction
Documents”.
E. For
purposes of this Agreement: “Conversion Shares” means all Ordinary Shares issuable upon conversion of all or any portion
of the Note; and “Securities” means the Note and the Conversion Shares.
NOW, THEREFORE, in
consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Company and Investor hereby agree as follows:
1. Purchase
and Sale of Securities.
1.1. Purchase
of Note. Company shall issue and sell to Investor and Investor shall purchase from Company the Note. In consideration thereof, Investor
shall pay the Purchase Price (as defined below) to Company.
1.2. Form
of Payment. On the Closing Date (as defined below), Investor shall pay the Purchase Price to Company via wire transfer of immediately
available funds against delivery of the Note.
1.3. Closing
Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the date of the
issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be January 19, 2024, or another
mutually agreed upon date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur
on the Closing Date by means of the exchange by email of signed .pdf documents, but shall be deemed for all purposes to have occurred
at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.
1.4. Collateral
for the Note. The Note shall be unsecured.
1.5. Original
Issue Discount; Transaction Expense Amount. The Note carries an original issue discount of $40,000.00 (the “OID”).
In addition, Company agrees to pay $10,000.00 to Investor to cover Investor’s legal fees, accounting costs, due diligence, monitoring
and other transaction costs incurred in connection with the purchase and sale of the Note (the “Transaction Expense Amount”).
The OID and Transaction Expense amount will be included in the initial principal balance of the Note. The “Purchase Price”,
therefore, shall be $500,000.00, computed as follows: $550,000.00 initial principal balance, less the OID, less the Transaction Expense
Amount.
2. Investor’s
Representations and Warranties. Investor represents and warrants to Company that as of the Closing Date: (i) this Agreement has been
duly and validly authorized by the Investor; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in
accordance with its terms; and (iii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D of the 1933 Act.
3. Company’s
Representations and Warranties. Except as set forth on the disclosure schedules attached hereto with each numbered schedule corresponding
to the section number herein, Company represents and warrants to Investor that as of the Closing Date: (i) Company is a company duly organized,
validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate power to own
its properties and to carry on its business as now being conducted; (ii) Company is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification
necessary; (iii) Company has registered its Ordinary Shares under Section 12(b) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), and is obligated to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act;
(iv) each of the Transaction Documents and the transactions contemplated hereby and thereby, have been duly and validly authorized by
Company and all necessary actions have been taken; (v) this Agreement, the Note and the other Transaction Documents have been duly executed
and delivered by Company and constitute the valid and binding obligations of Company enforceable in accordance with their terms; (vi)
the execution and delivery of the Transaction Documents by Company, the issuance of the Securities in accordance with the terms hereof,
and the consummation by Company of the other transactions contemplated by the Transaction Documents do not and will not conflict with
or result in a breach by Company of any of the terms or provisions of, or constitute a default under (a) Company’s Amended and Restated
Memorandum and Articles of Association, as currently in effect, or other applicable organizational documents (b) any indenture, mortgage,
deed of trust, or other material agreement or instrument to which Company is a party or by which it or any of its properties or assets
are bound, including, without limitation, any listing agreement for the Ordinary Shares, or (c) any existing applicable law, rule, or
regulation or any applicable decree, judgment, or order of any court, United States federal, state or foreign regulatory body, administrative
agency, or other governmental body having jurisdiction over Company or any of Company’s properties or assets, except, in the cases
of subsections (b) and (c) above, for any and such conflict, breach or default which (individually or in the aggregate) would not reasonably
be expected to have a material adverse effect on the Company; (vii) except as have been obtained prior to the Closing, no further authorization,
approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the
stockholders or any lender of Company is required to be obtained by Company for the issuance of the Securities to Investor or the entering
into of the Transaction Documents; (viii) none of Company’s filings with the SEC contained, at the time they were filed, any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not misleading; (ix) within the last 12 months, Company has filed all
reports, schedules, forms, statements and other documents required to be filed by Company with the SEC under the 1934 Act on a timely
basis or has received a valid extension of such time of filing and has filed any such report, schedule, form, statement or other document
prior to the expiration of any such extension; (x) there is no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of Company, threatened against or affecting Company before or by any governmental authority
or non-governmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision,
ruling or finding would have a material adverse effect on Company or which would adversely affect the validity or enforceability of, or
the authority or ability of Company to perform its obligations under, any of the Transaction Documents; (xi) Company has not consummated
any financing transaction that has not been disclosed in a periodic filing or current report with the SEC under the 1934 Act; (xii) Company
is not, nor has it been at any time in the previous twelve (12) months, a “Shell Company,” as such type of “issuer”
is described in Rule 144(i)(1) under the 1933 Act; (xiii) with respect to any commissions, placement agent or finder’s fees or similar
payments that will or would become due and owing by Company to any person or entity as a result of this Agreement or the transactions
contemplated hereby (“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws
and regulations and only to a person or entity that is a registered investment adviser or registered broker-dealer; (xiv) Investor shall
have no obligation with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees of a type
contemplated in this subsection that may be due in connection with the transactions contemplated hereby and Company shall indemnify and
hold harmless each of Investor, Investor’s employees, officers, directors, stockholders, members, managers, agents, and partners,
and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’
fees) and expenses suffered in respect of any such claimed Broker Fees; (xv) neither Investor nor any of its officers, directors, stockholders,
members, managers, employees, agents or representatives has made any representations or warranties to Company or any of its officers,
directors, employees, agents or representatives except as expressly set forth in the Transaction Documents and, in making its decision
to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation, warranty, covenant
or promise of Investor or its officers, directors, members, managers, employees, agents or representatives other than as set forth in
the Transaction Documents; (xvi) Company acknowledges that the State of Utah has a reasonable relationship and sufficient contacts to
the transactions contemplated by the Transaction Documents and any dispute that may arise related thereto such that the laws and venue
of the State of Utah, as set forth more specifically in Section 11.2 below, shall be applicable to the Transaction Documents and the transactions
contemplated therein; (xvii) Company acknowledges that Investor is not registered as a ‘dealer’ under the 1934 Act; (xviii)
Company has performed due diligence and background research on Investor and its affiliates and has received and reviewed the due diligence
packet provided by Investor; and (xix) Company has notified Nasdaq of its intention to be subject to the home country practice of the
Cayman Islands, has made all applicable filings with the SEC with respect to relying on home country practice and thus Nasdaq Listing
Rule 5635(d) does not apply to Company. Company, being aware of the matters and legal issues described in subsections (xvii) and (xviii)
above, acknowledges and agrees that such matters, or any similar matters, have no bearing on the transactions contemplated by the Transaction
Documents and covenants and agrees it will not use any such information or legal theory as a defense to performance of its obligations
under the Transaction Documents or in any attempt to avoid, modify, reduce, rescind or void such obligations.
4. Company
Covenants. Until all of Company’s obligations under all of the Transaction Documents are paid and performed in full, or within
the timeframes otherwise specifically set forth below, Company will at all times comply with the following covenants: (i) so long as Investor
beneficially owns any of the Securities and for at least twenty (20) Trading Days (as defined in the Note) thereafter, Company will remain
listed on Nasdaq and timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13
or 15(d) of the 1934 Act, and will take all reasonable action under its control to ensure that adequate current public information with
respect to Company, as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status
as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such
termination; (ii) when issued in accordance with the Amended and Restated Memorandum and Articles of Association of the Company and registered
in the register of members of the Company, the Conversion Shares will be duly authorized, validly issued as fully paid and non-assessable,
free and clear of all liens, claims, charges and encumbrances; (iii) the Ordinary Shares shall be listed or quoted for trading on NYSE
or Nasdaq; (iv) trading in Company’s Ordinary Shares will not be suspended, halted, chilled, frozen, reach zero bid or otherwise
cease trading on Company’s principal trading market; (v) from the Closing Date until five (5) days after the Note is satisfied in
full, Company will not make any Restricted Issuance (as defined below) without Investor’s prior written consent, which consent may
be granted or withheld in Investor’s sole and absolute discretion; and (vi) Company shall not enter into any agreement or otherwise
agree to any covenant, condition, or obligation that locks up, restricts in any way or otherwise prohibits Company: (a) from entering
into a variable rate transaction with Investor or any affiliate of Investor, or (b) from issuing Ordinary Shares, preferred stock, warrants,
convertible notes, other debt securities, or any other Company securities to Investor or any affiliate of Investor. For purposes
hereof, the term “Restricted Issuance” means the issuance, incurrence or guaranty of any debt obligations, other than
trade payables in the ordinary course of business or any commercial loans borrowed from a bank or similar financing institution, or the
issuance of any securities that (1) have or may have conversion rights of any kind, contingent, conditional or otherwise, in which the
number of shares that may be issued pursuant to such conversion right varies with the market price of the Ordinary Shares, (2) are or
may become convertible into Ordinary Shares (including without limitation convertible debt, warrants or convertible preferred shares),
with a conversion price that varies with the market price of the Ordinary Shares, even if such security only becomes convertible following
an event of default, the passage of time, or another trigger event or condition; or (3) have a fixed conversion price, exercise price
or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity security
(A) due to a change in the market price of Company’s Ordinary Shares since the date of the initial issuance or (B) upon the occurrence
of specified or contingent events directly or indirectly related to the business of Company (except for, however, any adjustments for
any reorganization, recapitalization, non-cash dividend, share split or similar transaction). For the avoidance of doubt, the issuance
of Ordinary Shares under, pursuant to, in exchange for or in connection with any contract or instrument, whether convertible or not, is
deemed a Restricted Issuance for purposes hereof if the number of shares of Ordinary Shares to be issued is based upon or related in any
way to the market price of the Ordinary Shares, including, but not limited to, Ordinary Shares issued in connection with a Section 3(a)(9)
exchange, a Section 3(a)(10) settlement, or any other similar settlement or exchange. For the further avoidance of doubt, Ordinary Shares
issued pursuant to any of the following will not be considered Restricted Issuances: (i) ATM facilities; (ii) primary equity or debt offerings
(provided that the aggregate amount of such debt offerings may not exceed $2,000,000.00) without variable price mechanics, including variable
priced warrants provided that the variable priced warrants have no provision that will increase the number of warrants issued at closing
or increase the number of Ordinary Shares issuable under each warrant to a ratio of more than 1:1 (except for any adjustments for any
reorganization, recapitalization, non-cash dividend, share split or similar transaction), (iii) share issuances to non-US persons, (iv)
securities issued under an incentive plan or pursuant to a registration statement on form S-8, or (v) the issuance of Ordinary Shares
in conjunction with any acquisitions, mergers, licensing arrangements and partnerships provided that such issues do not cause a change
of control or have variable price mechanisms (each, an “Exempted Issuance”).
5. Conditions
to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Securities to Investor at the Closing
is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:
5.1. Investor
shall have executed this Agreement and delivered the same to Company.
5.2. Investor
shall have delivered the Purchase Price to Company in accordance with Section 1.2 above.
6. Conditions
to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Securities at the Closing is subject
to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that these conditions are for Investor’s
sole benefit and may be waived by Investor at any time in its sole discretion:
6.1. Company
shall have executed this Agreement and the Note and delivered the same to Investor.
6.2. Company
shall have delivered to Investor a fully executed Irrevocable Letter of Instructions to Transfer Agent (the “TA Letter”)
substantially in the form attached hereto as Exhibit B acknowledged and agreed to in writing by Company’s transfer agent
(the “Transfer Agent”).
6.3. Company
shall have delivered to Investor a fully executed Officer’s Certificate substantially in the form attached hereto as Exhibit
C evidencing Company’s approval of the Transaction Documents.
6.4. Company
shall have delivered to Investor a fully executed Share Issuance Resolution substantially in the form attached hereto as Exhibit D
to be delivered to the Transfer Agent.
7. Reservation
of Shares. On the date hereof, Company will reserve 3,000,000 Ordinary Shares from its authorized and unissued Ordinary Shares to
provide for all issuances of Ordinary Shares under the Note (the “Share Reserve”). Company further agrees to add additional
Ordinary Shares to the Share Reserve in increments of 100,000 shares as and when requested by Investor if as of the date of any such request
the number of shares being held in the Share Reserve is less than three (3) times the number of Ordinary Shares obtained by dividing the
Outstanding Balance (as defined in the Note) of the Note as of the date of the request by the Redemption Conversion Price (as defined
in the Note). Company shall further require the Transfer Agent to hold the Ordinary Shares reserved pursuant to the Share Reserve exclusively
for the benefit of Investor and to issue such shares to Investor promptly upon Investor’s delivery of a Redemption Notice under
the Note. Finally, Company shall require the Transfer Agent to issue Ordinary Shares pursuant to the Note to Investor out of its authorized
and unissued shares, and not the Share Reserve, to the extent Ordinary Shares have been authorized, but not issued, and are not included
in the Share Reserve. The Transfer Agent shall only issue Ordinary Shares out of the Share Reserve to the extent there are no other authorized
shares available for issuance and then only with Investor’s written consent.
8. Most
Favored Nation. So long as the Note is outstanding, upon any issuance by Company of any security with any term or condition more favorable
to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Investor in the
Transaction Documents, then Company shall notify Investor of such additional or more favorable term and such term, at Investor’s
option, shall become a part of the Transaction Documents for the benefit of Investor. Additionally, if Company fails to notify Investor
of any such additional or more favorable term, but Investor becomes aware that Company has granted such a term to any third party, Investor
may notify Company of such additional or more favorable term and such term shall become a part of the Transaction Documents retroactive
to the date on which such term was granted to the applicable third party. The types of terms contained in another security that may be
more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion lookback
periods, interest rates, original issue discounts, stock sale price, conversion price per share, warrant coverage, warrant exercise price,
and anti-dilution/conversion and exercise price resets. For avoidance of doubt, this Section 8 shall not apply to any Exempted Issuances.
9. Reinvestment
Right. At any time during the 12-month period beginning on the earlier of (a) the date of the first Redemption Conversion (as defined
in the Note) under the Note; or (b) the 12-month anniversary of the Closing Date, Investor will have the right, but not the obligation,
in its sole and absolute discretion, to reinvest up to an additional $5,000,000.00 in Company in one or more notes on the same terms and
conditions as the Note.
10. OFAC;
Patriot Act.
10.1. OFAC
Certification. Company certifies that (i) it is not acting on behalf of any person, group, entity, or nation named by any Executive
Order or the United States Treasury Department, through its Office of Foreign Assets Control (“OFAC”) or otherwise,
as a terrorist, “Specially Designated Nation”, “Blocked Person”, or other banned or blocked person, entity, nation,
or transaction pursuant to any law, order, rule or regulation that is enforced or administered by OFAC or another department of the United
States government, and (ii) Company is not engaged in this transaction on behalf of, or instigating or facilitating this transaction on
behalf of, any such person, group, entity or nation.
10.2. Foreign
Corrupt Practices. Neither Company, nor any of its subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of Company or any subsidiary has, in the course of his actions for, or on behalf of, Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
10.3. Patriot
Act. Company shall not (i) be or become subject at any time to any law, regulation, or list of any government agency (including, without
limitation, the OFAC) that prohibits or limits Investor from making any advance or extension of credit to Company or from otherwise conducting
business with Company, or (ii) fail to provide documentary and other evidence of Company’s identity as may be requested by Investor
at any time to enable Investor to verify Company’s identity or to comply with any applicable law or regulation, including, without
limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318. Company shall comply with all requirements of law relating
to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect. Upon Investor’s request
from time to time, Company shall certify in writing to Investor that Company’s representations, warranties and obligations under
this Section 10.3 remain true and correct and have not been breached. Company shall immediately notify Investor in writing if any of such
representations, warranties or covenants are no longer true or have been breached or if Company has a reasonable basis to believe that
they may no longer be true or have been breached. In connection with such an event, Company shall comply with all requirements of law
and directives of governmental authorities and, at Investor’s request, provide to Investor copies of all notices, reports and other
communications exchanged with, or received from, governmental authorities relating to such an event. Company shall also reimburse Investor
any expense incurred by Investor in evaluating the effect of such an event on the loan secured hereby, in obtaining any necessary license
from governmental authorities as may be necessary for Investor to enforce its rights under the Transaction Documents, and in complying
with all requirements of law applicable to Investor as the result of the existence of such an event and for any penalties or fines imposed
upon Investor as a result thereof.
11. Miscellaneous.
The provisions set forth in this Section 11 shall apply to this Agreement, as well as all other Transaction Documents as if these terms
were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section
11 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.
11.1. Arbitration
of Claims. The parties shall submit all Claims (as defined in Exhibit E) arising under this Agreement or any other Transaction
Document or any other agreement between the parties and their affiliates or any Claim relating to the relationship of the parties to binding
arbitration pursuant to the arbitration provisions set forth in Exhibit E attached hereto (the “Arbitration Provisions”).
For the avoidance of doubt, the parties agree that the injunction described in Section 11.3 below may be pursued in an arbitration that
is separate and apart from any other arbitration regarding all other Claims arising under the Transaction Documents. The parties hereby
acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other
provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed the Arbitration
Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration
Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations
set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company
acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration Provisions.
11.2. Governing
Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Utah. Each party consents to and expressly agrees that the exclusive venue for
arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their affiliates
shall be in Salt Lake County, Utah. Without modifying the parties’ obligations to resolve disputes hereunder pursuant to the Arbitration
Provisions, for any litigation arising in connection with any of the Transaction Documents (and notwithstanding the terms (specifically
including any governing law and venue terms) of any transfer agent services agreement or other agreement between the Transfer Agent and
Company, such litigation specifically includes, without limitation any action between or involving Company and the Transfer Agent under
the TA Letter or otherwise related to Investor in any way (specifically including, without limitation, any action where Company seeks
to obtain an injunction, temporary restraining order, or otherwise prohibit the Transfer Agent from issuing Ordinary Shares to Investor
for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or
federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof,
(iii) agrees to not bring any such action (specifically including, without limitation, any action where Company seeks to obtain an injunction,
temporary restraining order, or otherwise prohibit the Transfer Agent from issuing Ordinary Shares to Investor for any reason) outside
of any state or federal court sitting in Salt Lake County, Utah, and (iv) waives any claim of improper venue and any claim or objection
that such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction
or to any claim that such venue of the suit, action or proceeding is improper. Finally, Company covenants and agrees to name Investor
as a party in interest in, and provide written notice to Investor in accordance with Section 11.11 below prior to bringing or filing,
any action (including without limitation any filing or action against any person or entity that is not a party to this Agreement, including
without limitation the Transfer Agent) that is related in any way to the Transaction Documents or any transaction contemplated herein
or therein, including without limitation any action brought by Company to enjoin or prevent the issuance of any Ordinary Shares to Investor
by the Transfer Agent, and further agrees to timely name Investor as a party to any such action. Company acknowledges that the governing
law and venue provisions set forth in this Section 11.2 are material terms to induce Investor to enter into the Transaction Documents
and that but for Company’s agreements set forth in this Section 11.2 Investor would not have entered into the Transaction Documents.
11.3. Specific
Performance. Company acknowledges and agrees that Investor may suffer irreparable harm in the event that Company fails to perform
any material provision of this Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly
agreed that Investor shall be entitled to one or more injunctions to prevent or cure breaches of the provisions of this Agreement or such
other Transaction Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other
remedy to which Investor may be entitled under the Transaction Documents, at law or in equity. Company specifically agrees that: (a) following
an Event of Default (as defined in the Note) under the Note, Investor shall have the right to seek and receive injunctive relief from
a court or an arbitrator prohibiting Company from issuing any of its Ordinary Shares or preferred stock to any party unless the Note are
being paid in full simultaneously with such issuance; and (b) following a breach of Section 4(vi) above, Investor shall have the right
to seek and receive injunctive relief from a court or arbitrator invalidating such lock-up. Company specifically acknowledges that Investor’s
right to obtain specific performance constitutes bargained for leverage and that the loss of such leverage would result in irreparable
harm to Investor. For the avoidance of doubt, in the event Investor seeks to obtain an injunction from a court or an arbitrator against
Company or specific performance of any provision of any Transaction Document, such action shall not be a waiver of any right of Investor
under any Transaction Document, at law, or in equity, including without limitation its rights to arbitrate any Claim pursuant to the terms
of the Transaction Documents, nor shall Investor’s pursuit of an injunction prevent Investor, under the doctrines of claim preclusion,
issues preclusion, res judicata or other similar legal doctrines, from pursuing other Claims in the future in a separate arbitration.
11.4. Cayman
Proceeding. Notwithstanding anything herein or in any of the other Transaction Documents to the contrary and without limiting any
other rights and remedies set forth in the Transaction Documents, each of Company and Investor agrees that: (a) Investor has the right
to make an application to the Cayman Islands Court to wind up Company pursuant to Cayman Islands statutes, regulations and rules, specifically
but not limited to the Cayman Islands Companies Act (As Revised) (a “Cayman Proceeding”) following an Event of Default
under the Note; (b) the Cayman Islands will be the exclusive venue for the Cayman Proceeding; (c) the Cayman Proceeding will be governed
by Cayman Islands law; and (d) in the event Investor brings a Cayman Proceeding and the Cayman Islands Court rules that there is a bona
fide dispute between the parties with respect to the debt that needs to be resolved, then such dispute between the parties will immediately
be removed to Utah for arbitration pursuant to the Arbitration Provisions.
11.5. Calculation
Disputes. Notwithstanding the Arbitration Provisions, in the case of a dispute as to any determination or arithmetic calculation under
the Transaction Documents, including without limitation, calculating the Outstanding Balance, Conversion Price, Conversion Shares, or
VWAP (as defined in the Note) (each, a “Calculation”), Company or Investor (as the case may be) shall submit any disputed
Calculation via email or facsimile with confirmation of receipt (i) within two (2) Trading Days after receipt of the applicable notice
giving rise to such dispute to Company or Investor (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after
Investor learned of the circumstances giving rise to such dispute. If Investor and Company are unable to agree upon such Calculation within
two (2) Trading Days of such disputed Calculation being submitted to Company or Investor (as the case may be), then Investor will promptly
submit via email or facsimile the disputed Calculation to Unkar Systems Inc. (“Unkar Systems”). Investor shall cause
Unkar Systems to perform the Calculation and notify Company and Investor of the results no later than ten (10) Trading Days from the time
it receives such disputed Calculation. Unkar Systems’ determination of the disputed Calculation shall be binding upon all parties
absent demonstrable error. Unkar Systems’ fee for performing such Calculation shall be paid by the incorrect party, or if both parties
are incorrect, by the party whose Calculation is furthest from the correct Calculation as determined by Unkar Systems. In the event Company
is the losing party, no extension of the Delivery Date (as defined in the Note) shall be granted and Company shall incur all effects for
failing to deliver the applicable shares in a timely manner as set forth in the Transaction Documents. Notwithstanding the foregoing,
Investor may, in its sole discretion, designate an independent, reputable investment bank or accounting firm other than Unkar Systems
to resolve any such dispute and in such event, all references to “Unkar Systems” herein will be replaced with references to
such independent, reputable investment bank or accounting firm so designated by Investor.
11.6. Counterparts.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
11.7. Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this
Agreement.
11.8. Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule
of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
11.9. Entire
Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes
any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance of doubt, all prior term sheets
or other documents between Company and Investor, or any affiliate thereof, related to the transactions contemplated by the Transaction
Documents (collectively, “Prior Agreements”), that may have been entered into between Company and Investor, or any
affiliate thereof, are hereby null and void and deemed to be replaced in their entirety by the Transaction Documents. To the extent there
is a conflict between any term set forth in any Prior Agreement and the term(s) of the Transaction Documents, the Transaction Documents
shall govern.
11.10. Amendments.
No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both parties hereto.
11.11. Notices.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to
an executive officer named below or such officer’s successor, or by facsimile (with successful transmission confirmation which is
kept by sending party), (ii) the earlier of the date delivered or the third Trading Day after deposit, postage prepaid, in the United
States Postal Service by certified mail or with an international courier, or (iii) the earlier of the date delivered or the third Trading
Day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto
entitled at the following addresses (or at such other addresses as such party may designate by five (5) calendar days’ advance written
notice similarly given to each of the other parties hereto):
If to Company:
Ostin Technology Group Co.,
Ltd.
Attn: Tao Ling, Chief Executive
Officer
Building 2,
101/201
1 Kechuang Road
Qixia District,
Nanjing
Jiangsu Province,
China 210046
If to Investor:
Streeterville Capital, LLC
Attn: John M. Fife
303 East Wacker Drive, Suite 1040
Chicago, Illinois 60601
With a copy to (which copy shall not constitute notice):
Hansen Black Anderson Ashcraft PLLC
Attn: Jonathan Hansen
3051 West Maple Loop Drive, Suite 325
Lehi, Utah 84043
11.12. Successors
and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor
hereunder may be assigned by Investor to a third party, including its affiliates, in whole or in part, without the need to obtain Company’s
consent thereto. Company may not assign its rights or obligations under this Agreement or delegate its duties hereunder, whether directly
or indirectly, without the prior written consent of Investor, and any such attempted assignment or delegation shall be null and void.
11.13. Survival.
The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees to indemnify and hold harmless Investor
and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach or
alleged breach by Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants
and obligations under this Agreement, including advancement of expenses as they are incurred.
11.14. Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
11.15. Investor’s
Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative
and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Investor may
have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute,
and any and all such rights and remedies may be exercised from time to time and as often and in such order as Investor may deem expedient.
11.16. Attorneys’
Fees and Cost of Collection. In the event any suit, action or arbitration is filed by either party against the other to interpret
or enforce any of the Transaction Documents, the unsuccessful party to such action agrees to pay to the prevailing party all costs and
expenses, including reasonable attorneys’ fees incurred therein, including the same with respect to an appeal. The “prevailing
party” shall be the party in whose favor a judgment is entered, regardless of whether judgment is entered on all claims asserted
by such party and regardless of the amount of the judgment; or where, due to the assertion of counterclaims, judgments are entered in
favor of and against both parties, then the arbitrator shall determine the “prevailing party” by taking into account the relative
dollar amounts of the judgments or, if the judgments involve nonmonetary relief, the relative importance and value of such relief. Nothing
herein shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad faith pleading.
If (i) any Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings,
or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect amounts due under
the Note or to enforce the provisions of the Note, or (ii) there occurs any bankruptcy, reorganization, receivership of Company or
other proceedings affecting Company’s creditors’ rights and involving a claim under the Note; then Company shall pay the costs
incurred by Investor for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or
other proceeding, including, without limitation, reasonable attorneys’ fees, expenses, deposition costs, and disbursements.
11.17. Waiver.
No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to
any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a
party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
11.18. Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS OF THE PARTIES
HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE
STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.
11.19. Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other
Transaction Documents.
11.20. Voluntary
Agreement. Company has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed
for Company to understand the terms, consequences and binding effect of this Agreement and each of the other Transaction Documents and
fully understand them. Company has had the opportunity to seek the advice of an attorney of Company’s choosing, or has waived the
right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily and without any duress or undue
influence by Investor or anyone else.
11.21. Document
Imaging. Investor shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments,
documents, and items and records governing, arising from or relating to any of Company’s loans, including, without limitation, this
Agreement and the other Transaction Documents, and Investor may destroy or archive the paper originals. The parties hereto (i) waive
any right to insist or require that Investor produce paper originals, (ii) agree that such images shall be accorded the same force and
effect as the paper originals, (iii) agree that Investor is entitled to use such images in lieu of destroyed or archived originals for
any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed
facsimile (faxed), scanned, emailed, or other imaged copy of this Agreement or any other Transaction Document shall be deemed to be of
the same force and effect as the original manually executed document.
11.22. No
Shorting. During the period beginning on the Closing Date and ending on the date the Note has been repaid in full or sold by Investor
to a third party that is not an affiliate of Investor, Investor shall not directly or through an affiliate engage in any open market Short
Sales (as defined below) of the Ordinary Shares; provided; however, that unless and until Company has affirmatively demonstrated
by the use of specific evidence that Investor is engaging in open market Short Sales, Investor shall be assumed to be in compliance with
the provisions of this Section 11.22 and Company shall remain fully obligated to fulfill all of its obligations under the Transaction
Documents; and provided, further, that (i) Company shall under no circumstances be entitled to request or demand that Investor either
(A) provide trading or other records of Investor or of any party or (B) affirmatively demonstrate that Investor or any other party has
not engaged in any such Short Sales in breach of these provisions as a condition to Company’s fulfillment of its obligations under
any of the Transaction Documents, (ii) Company shall not assert Investor’s or any other party’s failure to demonstrate such
absence of such Short Sales or provide any trading or other records of Investor or any other party as all or part of a defense to any
breach of Company’s obligations under any of the Transaction Documents, and (iii) Company shall have no setoff right with respect
to any such Short Sales. For the avoidance of doubt, selling against the issuance of Conversion Shares (as defined in the Note) after
delivery of a Conversion Notice (as defined in the Note) is not a Short Sale. Other than the weekly sales limitation set forth in Section
11 of the Note, there will be no restriction or limitation of any kind on Investor’s right or ability to sell or transfer any or
all of the Conversion Shares at any time, in its sole and absolute discretion. As used herein, “Short Sale” has the
meaning provided in Rule 200 promulgated under Regulation SHO under the 1934 Act.
[Remainder of page intentionally left blank;
signature page follows]
IN WITNESS WHEREOF, the undersigned
Investor and Company have caused this Agreement to be duly executed as of the date first above written.
| |
INVESTOR: |
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Streeterville Capital, LLC |
| |
|
| |
By: |
/s/ John M. Fife |
| |
|
John M. Fife, President |
| |
|
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COMPANY: |
| |
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Ostin Technology Group Co., Ltd. |
| |
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By: |
/s/ Tao Ling |
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Tao Ling, Chief Executive Officer |
[Signature Page to Securities
Purchase Agreement]
ATTACHED EXHIBITS:
| Exhibit A | |
Note |
| Exhibit B | |
Irrevocable Transfer Agent Instructions |
| Exhibit C | |
Officer’s Certificate |
| Exhibit D | |
Share Issuance Resolution |
| Exhibit E | |
Arbitration Provisions |
Exhibit
E
ARBITRATION PROVISIONS
1. Dispute
Resolution. For purposes of this Exhibit E, the term “Claims” means any disputes, claims, demands, causes
of action, requests for injunctive relief, requests for specific performance, liabilities, damages, losses, or controversies whatsoever
arising from, related to, or connected with the transactions contemplated in the Transaction Documents and any communications between
the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation, failure of
formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and any statutory
claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions (defined
below)) or any of the other Transaction Documents. For the avoidance of doubt, Investor’s pursuit of an injunction or other Claim
pursuant to these Arbitration Provisions or with a court will not later prevent Investor under the doctrines of claim preclusion, issue
preclusion, res judicata or other similar legal doctrines from pursuing other Claims in a separate arbitration in the future. The parties
to this Agreement (the “parties”) hereby agree that the Claims may be arbitrated in one or more Arbitrations pursuant
to these Arbitration Provisions (one for an injunction or injunctions and a separate one for all other Claims). The term “Claims”
specifically excludes a dispute over Calculations. The parties to the Agreement hereby agree that the arbitration provisions set forth
in this Exhibit E (“Arbitration Provisions”) are binding on each of them. As a result, any attempt to rescind
the Agreement (or these Arbitration Provisions) or declare the Agreement (or these Arbitration Provisions) or any other Transaction Document
invalid or unenforceable for any reason is subject to these Arbitration Provisions. As a result, any attempt to rescind the Agreement
(or these Arbitration Provisions) or any other Transaction Document) or declare the Agreement (or these Arbitration Provisions) or any
other Transaction Document invalid or unenforceable pursuant to Section 29 of the 1934 Act or for any other reason is subject to these
Arbitration Provisions. Any capitalized term not defined in these Arbitration Provisions shall have the meaning set forth in the Agreement.
2. Arbitration.
Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted exclusively
in Salt Lake County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right
provided for in Paragraph 5 below (the “Appeal Right”), the parties agree that the award of the arbitrator rendered
pursuant to Paragraph 4 below (the “Arbitration Award”) shall be (a) final and binding upon the parties, (b) the sole
and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator,
and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to the
Appeal Right, any costs or fees, including without limitation reasonable attorneys’ fees, incurred in connection with or incident
to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement.
The Arbitration Award shall include default interest (as defined or otherwise provided for in the Note, “Default Interest”)
(with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award.
Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in Salt Lake County, Utah.
3. The
Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration Act,
U.C.A. § 78B-11-101 et seq. (as amended or superseded from time to time, the “Arbitration Act”). Notwithstanding
the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration Act, in the event of conflict or variation
between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration Provisions
shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act that may conflict
with or vary from these Arbitration Provisions.
4. Arbitration
Proceedings. Arbitration between the parties will be subject to the following:
4.1 Initiation
of Arbitration. Pursuant to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving
written notice to the other party (“Arbitration Notice”) in the same manner that notice is permitted under Section
11.11 of the Agreement; provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed
initiated as of the date that the Arbitration Notice is deemed delivered to such other party under Section 11.11 of the Agreement (the
“Service Date”). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant
to Section 11.11 of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy,
the remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent
with the Utah Rules of Civil Procedure.
4.2 Selection
and Payment of Arbitrator.
(a) Within ten (10) calendar
days after the Service Date, Investor shall select and submit to Company the names of three (3) arbitrators that are designated as “neutrals”
or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such three (3) designated persons hereunder are referred
to herein as the “Proposed Arbitrators”). For the avoidance of doubt, each Proposed Arbitrator must be qualified as
a “neutral” with Utah ADR Services. Within five (5) calendar days after Investor has submitted to Company the names of the
Proposed Arbitrators, Company must select, by written notice to Investor, one (1) of the Proposed Arbitrators to act as the arbitrator
for the parties under these Arbitration Provisions. If Company fails to select one of the Proposed Arbitrators in writing within such
5-day period, then Investor may select the arbitrator from the Proposed Arbitrators by providing written notice of such selection to Company.
(b) If Investor fails
to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph (a) above,
then Company may at any time prior to Investor so designating the Proposed Arbitrators, identify the names of three (3) arbitrators that
are designated as “neutrals” or qualified arbitrators by Utah ADR Service by written notice to Investor. Investor may then,
within five (5) calendar days after Company has submitted notice of its Proposed Arbitrators to Investor, select, by written notice to
Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Investor
fails to select in writing and within such 5-day period one (1) of the three (3) Proposed Arbitrators selected by Company, then Company
may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written notice of such selection to
Investor.
(c) If a Proposed Arbitrator
chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed Arbitrator
may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed Arbitrator
declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline or are otherwise
unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph 4.2.
(d) The date that the
Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve
as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”. If an arbitrator resigns
or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue
the Arbitration. If Utah ADR Services ceases to exist or to provide a list of neutrals and there is no successor thereto, then the arbitrator
shall be selected under the then prevailing rules of the American Arbitration Association.
(e) Subject to Paragraph
4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or
fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to the accrual of Default
Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.
4.3 Applicability
of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Utah Rules of Civil
Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall apply, without limitation, to the
filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Utah Rules of Evidence
shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the parties’
intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event of any conflict between
the Utah Rules of Civil Procedure or the Utah Rules of Evidence and these Arbitration Provisions, these Arbitration Provisions shall control.
4.4 Answer
and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the
Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline,
the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against such
party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within
the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration
Notice, against a party that fails to submit an answer within such time period.
4.5 Related
Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence concurrent legal
proceedings with any state or federal court sitting in Salt Lake County, Utah (“Litigation Proceedings”), subject to
the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration
Notice, provided that an additional cause of action to compel arbitration will also be included therein, (b) so long as the other party
files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings will
be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable) hereunder, (c) if the other party fails
to file an answer in the Litigation Proceedings or an answer in the Arbitration proceedings, then the party initiating Arbitration shall
be entitled to a default judgment consistent with the relief requested, to be entered in the Litigation Proceedings, and (d) any legal
or procedural issue arising under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined
in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal Panel (defined below)) may be entered in such Litigation
Proceedings pursuant to the Arbitration Act.
4.6 Discovery.
Pursuant to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted as follows:
(a) Written discovery
will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof, and the written
discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration.
The party seeking written discovery shall always have the burden of showing that all of the standards and limitations set forth in these
Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:
(i) To
facts directly connected with the transactions contemplated by the Agreement.
(ii) To
facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less
expensive than in the manner requested.
(b) No party shall be
allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission (including
discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than three (3) depositions
(excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions will be borne by
the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition of the estimated
attorneys’ fees that such party expects to incur in connection with defending the deposition. If the party defending the deposition
fails to submit an estimate of attorneys’ fees within five (5) calendar days of its receipt of a deposition notice, then such party
shall be deemed to have waived its right to the estimated attorneys’ fees. The party taking the deposition must pay the party defending
the deposition the estimated attorneys’ fees prior to taking the deposition, unless such obligation is deemed to be waived as set
forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated attorneys’ fees are
unreasonable, such party may submit the issue to the arbitrator for a decision. All depositions will be taken in Utah.
(c) All discovery requests
(including document production requests included in deposition notices) must be submitted in writing to the arbitrator and the other party.
The party submitting the written discovery requests must include with such discovery requests a detailed explanation of how the proposed
discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure. The receiving party
will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the arbitrator an estimate
of the attorneys’ fees and costs associated with responding to such written discovery requests and a written challenge to each applicable
discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s) to one or more discovery requests,
consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding as to the likely attorneys’
fees and costs associated with responding to the discovery requests and issue an order that (i) requires the requesting party to prepay
the attorneys’ fees and costs associated with responding to the discovery requests, and (ii) requires the responding party to respond
to the discovery requests as limited by the arbitrator within twenty-five (25) calendar days of the arbitrator’s finding with respect
to such discovery requests. If a party entitled to submit an estimate of attorneys’ fees and costs and/or a challenge to discovery
requests fails to do so within such 5-day period, the arbitrator will make a finding that (A) there are no attorneys’ fees or costs
associated with responding to such discovery requests, and (B) the responding party must respond to such discovery requests (as may be
limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests.
Any party submitting any written discovery requests, including without limitation interrogatories, requests for production subpoenas to
a party or a third party, or requests for admissions, must prepay the estimated attorneys’ fees and costs, before the responding
party has any obligation to produce or respond to the same, unless such obligation is deemed waived as set forth above.
(d) In order to allow
a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth in these Arbitration
Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery request does not
satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil Procedure, the arbitrator may modify
such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in part.
(e) Each party may submit
expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of the Arbitration Commencement
Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following: (i) a complete statement of
all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name and qualifications, including
a list of all the expert’s publications within the preceding ten (10) years, and a list of any other cases in which the expert has
testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii) the compensation to be paid
for the expert’s report and testimony. The parties are entitled to depose any other party’s expert witness one (1) time for
no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning any matter not fairly disclosed in
the expert report.
4.6 Dispositive
Motions. Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of Civil Procedure
(a “Dispositive Motion”). The party submitting the Dispositive Motion may, but is not required to, deliver to the arbitrator
and to the other party a memorandum in support (the “Memorandum in Support”) of the Dispositive Motion. Within seven
(7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other party a memorandum
in opposition to the Memorandum in Support (the “Memorandum in Opposition”). Within seven (7) calendar days of delivery
of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to the arbitrator and
to the other party a reply memorandum to the Memorandum in Opposition (“Reply Memorandum”). If the applicable party
shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the Reply Memorandum as required
above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless.
4.7 Confidentiality.
All information disclosed by either party (or such party’s agents) during the Arbitration process (including without limitation
information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party
agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including
without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure such information becomes
public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents, (b) such
information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified the other
party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction prior
to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives and legal counsel on a need
to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5) of the Arbitration
Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information
and confidential information upon the written request of either party.
4.8 Authorization;
Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize and direct the
arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the Arbitration proceedings
to be efficient and expeditious. Pursuant to Section 120 of the Arbitration Act, the parties hereby agree that an Arbitration Award must
be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized and
directed to hold a scheduling conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish a
scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the parties to enable
the arbitrator to render a decision prior to the end of such 120-day period.
4.9 Relief.
The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator
deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator
may not award exemplary or punitive damages.
4.10 Fees
and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and
(b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other discovery
costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.
5. Arbitration
Appeal.
5.1 Initiation
of Appeal. Following the entry of the Arbitration Award, either party (the “Appellant”) shall have a period of
thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing, that the Appellant elects
to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal Notice”) to a panel of arbitrators
as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein as the “Appeal
Date”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect
to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also
pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of
the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant
delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of
this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will not be further conditioned.
In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other party within
the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party delivers an
Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph
5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties’
agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.
5.2 Selection
and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of
the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration
panel (the “Appeal Panel”).
(a) Within ten (10)
calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators that
are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such five
(5) designated persons hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For the avoidance
of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral” with Utah ADR Services, and shall not be the
arbitrator who rendered the Arbitration Award being appealed (the “Original Arbitrator”). Within five (5)
calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must
select, by written notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members of the Appeal Panel.
If the Appellant fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day period, then the Appellee
may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the
Appellant.
(b) If the Appellee
fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the Appeal Date pursuant
to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed Appeal Arbitrators, identify
the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Service (none of
whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then, within five (5) calendar days after the
Appellant has submitted notice of its selected arbitrators to the Appellee, select, by written notice to the Appellant, three (3) of such
selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in writing within such 5-day period three (3) of the
arbitrators selected by the Appellant to serve as the members of the Appeal Panel, then the Appellant may select the three (3) members
of the Appeal Panel from the Appellant’s list of five (5) arbitrators by providing written notice of such selection to the Appellee.
(c) If a selected
Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator may
select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date a chosen Proposed
Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three (3) of the five (5)
designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator selection process
shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal Arbitrators who have already
agreed to serve shall remain on the Appeal Panel.
(d) The date that
all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email) delivered to
both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “Appeal Commencement
Date”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in writing (including
via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel to serve as the lead
arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration
Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make determinations upon
the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator on the Appeal
Panel. If an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings,
a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel.
If Utah ADR Services ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal Panel shall be selected
under the then prevailing rules of the American Arbitration Association.
(d) Subject to
Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.
5.3 Appeal
Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall conduct
a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other provisions
of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair and expeditious
disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence and discovery,
together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed with the Appeal
Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel shall not permit
the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new witnesses or affidavits,
and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the Arbitration Award.
5.4 Timing.
(a) Within
seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel
copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents
filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may,
but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s arguments concerning
or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7)
calendar days of the Appellant’s delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal
Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s
delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum
to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of this subparagraph
(a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall
fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply Memorandum as required
above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed
regardless.
(b) Subject
to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar days
of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal
is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date).
5.5 Appeal
Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the lead arbitrator on
the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety and
make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall
remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive
remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d)
be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees,
including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall,
to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award shall include
Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration
Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in Salt Lake County, Utah.
5.6 Relief.
The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper
under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may
not award exemplary or punitive damages.
5.7 Fees
and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration and
the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which,
for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any
part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and other
expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without limitation
in connection with the Appeal).
6. Miscellaneous.
6.1 Severability.
If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified
to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions
shall remain unaffected and in full force and effect.
6.2 Governing
Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict of laws principles
therein.
6.3 Interpretation.
The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation
of, these Arbitration Provisions.
6.4 Waiver.
No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party
granting the waiver.
6.5 Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.
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