Convertible Equity Agreement (DIFC)

Definitions

"Next Equity Round" means the first allotment by the Company, after the date of this Agreement, of preference shares or other new shares for cash at a stated company valuation, in one transaction or a series of related ones, raising at least the Round Threshold in cash from persons who are not the Investor, its group or any holder of another Convertible Right, and not counting the conversion of any Convertible Right.

"Round Shares" means the class of shares allotted to the new cash investors in the Next Equity Round, and "Round Price" means the lowest price per share they pay.

"Convertible Right" means this Agreement and any other agreement, note or instrument under which a person has the right to receive shares of the Company on a future event on conversion terms, whether or not it is repayable.

"Conversion Shares" means the Round Shares, or if the Company so determines with the Investor's agreement a class with the same rights, allotted to the Investor under this Agreement.

"Sale Event" means a transfer of shares by which one person or a group acting together comes to hold more than half the voting rights in the Company, a transfer of all or substantially all of the Company's business, or a listing of the Company's shares on a stock exchange.

"Liquidation Event" means the Company's winding up, whether solvent or insolvent, under the Companies Law or the insolvency law applying in the DIFC, or the making of an assignment or composition with the Company's creditors.

"Companies Law" means the Companies Law of the DIFC, DIFC Law No. 5 of 2018, and "Registrar" means the Registrar of Companies of the DIFC; "Articles" means the Company's articles of association as in force.

"Capitalisation" means all shares of the Company in issue immediately before the Next Equity Round completes, together with all shares issuable on the exercise of options, warrants and promised awards, the shares reserved for an employee incentive plan and not yet awarded, and the shares issuable on conversion of every Convertible Right including this Agreement, counted once, with any enlargement of the incentive reserve made for the Next Equity Round counted only to the extent of awards already promised.

Funding

The Investor shall pay the Funding Amount in the Settlement Currency, in cleared funds, to the Company's bank account within 7 days after the date of this Agreement. The Company confirms that the payment is an advance against shares to be allotted and is not a deposit or a loan.

The Funding Amount is paid for the right to receive shares and is not a loan. No interest accrues on it, there is no maturity date, and the Company is not obliged to repay it except as the Liquidation Event provision states. The Investor is not a creditor of the Company by reason of this Agreement.

Allotment of Shares

On conversion the Company shall allot and issue Conversion Shares to the Investor, fully paid, in accordance with the Companies Law and the Articles. The Company shall, before allotment, pass any resolution of its directors or shareholders that the Companies Law or the Articles require to authorise the allotment, shall deal with any pre-emption right of existing shareholders, if there is one, under the Companies Law or the Articles, by obtaining a waiver or disapplication (covering, where the Companies Law treats it as an allotment, the grant of the conversion right under this Agreement), and shall within the time the Companies Law requires enter the Investor in its register of members and give notice of the allotment to the Registrar. The Company shall not allot any share below its par value, if its shares have one.

Conversion

If a Next Equity Round completes before this Agreement ends, the Funding Amount converts automatically on completion into a number of Conversion Shares equal to the Funding Amount divided by the Conversion Price, rounded down, with any fraction paid in cash at the Conversion Price. The Investor shall sign the share subscription form and the shareholders' and articles documents signed by the cash investors, on the same terms, with the usual exceptions for the Investor limiting its warranties to its own capacity and title.

Conversion Price

The "Conversion Price" is the Cap divided by the Capitalisation. No discount applies.

Sale Event

If a Sale Event occurs before this Agreement ends, the Company shall pay the Investor, from the proceeds and at or before completion of the Sale Event, the greater of the Funding Amount and the value of the number of ordinary shares equal to the Funding Amount divided by the Cap and multiplied by the Capitalisation at that date, paid on the same terms and in the same form of consideration as is offered to the holders of ordinary shares. The Investor may instead elect conversion to ordinary shares immediately before completion.

Liquidation Event

If a Liquidation Event occurs before this Agreement ends, the Investor is entitled to be paid the Funding Amount out of the Company's surplus assets, after its creditors have been paid in full and ahead of any distribution to its shareholders, level with the holders of other Convertible Rights, who share pro rata if the surplus is not enough. Where the insolvency law applying to the Company does not permit this ranking, the Investor has the rights that law allows.

Position Before Conversion

Until Conversion Shares are allotted to it, the Investor is not a member of the Company and has no right to vote, to receive notice of or attend general meetings, to receive dividends or to inspect the register of members.

Participation Right

The Investor may subscribe in cash for up to its pro rata share of the shares offered in the Next Equity Round on the terms offered to the other subscribers. Its pro rata share is the number of Conversion Shares divided by the Capitalisation. It must accept within 10 days of the Company's notice, and the right ends when the Next Equity Round completes.

Information

While this Agreement is in force, the Company shall send the Investor its annual financial statements within 6 months after each financial year end and give prompt notice of a proposed Next Equity Round, Sale Event or Liquidation Event. The Investor shall keep information confidential.

Better Terms

If, before the Next Equity Round completes, the Company grants another Convertible Right with a lower cap, a higher discount or other terms better for its holder than this Agreement, it shall promptly tell the Investor, who may within 15 days adopt those terms in place of the corresponding terms of this Agreement, as a package.

Warranties

The Company warrants to the Investor on the date of this Agreement that: it is duly registered and in good standing with the Registrar and holds the licence its business needs in the DIFC; it has power to enter into and perform this Agreement and has taken all corporate action needed; this Agreement binds it; its performance breaches neither the Articles nor any law or material contract applying to it; and its share capital and options are as stated in the register and cap table given to the Investor.

The Investor warrants to the Company that it has capacity and authority to enter into this Agreement; that it enters into it for its own account for investment and not for resale; that it is a person to whom the Company may lawfully make this offer, such as a professional client or a person within an exemption available to a private company, and will give evidence of that on request; that it has had the opportunity to ask questions about the Company; and that it understands the investment is illiquid and may be lost in full.

Regulatory Matters

The parties acknowledge that financial services in or from the DIFC are regulated by the Dubai Financial Services Authority, and that offering, promoting or dealing in securities or arranging the investment may be a regulated activity or subject to a restriction on promotions to the public. The Company confirms that it is relying on the offer to the Investor falling outside any such restriction, or within an available exemption, and shall not promote the Agreement to the public. Each party shall take its own legal advice about the regime.

Data Protection

Each party shall handle personal data it receives under this Agreement, including names, identity and contact details of individuals and beneficial owners, in accordance with the data protection law of the DIFC, DIFC Law No. 5 of 2020, where it applies to that party, and shall use it only to perform this Agreement and comply with legal and regulatory duties.

Transfer

The Investor may not assign, transfer or hold on trust its rights under this Agreement without the Company's written consent, which shall not be unreasonably withheld for a transfer to an affiliate or the Investor's estate, and the transferee must first sign a deed of adherence and satisfy the Company's identity checks.

Amendment

A term of this Agreement may be amended or waived in writing by the Company and either the Investor or the holders of a majority of the funding amounts of all agreements on the same cap and discount, provided that the Funding Amount cannot be changed this way, each holder is asked to agree, and all are treated alike.

Termination

This Agreement ends on the earlier of allotment of the Conversion Shares to the Investor and payment to the Investor, or the setting aside of payment, of the sums due on a Sale Event or Liquidation Event. Ending it does not affect rights that arose before.

Language and Counterparts

This Agreement is made in English, which prevails over any translation, including an Arabic translation made for filing or for any authority. It may be signed in counterparts and by electronic signature, each of which is an original.

Notices

A notice under this Agreement must be in writing and sent by hand, courier or email to the Company at [TO BE CONFIRMED — Company notice address and email] or the Investor at [TO BE CONFIRMED — Investor notice address and email]. It is treated as received on delivery by hand or courier, or when sent by email if that is on a working day in the DIFC before 5.00 pm, and otherwise on the next working day.

General

This Agreement is the entire agreement of the parties on its subject. A provision that is held invalid is severed and the rest continues. A person that is not a party has no right to enforce it.

Governing Law and Disputes

This Agreement and any dispute or claim arising out of it are governed by the laws of the DIFC. The Courts of the DIFC have exclusive jurisdiction over any such dispute.