SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of March 12, 2008, by and among
First Growth Investors, Inc., a Nevada corporation,
and all
predecessors thereof (collectively, the “Company”),
Bright
Stand International Limited, an International business company incorporated
in
the British Virgin Islands (“BVI”),
Weifang YuHe Poultry Co., Ltd., a wholly foreign-owned enterprise organized
under the laws of the People’s Republic of China (“WFOE”),
the
selling stockholder identified on the signature page hereto (the “Selling
Stockholder”)
and the
investors listed on the Schedule of Investors attached hereto as Appendix
A
(each,
an “Investor”
and
collectively, the “Investors”).
WHEREAS,
on March 12, 2008, the Company entered into an Equity Transfer Agreement, which
has been reviewed by the Investors and will be filed with the Company’s Current
Report on Form 8-K under the Exchange Act (the “Exchange
Agreement”)
as an
exhibit, with BVI and Xxxxx Xxxxxxxx, a Japanese individual and sole former
shareholder of BVI, pursuant to which the Company will, subject to the terms
and
conditions thereof, acquire all of the equity interest of BV I and, indirectly,
all of BVI’s subsidiaries, in exchange for at least 100% of the total
outstanding shares Common Stock on a fully diluted basis as of the time of
the
closing of the exchange under the Exchange Agreement and immediately prior
to
the Closing under this Agreement (the “Exchange”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
exemptions from registration under the Securities Act (as defined below), the
Company desires to issue and sell to each Investor and the Selling Stockholder
desires to sell to each Investor, and each Investor, severally and not jointly,
desires to purchase from the Company and the Selling Stockholder, shares of
the
Company’s Common Stock, as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company, the Selling Stockholder and the Investors
agree as follows:
ARTICLE
1.
DEFINITIONS
1.1. Definitions
.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:
“2008
Annual
Report”
means
the
Annual Report of the Company for the fiscal year ending December 31, 2008,
as
filed with the Commission on Form 10-K (or such other form appropriate for
such
purpose as promulgated by the Commission).
“2008
Guaranteed
ATNI” has
the
meaning set forth in Section 4.11.
“2008
Make Good Shares” has
the
meaning set forth in Section 4.11.
“2009
Annual
Report”
means
the
Annual Report of the Company for the fiscal year ending December 31, 2009,
as
filed with the Commission on Form 10-K (or such other form appropriate for
such
purpose as promulgated by the Commission).
“2009
Guaranteed
ATNI” has
the
meaning set forth in Section 4.11.
“2009
Guaranteed
EPS” has
the
meaning set forth in Section 4.11.
“2009
Make Good Shares” has
the
meaning set forth in Section 4.11.
“Action”
as to
any Person, means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or threatened in writing against or affecting such Person, any of such Person’s
Subsidiaries or any of such Person’s or such Subsidiaries’ respective
properties, before or by any court, arbitrator, governmental or administrative
agency, regulatory authority (federal, state, county, local or foreign), stock
market, stock exchange or trading facility.
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144.
“After
Tax Net Income”
shall
have the meaning set forth in Section 4.11.
"Available
Undersubscription Amount"
has the
meaning set forth in Section 4.16.
"Basic
Amount"
has the
meaning set forth in Section 4.16.
“Business
Day”
means
any day except Saturday, Sunday and any day which is a federal legal holiday
or
a day on which banking institutions in the State of New York or State of Utah
are authorized or required by law or other governmental action to
close.
“Buy-In”
has
the
meaning set forth in Section 4.1(c).
“BVI”
has the
meaning set forth in the recitals to this Agreement.
“Closing”
means
the closing of the purchase and sale of the Shares
pursuant
to Article II.
“Closing
Date”
means
the Business Day on which all of the conditions set forth in Sections 5.1 and
5.2 hereof are satisfied, or such other date as the parties may
agree.
"Closing
Escrow Agreement"
means
the Closing Escrow Agreement, dated as of the date hereof, among the Company,
the Investors and the escrow agent (the “Escrow
Agent”)
identified therein, in the form of Exhibit
A
hereto,
as may be amended from time to time pursuant to Section 6.4 of this
Agreement.
“Commission”
means
the Securities and Exchange Commission.
2
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereafter be reclassified or for which it
may
be exchanged as a class.
“Company”
has
the
meaning set forth in the recitals to this Agreement.
“Company
Entities”
means
the Company, BVI, WFOE and all existing Subsidiaries of any such entities and
any other entities which hereafter become Subsidiaries of any such
entities.
“Common
Stock Equivalents”
means
any securities of the Company or any Subsidiary which entitle the holder thereof
to acquire Common Stock at any time, including, without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any
time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder
to
receive, directly or indirectly, Common Stock.
“Company
U.S. Counsel”
means
Xxxxxx Xxxxxx LLP.
“Company
Deliverables”
has the
meaning set forth in Section 2.2(a).
“Disclosure
Materials”
has the
meaning set forth in Section 3.1(h).
“Earnings
Per Share” shall
have the meaning set forth in Section 4.11.
“Effective
Date”
means
the date that the Registration Statement required by Section 2(a) of the
Registration Rights Agreement is first declared effective by the
Commission.
“Evaluation
Date” has
the
meaning set forth in Section 3.1(s).
“Exchange”
has the
meaning set forth in the recitals to this Agreement.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exchange
Agreement”
has the
meaning set forth in the recitals to this Agreement.
“Existing
Company Entities”
means
the Company, BVI, WFOE and their respective Subsidiaries.
“GAAP”
means
U.S. generally accepted accounting principles.
“Holdback
Escrow Agreement” means
the
Holdback Escrow Agreement, dated as of the date hereof, by
and
among
the Company, the Investors and Escrow Agent, in the form of Exhibit
E
hereto.
“Intellectual
Property Rights”
has the
meaning set forth in Section 3.1(p).
3
“Intellectual
Property Rights Licensing Agreements” has
the
meaning set forth in Section 3.1(p).
“Investment
Amount”
means,
with respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to this Agreement, which is also reflected on the
Schedule of Investors attached hereto as Appendix
A.
“Investor
Deliverables”
has the
meaning set forth in Section 2.2(b).
“Investor
Party”
has the
meaning set forth in Section 4.7.
“Lien”
means
any lien, charge, encumbrance, security interest, right of first refusal, right
of participation or other restrictions of any kind.
Lockup
Agreement”
means
the Lockup Agreement, dated as of the date hereof, by and between the Company
and each person listed as a signatory thereto, in the form attached as
Exhibit
C
hereto.
“Losses”
has the
meaning set forth in Section 4.7.
“Make
Good Escrow Agreement” means
the
Make Good Escrow Agreement, dated as of the date hereof, among the Company,
Xxxx
Capital Partners, LLC, the escrow agent identified therein (the “Make
Good Escrow Agent”),
the
Make Good Pledgor and the Investors, in the form of Exhibit
D
hereto,
as may be amended from time to time pursuant to Section 6.4 of this
Agreement.
“Make
Good Pledgor” means
Xx.
Xxxxx Xxxxxxxx.
“Material
Adverse Effect”
means
any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, properties, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken
as
a whole, or (iii) a material and adverse impairment to the Company’s ability to
perform on a timely basis its material obligations under any Transaction
Document, or the Exchange Agreement.
“Money
Laundering Laws”
has
the
meaning set forth in Section 3.1(gg).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Notice”
has
the
meaning set forth in Section 4.13.
"Notice
of Acceptance"
has the
meaning set forth in Section 4.16.
"Offer"
has the
meaning set forth in Section 4.16.
"Offer
Notice"
has the
meaning set forth in Section 4.16.
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"Offer
Period"
has the
meaning set forth in Section 4.16.
"Offered
Securities"
has the
meaning set forth in Section 4.16.
“OFAC”
has the
meaning set forth in Section 3.1(ee).
“Outside
Date”
means
the fifteenth calendar day (if such calendar day is a Trading Day and if not,
then the first Trading Day following such fifteenth calendar day) following
the
date of this Agreement.
“Per
Share Purchase Price”
equals
$0.21.
“Person”
means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“PRC”
means,
for the purpose of this Agreement, the People’s Republic of China, not including
Taiwan, Hong Kong and Macau.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or, to the knowledge of the Company, threatened.
“Questionnaire”
has the
meaning set forth in Section 5.2(d).
"Refused
Securities"
has the
meaning set forth in Section 4.16.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date hereof, among the
Company and the Investors, in the form of Exhibit
B
hereto.
“Registration
Statement”
means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Investors of the
Shares.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
has the
meaning set forth in Section 3.1(h).
“Securities”
means
Shares, Selling Stockholder Shares and Make Good Shares, if ever Make Good
Shares are due to be delivered pursuant to the Transaction
Documents.
“Securities
Act”
means
the Securities Act of 1933, as amended.
5
“Selling
Stockholder Shares” means
the
shares of Common Stock being offered and sold by the Selling Stockholder to
the
Investors hereunder in such number as is set forth below the Selling
Stockholder’s signature to this Agreement.
“Share
Delivery Date”
has the
meaning set forth in Section 4.1(c).
“Shares”
means
the shares of Common Stock being issued and sold to the Investors by the Company
hereunder.
“Short
Sales”
include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect
stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
"Subsequent
Placement"
has the
meaning set forth in Section 4.16.
“Subsequent
Placement Agreement” has
the
meaning set forth in Section 4.16.
“Subsidiary”
of any
Person means any “subsidiary” as defined in Rule 1-02(x) of the Regulation S-X
promulgated by the Commission under the Exchange Act of such Person.
Notwithstanding anything to the contrary set forth in any Transaction Document,
BVI, WFOE and their respective subsidiaries are each considered a Subsidiary
of
the Company.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market or (ii) if
the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the Pink Sheets
LLC (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i) or (ii) hereof, then Trading Day shall
mean
a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.
“Transaction
Documents”
means
this Agreement, the Registration Rights Agreement, the Closing Escrow Agreement,
the Make Good Escrow Agreement, the Holdback Escrow Agreement, the Lockup
Agreement and any other documents or agreements executed in connection with
the
transactions contemplated hereunder.
“Transfer
Agent”
means
Interwest Transfer Company, Inc., the current transfer agent of the Company
with
a mailing address of 0000 Xxxx Xxxxxx Xxxxxxxx Road, Suite 100, X.X. Xxx 00000,
Xxxx Xxxx Xxxx, Xxxx 00000 and a facsimile number of (000)000-0000, and any
successor transfer agent of the Company.
"Trigger
Date"
has the
meaning set forth in Section 4.16.
6
"Undersubscription
Amount"
has the
meaning set forth in Section 4.16.
“WFOE”
has the
meaning set forth in the recitals to this Agreement.
ARTICLE
2.
PURCHASE
AND SALE
2.1. Closing.
(a) Subject
to the terms and conditions set forth in this Agreement, at the Closing: (i)
the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company Shares in such number
as
equals the quotient (rounded down to the nearest whole share) obtained by
dividing (1) 85.71% of such Investor’s Investment Amount by (2) the Per Share
Purchase Price; and (ii) the Selling Stockholder shall sell to each Investor,
and each Investor shall, severally and not jointly, purchase from the Selling
Stockholder, Selling Stockholder Shares in such number as equals the quotient
(rounded down to the nearest whole share) obtained by dividing (1) 14.29% of
such Investor’s Investment Amount by (2) the Per Share Purchase Price. The
Closing shall take place at the offices of Winston & Xxxxxx LLP, counsel to
Xxxx Capital Partners, LLC, located at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000
or at
such other location as the parties may agree.
(b) The
Company and the Selling Stockholder will cooperate with one another, and will
cause the Selling Stockholder Shares to be issued to the Investors at Closing
as
part of a single stock certificate from the Company to each Investor that will
include all Shares and Selling Stockholder Shares being acquired by such
Investor under this Agreement. In furtherance thereof, the Selling Stockholder
hereby (i) instructs the Company to retain and cause to be delivered to the
Investors at Closing in accordance with Section 2.2 such number of shares of
Common Stock otherwise deliverable to the Selling Stockholder under the Exchange
Agreement as equals the total number of Selling Stockholder Shares subject
to
sale to Investors hereunder, and (ii) agrees to deliver to the Company such
documents (including legal opinions) as the Company may require to effect the
transfer of such shares to the name of the Investors at the Closing, including
executed stock powers.
2.2. Closing
Deliveries.
(a)
At the
Closing, the Company shall deliver or cause to be delivered to each Investor
the
following (the “Company
Deliverables”):
(i) a
single
certificate representing that number of aggregate Shares and Selling Stockholder
Shares to be issued and sold at Closing to such Investor, determined under
Section 2.1(a), registered in the name of such Investor;
(ii) the
legal
opinion of Company U.S. Counsel, in agreed form, addressed to the Investors;
and
(iii) the
legal
opinion of special PRC counsel to WFOE and the Company, in agreed form,
addressed to the Investors.
7
(b) By
the
Closing, each Investor shall deliver or cause to be delivered the agreements
specified in Section 5.2(d), each duly signed by such Investor (collectively,
the “Investor
Deliverables”).
(c) Within
two Trading Days following the date of this Agreement, each Investor shall
deliver to the Escrow Agent for deposit and disbursement in accordance with
the
Closing Escrow Agreement, its Investment Amount, in United States dollars and
in
immediately available funds, by wire transfer to an account designated in
writing by the Company for such purpose.
ARTICLE
3.
REPRESENTATIONS
AND WARRANTIES
3.1. Representations
and Warranties of the Company.
The
Company, BVI and WFOE hereby jointly and severally make the following
representations and warranties to each Investor:
(a) Subsidiaries.
None of
the Existing Company Entities have any direct or indirect Subsidiaries other
than as disclosed in the SEC Reports. Except as disclosed in the SEC Reports,
(i) the Company owns, directly or indirectly, all of the capital stock of each
other Existing Company Entity, and each other Existing Company Entity alone
or
together with other Existing Company Entities owns, directly or indirectly,
all
of the capital stock of its respective Subsidiaries, in each case free and
clear
of any and all Liens, and (ii) all the issued and outstanding shares of capital
stock of each Existing Company Entity and each Subsidiary are validly issued
and
are fully paid, non-assessable and free of preemptive and similar rights.
(b) Organization
and Qualification.
Each
Existing Company Entity is duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its respective properties and assets and to carry
on
its respective business as currently conducted and as specified in the Exchange
Agreement and Current Report on Form 8-K to be filed in accordance with Section
4.5 herein. No Existing Company Entity is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each Existing Company Entity is duly
qualified to conduct its respective businesses and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature
of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.
(c) Authorization;
Enforcement.
Each
Existing Company Entity which is or is to become party to any Transaction
Document and the Exchange Agreement has the requisite corporate and other power
and authority to enter into and to consummate the transactions contemplated
by
each such Transaction Document and the Exchange Agreement to which it is a
party
and otherwise to carry out its obligations thereunder. The execution and
delivery of the Transaction Documents, by each Existing Company Entity to be
party thereto and the consummation by each of them of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of such Existing Company Entity, and no further action is required by
any
of them in connection with such authorization. Each Transaction Document and
the
Exchange Agreement has been (or upon delivery will have been) duly executed
by
the Company, each other Existing Company Entity required to execute the same
and
each Subsidiary (to the extent any of them is a party thereto) and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company, such Existing Company Entity and such
Subsidiary, enforceable against the Company, the Existing Company Entity and
the
Subsidiary, as the case may be, each in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application. The execution and delivery
of
the Exchange Agreement by each party thereto and the consummation by each of
them of the transactions contemplated thereby have been duly authorized by
all
necessary action on the part of each such party thereto, and no further action
is required by any of them in connection with such authorization. The Exchange
Agreement has
been
duly executed by each party thereto and will constitute the valid and binding
obligation of each party thereto enforceable against each party thereto in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
8
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company,
and each other Existing Company Entity and Subsidiary (to the extent a party
thereto) and the consummation by the Company, and such other Existing Company
Entities and Subsidiaries, of the transactions contemplated thereby and the
sale
of the Selling Stockholder Shares hereunder do not and will not (i) conflict
with or violate any provision of the Company’s, such Existing Company Entity’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing an Existing
Company Entity or Subsidiary debt or otherwise) or other understanding to which
any Existing Company Entity or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any United States or PRC court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which
any
property or asset of the Company or a Subsidiary is bound or affected; except
in
the case of each of clauses (ii) and (iii), such as could not, individually
or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(e) Filings,
Consents and Approvals.
No
Existing Company Entity is required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any
United States or PRC court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and
performance by the Company and each Subsidiary to the extent such Subsidiary
is
a party thereto of the Transaction Documents or by reason of the sale of the
Selling Stockholder Shares hereunder, other than (i) the filing with the
Commission of one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, (ii) filings required by
state securities laws, (iii) the filing of a Notice of Sale of Securities on
Form D with the Commission under Regulation D of the Securities Act, (iv) the
filings required in accordance with Section 4.5, (v) filings, consents and
approvals required by the rules and regulations of the applicable Trading
Market, (vi) those that have been made or obtained prior to the date of this
Agreement, (vii) registrations, notices or filings required to be made in order
to comply with the currency and exchange control requirements imposed by the
Chinese government and/or Chinese law, if any, and (vii) other post closing
securities filings or notifications required to be made under federal or state
securities laws. To the knowledge of the Company, the Selling Stockholder is
not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any United State or People’s
Republic of China court or other federal, state, local or other governmental
authority or any other Person in connection with the execution, delivery and
performance by him of the Transaction Documents or by reason of the sale of
the
Selling Stockholder Shares hereunder.
9
(f) Issuance
of the Shares.
The
Shares have been duly authorized and, when issued and paid for in accordance
with the Transaction Documents, will be duly and validly issued, fully paid
and
nonassessable, free and clear of all Liens. As of the Closing, the Company
has
reserved from its duly authorized capital stock the shares of Common Stock
issuable pursuant to this Agreement in order to issue the Shares. When issued,
the Selling Stockholder Shares were duly authorized and were validly issued,
fully paid and nonassessable. The Selling Stockholder is the sole record owner
of the Selling Stockholder Shares to be sold hereunder.
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance
under
the Company’s various option and incentive plans, is specified in Schedule
3.1(g).
All of
the outstanding shares of the Common Stock and any other outstanding security
of
the Company have been duly and validly authorized and validly issued, fully
paid
and nonassessable and were issued in accordance with the registration or
qualification provisions of the Securities Act, or pursuant to valid exemptions
therefrom. Except as specified in Schedule
3.1(g),
no
securities of any Existing Company Entity are entitled to preemptive or similar
rights, and no Person has any right of first refusal, preemptive right, right
of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as specified in Schedule
3.1(g),
there
are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exchangeable for, or giving any Person any
right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Shares and the Selling Stockholder Shares hereunder
will not, immediately or with the passage of time, obligate the Company or
any
Subsidiary to issue shares of Common Stock or other securities to any Person
(other than the Investors) and will not result in a right of any holder of
Company or Subsidiary securities to adjust the exercise, conversion, exchange
or
reset price under such securities. Except as set forth in Schedule
3.1(g),
no
Existing Company Entity has issued any capital stock in a private placement
transaction, including, without limitation, in a transaction commonly referred
to in the PRC as a “1 ½ transaction.”
10
(h) SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the twelve months preceding the date hereof (or such shorter period as
the
Company was required by law to file such reports), including, for this purpose,
the draft of the current report on Form 8-K that will be filed by the Company
to
disclose the transactions contemplated by the Exchange Agreement (the foregoing
materials being collectively referred to herein as the “SEC
Reports”
and,
together with the Schedules to this Agreement (if any), the “Disclosure
Materials”)
on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.
As
of their respective dates, to the knowledge of the Company, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The financial
statements of the Company and each Subsidiary included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the
time
of filing. Such financial statements have been prepared in accordance with
GAAP
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in
the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
(i) Press
Releases.
To the
knowledge of the Company, the press releases disseminated by the Company during
the twelve months preceding the date of this Agreement taken as a whole do
not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when
made,
not misleading.
(j) Material
Changes.
Aside
from the transactions contemplated by this Agreement and the Exchange Agreement,
except as specifically disclosed in the SEC Reports, since September 30, 2007
(i) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (ii) no
Existing Company Entity has incurred any liabilities (contingent or otherwise)
other than (A) trade payables, accrued expenses and other liabilities incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s or its Subsidiaries’
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) other than the GAAP conforming adjustments
the
Existing Company Entities have made in connection with their assumption of
public company status in connection with the Exchange Agreement, no Existing
Company Entity has altered its method of accounting or the identity of its
auditors, (iv) no Existing Company Entity has declared or made any dividend
or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) no Existing Company Entity has issued any equity securities
to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information.
11
(k) Litigation.
There
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Shares or (ii) except
as specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. No Existing Company Entity,
nor
any director or officer thereof (in his or her capacity as such), is or has
been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty, except
as specifically disclosed in the SEC Reports. There has not been, and to the
knowledge of the Company, there is not pending any investigation by the
Commission involving any Existing Company Entity or any of their respective
current or former directors or officers (in his or her capacity as such). The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(l) Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of any Existing Company Entity.
(m) Indebtedness;
Compliance.
Except
as disclosed on Schedule
3.1(m),
no
Existing Company Entity is a party to any indenture, debt, capital lease
obligations, mortgage, loan or credit agreement by which it or any of its
properties is bound. No Existing Company Entity (i) is in default under or
in
violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by such Existing
Company Entity under), nor has any Existing Company Entity received notice
of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is
a
party or by which it or
any of
its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of
any
order of any court, arbitrator or governmental body, or (iii) is or has been
in
violation of any statute, rule or regulation of any governmental authority,
including, without limitation all foreign, federal, state and local laws
relating to taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except in each
case
as could not, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect. The Exchange Agreement complies with
all
applicable laws, rules and regulations of the United States and the PRC. The
Company is in compliance with all effective requirements of the Xxxxxxxx-Xxxxx
Act of 2002, as amended, and the rules and regulations thereunder that are
applicable to it, except where such noncompliance could not have or reasonably
be expected to result in a Material Adverse Effect.
(n) Regulatory
Permits.
The
Existing Company Entities possess all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect, and no Existing Company Entity has received any notice
of proceedings relating to the revocation or modification of any such
permits.
12
(o) Title
to Assets.
The
Existing Company Entities have valid land use rights for all real property
that
is material to their respective businesses and good and marketable title in
all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the
use
made and proposed to be made of such property by such Existing Company Entity.
Any real property and facilities held under lease by any Existing Company Entity
are held by them under valid, subsisting and enforceable leases of which such
Existing Company Entity is in compliance, except as could not, individually
or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(p) Patents
and Trademarks.
Schedule
3.1(p)
has
disclosed patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights that
the Existing Company Entities own or have the rights to use (collectively,
the
“Intellectual
Property Rights”).
The
Intellectual Property Rights constitute all of the patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and other similar rights that are necessary and material to the
business of the Existing Company Entities in connection with their respective
businesses as described in the SEC
Reports.
No
Existing Company Entity has received a written notice that the Intellectual
Property Rights used by any of them violates or infringes upon the rights of
any
Person. Except as otherwise disclosed in the Schedule
3.1(p),
to the
knowledge of the Existing Company Entities, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights. To the knowledge of the Existing
Company Entities, no former or current employee, no former or current
consultant, and no third-party joint developer of any Existing Company Entity
has any Intellectual Property Rights that are necessary and material to the
business of the Existing Company Entities made, developed, conceived, created
or
written by the aforesaid employee, consultant or third-party joint developer
during the period of his or her retention by, or joint venture with, such
Existing Company Entity which has been asserted against any Existing Company
Entity. The
Intellectual Property Rights and the owner thereof or agreement through which
they are licensed to any of the Existing Company Entity are set forth on
Schedule
3.1(p).
By the
Closing, the WFOE shall have entered into agreements by which it is granted
irrevocable, exclusive, licenses on all Intellectual Property Rights that are
necessary and material to its business and that are registered to or owned
by
any Person other than the WFOE or its predecessor. Such agreements together
with
the licensing agreements disclosed on Schedule
3.1(p)
are
collectively the “Intellectual
Property Rights Licensing Agreements.”
The
Existing Company Entities will take such action as may be required, including
making and maintaining the filings set forth on Schedule
3.1(p)
and
shall cause any such transfers of Intellectual Property Rights to the
WFOE to be granted as is required in order for the WFOE to become the
registered owner (in its current name) of all such Intellectual Property Rights
(including, without limitation, the entering into of any Intellectual Property
Right Licensing Agreements as may be necessary).
13
(q) Insurance.
Each
Existing Company Entity is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses it is engaged and in the country in which the
Existing Company Entities operate. The Company has no reason to believe that
it
or any Existing Company Entity will not be able to renew its existing respective
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
on
terms consistent with market for the Company’s and such other Existing Company
Entity’s respective lines of business.
(r) Transactions
With Affiliates and Employees; Customers.
Except
as set forth in the SEC Reports, none of the officers, directors or 5%
or
more shareholders
of any
Existing Company Entity, and, to the knowledge of the Company, none of the
employees of any Existing Company Entity, is presently a party to any
transaction with any Existing Company Entity (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such Person or, to the knowledge of the Company, any entity
in
which any officer, director, or such employee or 5% or more shareholder has
a
substantial interest or is an officer, director, trustee or partner. None of
the
Existing Company Entities owes any money or other compensation to any of their
respective officers or directors or shareholders, except to extent of ordinary
course compensation arrangements specified in the SEC Reports. No material
customer of any Existing Company Entity has indicated their intention to
diminish their relationship with such Existing Company Entity and no Existing
Company Entity has any knowledge from which it could reasonably conclude that
any such customer relationship may be adversely affected.
(s) Internal
Accounting Controls.
The
Existing Company Entities maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company is establishing disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company Entities and designed such disclosure controls and
procedures to ensure that material information relating to the Company Entities
is made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Form 10-KSB or 10-QSB, as
the case may be, is being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures in
accordance with Item 307 of Regulation S-B under the Exchange Act for the
Company’s most recently ended fiscal quarter or fiscal year-end (such date, the
“Evaluation
Date”).
The
Company presented in its most recently filed Form 10-KSB or Form 10-QSB the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
14
(t) Solvency.
Based
on the financial condition of the Company, including the Existing Company
Entities, as of the Closing Date (and assuming that the Closing shall have
occurred), (i) each Existing Company Entity’s assets do not constitute
unreasonably small capital to carry on their respective business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by such Existing Company Entity, and projected capital
requirements and capital availability thereof and (ii) the current cash flow
of
such Existing Company Entity, together with the proceeds such Existing Company
Entities would receive, were they to liquidate all of their respective assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its debt when such amounts are required
to be paid. The Existing Company Entities do not intend to incur debts beyond
their respective ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its
debt).
(u) Certain
Fees.
Except
as described in Schedule
3.1(u),
no
brokerage or finder’s fees or commissions are or will be payable by any Existing
Company Entity to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(v) Certain
Registration Matters.
Assuming the accuracy of the Investors’ representations and warranties set forth
in Sections 3.3(b)-(e), no registration under the Securities Act is required
for
the offer and sale of the Shares by the Company and the Selling Stockholder
Shares (as applicable) to the Investors under the Transaction Documents. The
Company is eligible to register its Common Stock for resale by the Investors
under Form S-1 promulgated under the Securities Act. Except as specified in
Schedule
3.1(v),
no
Existing Company Entity has granted or agreed to grant to any Person other
than
the Investors pursuant to the Registration Rights Agreement any rights
(including “piggy-back” registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority
that
have not been satisfied.
(w) Listing
and Maintenance Requirements.
The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Common Stock on the Trading Market
on
which the Common Stock is currently listed or quoted. The issuance and sale
of
the Shares under the Transaction Documents does not contravene the rules and
regulations of the Trading Market on which the Common Stock is currently listed
or quoted, and no approval of the stockholders of the Company thereunder is
required for the Company to issue and deliver to the Investors the Shares as
contemplated by the Transaction Documents.
15
(x) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately following the
Closing will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
(y) Application
of Takeover Protections.
The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable
to
the Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including, without limitation, the Company’s issuance of the Shares and the
Investors’ ownership of the Shares.
(z) No
Additional Agreements.
No
Existing Company Entity has any agreement or understanding with any Investor
with respect to the transactions contemplated by the Transaction Documents
other
than as specified in the Transaction Documents.
(aa) Consultation
with Auditors.
The
Company has consulted its independent auditors concerning the accounting
treatment of the transactions contemplated by the Transaction Documents, and
in
connection therewith has furnished such auditors complete copies of the
Transaction Documents.
(bb) Make
Good Shares.
Make
Good Pledgor is the sole record and beneficial owner of the 2008 Make Good
Shares and 2009 Make Good Shares, and holds such shares free and clear of all
Liens.
(cc) Foreign
Corrupt Practices Act.
No
Existing Company Entity, nor to the knowledge of the Company, any agent or
other
person acting on behalf of any Existing Company Entity, has, directly or
indirectly, (i) used any funds, or will use any proceeds from the sale of the
Shares, for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or
to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company or any
such
Existing Company Entity (or made by any Person acting on their behalf of which
the Company is aware) which is in violation of law, or (iv) has violated in
any
material respect any provision of the Foreign Corrupt Practices Act of 1977,
as
amended, and the rules and regulations thereunder.
(dd) PFIC.
No
Existing Company Entity is or intends to become a “passive foreign investment
company” within the meaning of Section 1297 of the U.S. Internal Revenue Code of
1986, as amended.
(ee) OFAC.
No
Existing Company Entity nor, to the knowledge of the Company, any director,
officer, agent, employee, Affiliate or Person acting on behalf of any Existing
Company Entity, is currently subject to any U.S. sanctions administered by
the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”);
and
the Company will not directly or indirectly use the proceeds of the sale of
the
Shares, or lend, contribute or otherwise make available such proceeds to any
Subsidiary, joint venture partner or other Person or entity, towards any sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.
16
(ff) Money
Laundering Laws.
The
operations of each Existing Company Entity are and have been conducted at all
times in compliance with the money laundering statutes of applicable
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
applicable governmental agency (collectively, the “Money
Laundering Laws”)
and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving any Existing Company Entity with
respect to the Money Laundering Laws is pending or, to the best knowledge of
the
Company, threatened.
(gg) Other
Representations and Warranties Relating to WFOE.
(i) All
material consents, approvals, authorizations or licenses requisite under PRC
law
for the due and proper establishment and operation of WFOE have been duly
obtained from the relevant PRC governmental authorities and are in full force
and effect.
(ii) All
filings and registrations with the PRC governmental authorities required in
respect of WFOE and its capital structure and operations including, without
limitation, the registration with the Ministry of Commerce, the State
Administration of Industry and or their respective local divisions of Commerce,
the State Administration of Foreign Exchange, tax bureau and customs authorities
have been duly completed in accordance with the relevant PRC rules and
regulations, except where, the failure to complete such filings and
registrations does not, and would not, individually or in the aggregate, have
a
Material Adverse Effect.
(iii) WFOE
has
complied with all relevant PRC laws and regulations regarding the contribution
and payment of its registered share capital, the payment schedule of which
has
been approved by the relevant PRC governmental authorities. There are no
outstanding commitments made by the Company or any Subsidiary to sell any equity
interest in WFOE.
(iv) WFOE
has
not received any letter or notice from any relevant PRC governmental authority
notifying it of revocation of any licenses or qualifications issued to it or
any
subsidy granted to it by any PRC governmental authority for non-compliance
with
the terms thereof or with applicable PRC laws, or the lack of compliance or
remedial actions in respect of the activities carried out by WFOE, except such
revocation as does not, and would not, individually or in the aggregate, have
a
Material Adverse Effect.
(v) WFOE
has
conducted its business activities within the permitted scope of business or
has
otherwise operated its business in compliance with all relevant legal
requirements and with all requisite licenses and approvals granted by competent
PRC governmental authorities other than such non-compliance that do not, and
would not, individually or in the aggregate, have a Material Adverse Effect.
As
to licenses, approvals and government grants and concessions requisite or
material for the conduct of any material part of WFOE’s business which is
subject to periodic renewal, the Company has no knowledge of any reasons related
to the WFOE for which such requisite renewals will not be granted by the
relevant PRC governmental authorities.
17
(vi) With
regard to employment and staff or labor, WFOE has complied with all applicable
PRC laws and regulations in all material respects, including without limitation,
laws and regulations pertaining to welfare funds, social benefits, medical
benefits, insurance, retirement benefits, pensions or the like, other than
such
non-compliance that do not, and would not, individually or in the aggregate,
have a Material Adverse Effect.
(hh) Company
Policies.
To the
knowledge of the Company, the sale of the Selling Stockholder Shares by the
Selling Stockholder in the manner described in this Agreement does not violate
any policies or procedures established by the Company.
(ii) Accountants.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants formerly or presently employed
by the Company, that would, individually or in the aggregate, have or reasonably
be expected to result in, a Material Adverse Effect.
(jj) Disclosure.
Neither
any Company Entity nor any Person acting on its behalf has provided any Investor
or its respective agents or counsel with any information that any Company Entity
believes constitutes material, non-public information concerning the Company,
the Subsidiaries or their respective businesses, except insofar as the existence
and terms of the proposed transactions contemplated hereunder may constitute
such information. The Company understands and confirms that the Investors will
rely on the foregoing representations and covenants in effecting transactions
in
securities of the Company. To the knowledge of the Company, the representations
and warranties of the Selling Stockholder are true and correct in all material
respects. All disclosure provided to the Investors regarding the Company
Entities and their respective businesses and the transactions contemplated
hereby, furnished by or on behalf of the Company Entities (including their
respective representations and warranties set forth in this Agreement and the
disclosure set forth in any diligence report or business plan provided by any
Company Entity or any Person acting on such Company Entity’s behalf, if any) are
true and correct and do not contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.2. Representations
and Warranties of the Selling Stockholder.
The
Selling Stockholder hereby makes the following representations and warranties
to
each Investor:
(a) Enforcement.
This
Agreement has been duly executed and delivered by the Selling Stockholder and
constitutes the valid and binding obligation of the Selling Stockholder,
enforceable against him in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
18
(b) No
Consents.
No
consent, approval, authorization or order of, or any filing or declaration
with,
any United State or People’s Republic of China court or governmental agency or
body or other Person is required in connection with the consummation by the
Selling Stockholder of the transactions on its part contemplated by the
Transaction Documents, except (i) filings as may be required under Sections
13(d) and 16(a) of the Exchange Act, and (ii) those that have been made or
obtained prior to the date of this Agreement.
(c) No
Conflicts.
The
execution, delivery and performance by the Selling Stockholder of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby do not and will not result in a breach or
violation of, or constitute a default under (with or without notice or lapse
of
time), any stockholders agreement, voting trust agreement, pledge, registration
rights agreement or other agreement or instrument to which the Selling
Stockholder or any of his properties are bound or affected, and will not violate
or conflict with any judgment, decree or order of any United States or People’s
Republic of China court or other governmental agency or any law, rule or
regulation applicable to the Selling Stockholder, in each case such as could
not
have or result in a Material Adverse Effect.
(d) Certain
Registration Matters.
Assuming the accuracy of the Investors’ representations and warranties set forth
in Sections 3.3(b)-(d) and in the Investors’ Questionnaires, no registration
under the Securities Act is required for the purchase and sale of the Selling
Stockholder Shares to the Investors hereunder.
(e) Good
and Marketable Title.
The
Selling Stockholder is the sole lawful record and sole beneficial owner of
all
of the Selling Stockholder Shares to be sold by it hereunder. The Selling
Stockholder has good and marketable title to the Selling Stockholder Shares
to
be sold by it hereunder, free and clear of any Liens, except for restrictions
on
subsequent transfer imposed by United States securities laws. Upon consummation
of the Closing, the Investors will have good and marketable title to the Selling
Stockholder Shares purchased by them, free and clear of all Liens created by
or
through the Selling Stockholder.
(f) Certain
Fees.
Except
as described in Schedule
3.2(f),
no
brokerage or finder's fees or commissions are or will be payable by the Selling
Stockholder to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(g) No
Additional Agreements.
The
Selling Stockholder does not have any agreement or understanding with any
Investor or with the Company with respect to the transactions contemplated
by
the Transaction Documents other than as specified in the Transaction
Documents.
(h) Company
Policies.
The
sale of the Selling Stockholder Shares by the Selling Stockholder does not
violate any policies or procedures established by the Company.
19
3.3. Representations
and Warranties of the Investors
.
Each
Investor hereby, for itself and for no other Investor, represents and warrants
to the Company and the Selling Stockholder as follows:
(a) Organization;
Authority.
Such
Investor is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents to which it is a party
or
a signatory and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Investor of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or, if such Investor is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such Investor.
Each Transaction Document executed by such Investor has been duly executed
by
such Investor, and when delivered by such Investor in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Investor, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
(b) Investment
Intent.
Such
Investor is acquiring the Shares as principal for its own account for investment
purposes and not with a view to or for distributing or reselling such Shares
or
any part thereof, without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Shares in
compliance with applicable federal and state securities laws. Subject to the
immediately preceding sentence, nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares for any period
of
time. Such Investor is acquiring the Shares hereunder in the ordinary course
of
its business. Such Investor does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Shares.
(c) Investor
Status.
At the
time such Investor was offered the Shares, it was, and at the date hereof it
is,
an “accredited investor” as defined in Rule 501(a) under the Securities Act.
Such Investor is not a registered broker-dealer under Section 15 of the Exchange
Act. Such Investor has such experience in business and financial matters that
it
is capable of evaluating the merits and risks of an investment in the Shares.
Such Investor acknowledges that an investment in the Shares is speculative
and
involves a high degree of risk.
(d) General
Solicitation.
Such
Investor is not purchasing the Shares as a result of any advertisement, article,
notice, meeting, or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(e) Access
to Information.
Such
Investor acknowledges that it has reviewed the Disclosure Materials and has
been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning
the
terms and conditions of the offering of the Shares and the merits and risks
of
investing in the Shares; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with
respect to the investment. Neither such inquiries nor any other investigation
conducted by or on behalf of such Investor or its representatives or counsel
shall modify, amend or affect such Investor’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Existing Company
Entities’ representations and warranties contained in the Transaction
Documents.
20
(f) Certain
Trading Activities.
Such
Investor has not directly or indirectly, nor has any Person acting on behalf
of
or pursuant to any understanding with such Investor, engaged in any transactions
in the securities of the Company (including, without limitations, any Short
Sales involving the Company’s securities) since the earlier to occur of (1) the
time that such Investor was first contacted by the Company or Xxxx Capital
Partners, LLC regarding an investment in the Company and (2) the 30th
day
prior to the date of this Agreement. Such Investor covenants that neither it
nor
any Person acting on its behalf or pursuant to any understanding with it will
engage in any transactions in the securities of the Company (including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed.
(g) Independent
Investment Decision.
Such
Investor has independently evaluated the merits of its decision to purchase
the
Shares pursuant to the Transaction Documents, and such Investor confirms that
it
has not relied on the advice of any other Investor’s business and/or legal
counsel in making such decision. Such Investor has not relied on the business
or
legal advice of Xxxx Capital Partners, LLC or any of its agents, counsel or
Affiliates in making its investment decision hereunder, and confirms that none
of such Persons has made any representations or warranties to such Investor
in
connection with the transactions contemplated by the Transaction
Documents.
(h) Rule 144.
Such
Investor understands that the Securities must be held indefinitely unless such
Securities are registered under the Securities Act or an exemption from
registration is available. Such Investor acknowledges that it is familiar with
Rule 144 and that such Investor has been advised that Rule 144 permits
resales only under certain circumstances. Such Investor understands that to
the
extent that Rule 144 is not available, such Investor will be unable to sell
any Securities without either registration under the Securities Act or the
existence of another exemption from such registration requirement.
(i) General.
Such
Investor understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal
and
state securities laws and the Company is relying upon the truth and accuracy
of
the representations, warranties, agreements, acknowledgments and understandings
of such Investor set forth herein in order to determine the applicability of
such exemptions and the suitability of such Investor to acquire the Securities.
Such Investor understands that no United States federal or state agency or
any
government or governmental agency has passed upon or made any recommendation
or
endorsement of the Securities.
21
The
Existing Company Entities acknowledge and agree that no Investor has made or
makes any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.3.
ARTICLE
4.
OTHER
AGREEMENTS OF THE PARTIES
4.1. Transferability;
Certificate.
(a)
Securities
may only be disposed of in compliance with state and federal securities laws.
In
connection with any transfer of the Securities other than pursuant to an
effective registration statement, to the Company, to an Affiliate of an Investor
or in connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under
the
Securities Act.
(b) Certificates
evidencing Securities (as defined in Section 4.1(c)) will contain the following
legend, until such time as they are not required under Section
4.1(c):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A
BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that an Investor may from time to time pledge,
and/or grant a security interest in some or all of the Securities pursuant
to a
bona fide margin agreement in connection with a bona fide margin account and,
if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Securities to the pledgees or secured parties.
Such
a pledge or transfer would not be subject to approval or consent of the Company
and no legal opinion of legal counsel to the pledgee, secured party or pledgor
shall be required in connection with the pledge, but such legal opinion may
be
required in connection with a subsequent transfer following default by the
Investor transferee of the pledge. No notice shall be required of such pledge.
At the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer thereof including
the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of selling stockholders thereunder. Except
as otherwise provided in Section 4.1(c), any Securities subject to a pledge
or
security interest as contemplated by this Section 4.1(b) shall continue to
bear
the legend set forth in this Section 4.1(b) and be subject to the restrictions
on transfer set forth in Section 4.1(a).
22
(c) Certificates
evidencing Securities shall not contain any legend (including the legend set
forth in Section 4.1(b)): (i) while a registration statement (including the
Registration Statement) covering such Securities is then effective, or (ii)
following a sale or transfer of such Securities pursuant to Rule 144 (assuming
the transferee is not an Affiliate of the Company), or (iii) while such
Securities are eligible for sale by the selling Investor without volume
restrictions under Rule 144. The Company agrees that following the Effective
Date or such other time as legends are no longer required to be set forth on
certificates representing Securities under this Section 4.1(c), it will, no
longer than three Trading Days following the delivery by an Investor to the
Company or the Transfer Agent of a certificate representing such Securities
containing a restrictive legend, deliver or instruct the Transfer Agent to
deliver to such Investor, Securities which are free of all restrictive and
other
legends. If the Company is then eligible, certificates for Securities subject
to
legend removal hereunder shall be transmitted by the Transfer Agent to an
Investor by crediting the prime brokerage account of such Investor with the
Depository Trust Company System as directed by such Investor. If an Investor
shall make a sale or transfer of Securities either (x) pursuant to Rule 144
or
(y) pursuant to a registration statement and in each case shall have delivered
to the Company or the Company’s transfer agent the certificate representing the
applicable Securities containing a restrictive legend which are the subject
of
such sale or transfer and a representation letter in customary form (the
date
of such sale or transfer and Securities delivery being the “Share
Delivery Date”)
and (1)
the Company shall fail to deliver or cause to be delivered to such Investor
a
certificate representing such Securities that is free from all restrictive
or
other legends by the third Trading Day following the Share Delivery Date and
(2)
following such third Trading Day after the Share Delivery Date and prior to
the
time such Securities are received free from restrictive legends, the Investor,
or any third party on behalf of such Investor, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a
sale by the Investor of such Securities (a "Buy-In"),
then,
in addition to any other rights available to the Investor under the Transaction
Documents and applicable law, the Company shall pay in cash to the Investor
(for
costs incurred either directly by such Investor or on behalf of a third party)
the amount by which the total purchase price paid for Common Stock as a result
of the Buy-In (including brokerage commissions, if any) exceed the proceeds
received by such Investor as a result of the sale to which such Buy-In relates.
The Investor shall provide the Company written notice indicating the amounts
payable to the Investor in respect of the Buy-In. The Company may not make
any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this
Section.
23
4.2. Furnishing
of Information.
As long
as any Investor owns any Securities and cannot sell the Securities without
volume limitation without the timely filing of all such reports, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any
Investor owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Investors and make
publicly available in accordance with Rule 144(c) such information as is
required for the Investors to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to
time
to enable such Person to sell the Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule
144.
4.3. Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the sale of
the
Shares to the Investors, or that would be integrated with the offer or sale
of
the Shares for purposes of the rules and regulations of any Trading Market
in a
manner that would require stockholder approval of the sale of the Shares to
the
Investors.
4.4. Subsequent
Registrations.
The
Company may not file any registration statement (other than on Form S-8) with
the Commission with respect to any securities of the Company prior to the time
that all Shares are registered pursuant to one or more effective Registration
Statement(s), and the prospectuses forming a portion of such Registration
Statement(s) is available for the resale of all Shares.
4.5. Securities
Laws Disclosure; Publicity.
By 5:00
p.m. (New York time) on the Trading Day following the Closing Date, the Company
shall issue a press release, disclosing the transactions contemplated by the
Transaction Documents (including, without limitation, details with respect
to
the make good provision and thresholds (i.e. After Tax Net Income and Earnings
Per Share) contained in Section 4.11 herein as well as the revenue benchmarks
for the Company for each of the fiscal years ending December 31, 2008 and
December 31, 2009 related to the Make Good Shares) and the Closing. By 5:00
p.m.
(New York time) on the fourth Trading Day following the Closing
Date,
the
Company will file a Current Report on Form 8-K, disclosing the material terms
of
the Transaction Documents, including details with respect to the make good
provision and thresholds (i.e. After Tax Net Income and Earnings Per Share)
contained in Section 4.11 herein (and attach as exhibits thereto this Agreement,
the Registration Rights Agreement, the Make Good Escrow Agreement, the Holdback
Escrow Agreement and the Lockup Agreement) and the Closing. The Company
covenants that following such disclosure, the Investors shall no longer be
in
possession of any material, non-public information with respect to any of the
Existing Company Entities as a result of the transactions contemplated by the
Exchange Agreement and the Transaction Documents. In addition, the Company
will
make such other filings and notices in the manner and time required by the
Commission and the Trading Market on which the Common Stock is listed.
Notwithstanding the foregoing, the Company shall not publicly disclose the
name
of any Investor, or include the name of any Investor in any filing with the
Commission (other than the Registration Statement and any exhibits to filings
made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or Trading Market,
without the prior written consent of such Investor, except to the extent such
disclosure is required by law or Trading Market regulations.
24
4.6. Limitation
on Issuance of Future Priced Securities.
During
the twelve months following the Closing Date, the Company shall not issue any
“Future Priced Securities” as such term is described by NASD
IM-4350-1.
4.7. Indemnification
of Investors
(a)
In
addition to the indemnity provided in the Registration Rights Agreement, the
Company Entities and the Selling Stockholder will jointly and severally
indemnify and hold the Investors and their directors, officers, shareholders,
partners, employees and agents (each, an “Investor
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation in respect thereof that lead to an allegation of indemnity
hereunder (collectively, “Losses”)
that
any such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by any of the Company Entities in any Transaction
Document. In addition to the indemnity contained herein, the Company will
reimburse each Investor Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith if an allegation for indemnity hereunder follows) incurred in
connection therewith, as such expenses are incurred.
(b) Except
as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 4.7 shall be the same as those set
forth in Section 5 of the Registration Rights Agreement.
4.8. Non-Public
Information.
Each of
the Company and the Selling Stockholder covenants and agrees that neither it,
any Company Entity nor any other Person acting on its or their behalf will
provide any Investor or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto such Investor shall have executed a written agreement regarding the
confidentiality and use of such information. Each of the Company and the Selling
Stockholder understands and confirms that each Investor shall be relying on
the
foregoing representations in effecting transactions in securities of the
Company.
4.9. Listing
of Shares.
The
Company agrees, (i) if the Company applies to have the Common Stock traded
on
any other Trading Market, it will include in such application the Shares, and
will take such other action as is necessary or desirable to cause the Shares
to
be listed on such other Trading Market as promptly as possible, and (ii) the
Company will take all action reasonably necessary to continue the listing and
trading of its Common Stock on a Trading Market and will comply in all material
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of the Trading Market.
25
4.10. Use
of
Proceeds.
The
Company will use the net proceeds from the sale of the Shares hereunder for
working capital purposes and not for the satisfaction of any portion of the
Company’s debt (other than payment of trade payables and accrued expenses in the
ordinary course of the Company’s business and consistent with prior practices),
or to redeem any Common Stock or Common Stock Equivalents.
4.11. Make
Good Shares.
(a) The
Make
Good Pledgor
agrees
that in
the
event that the After Tax Net Income (as defined below) reported in the 2008
Annual Report is less than $9,000,000 (the “2008
Guaranteed ATNI”),
all
of the 2008 Make Good Shares (as defined below) shall be transferred
in
accordance with the Make Good Escrow Agreement to the Investors on a pro-rata
basis (determined by dividing each Investor’s Investment Amount by the aggregate
of all Investment Amounts delivered to the Company by the Investors hereunder)
for no consideration other than their respective Investment Amounts paid to
the
Company at Closing. The “2008
Make Good Shares”
means
the
24,705,889 shares of Common Stock (as
equitably adjusted for any stock splits, stock combinations, stock dividends
or
similar transactions)
required
to be deposited with the Make Good Escrow Agent pursuant to the Make Good Escrow
Agreement. In
the
event that either (i) the Earnings Per Share (as defined below) reported in the
2009 Annual Report is less than $0.740 on a fully diluted basis (as equitably
adjusted for any stock splits, stock combinations, stock dividends or similar
transactions) (the “2009
Guaranteed EPS”)
or
(ii) the After Tax Net Income reported in the 2009 Annual Report is less than
95% of $13,000,000 (the “2009
Guaranteed ATNI”),
the
2009 Make Good Shares (as defined below) shall be transferred in accordance
with
the Make Good Escrow Agreement to the Investors on a pro rata basis (determined
by dividing each Investor’s Investment Amount by the aggregate of all Investment
Amounts delivered to the Company by the Investors hereunder) for no
consideration other than payment of their respective Investment Amount paid
to
the Company at Closing. The “2009
Make Good Shares”
means
the 24,705,874 shares of Common Stock (as equitably adjusted for any stock
splits, stock combinations, stock dividends or similar transactions) required
to
be deposited with the Make Good Escrow Agent pursuant to the Make Good Escrow
Agreement. In the event that the After Tax Net Income reported in the 2008
Annual Report is equal to or greater than the 2008 Guaranteed ATNI, no transfer
of the 2008 Make Good Shares shall be required by the Make Good Pledgor to
the
Investors and such 2008 Make Good Shares shall be returned to the Make Good
Pledgor in accordance with the Make Good Escrow Agreement. In
the
event that (i) the Earnings Per Share reported in the 2009
Annual Report is
equal to
or greater than the 2009 Guaranteed EPS and (ii) the After Tax Net Income
reported in the 2009 Annual Report is equal to or greater than the 2009
Guaranteed ATNI,
no
transfer of the 2009 Make Good Shares shall be required by the Make Good Pledgor
to the Investors and such 2009 Make Good Shares shall be returned to the Make
Good Pledgor in accordance with the Make Good Escrow Agreement.
Any such
transfer or return of the 2008 Make Good Shares or the 2009 Make Good Shares
shall be made to the Investors or the Make Good Pledgor, as applicable, within
10 Business Days after the date which the 2008 Annual Report or 2009 Annual
Report, as applicable, is filed with
the
Commission. Notwithstanding
the foregoing or anything else to the contrary herein, for purposes of
determining whether or not the 2008 Guaranteed ATNI, 2009 Guaranteed EPS and
2009 Guaranteed ATNI have been met, the following items shall not be deemed
to
be an expense, charge, or any other deduction from revenues even though GAAP
may
require contrary treatment or the Annual Report for the respective fiscal years
filed with the Commission by the Company may report otherwise:
(i) the
release of any of the 2008 Make Good Shares and/or 2009 Make Good Shares to
the
Make Good Pledgor as a result of the operation of this Section 4.11 (for
additional clarity, the Company may disregard any compensation charge or expense
required to be recognized by the Company under GAAP resulting from the release
of the 2008 Make Good Shares or 2009 Make Good Shares (as relevant) to Make
Good
Pledgor if and to the extent such charge or expense is specified in the
Company's audited financial statements for the relevant year, as filed with
the
Commission); and
26
(ii) any
penalty or liquidated damage the Company has accrued or may accrue in the future
(A) for failing to comply with the terms of Section 4.14(d) of this Agreement
or
(B) pursuant to Section 2(f) of the Registration Rights Agreement.
No
other
exclusions shall be made for any non-recurring expenses of the Company in
determining whether any of the 2008 Guaranteed ATNI, 2009 Guaranteed EPS, or
2009 Guaranteed ATNI have been achieved. For
purposes of determining whether any of the 2008
Guaranteed ATNI, 2009 Guaranteed EPS, or 2009 Guaranteed ATNI
have
been achieved, the Company may not include any non-operating income including,
but not limited to, government grants, research grants, proceeds from asset
sales, etc. in the calculation of the 2008
Guaranteed ATNI, 2009 Guaranteed EPS, or 2009 Guaranteed ATNI,
as
applicable. If
prior
to the second anniversary of the filing of either of the 2008 Annual Report
or
the 2009 Annual Report (as relevant), the Company or their auditors report
or
recognize that the financial statements contained in such report are subject
to
amendment or restatement such that the Company would recognize or report
adjusted After Tax Net Income of less than either of the 2008 Guaranteed ATNI
or
2009 Guaranteed ATNI (as relevant) or Earnings Per Share of less than the 2009
Guaranteed EPS, as applicable, then notwithstanding any prior return
of
2008
Make Good Shares or 2009 Make Good Shares
to the
Make Good Pledgor, the Make Good Pledgor will, within 10 Business Days following
the earlier of the filing of such amendment or restatement or recognition,
deliver the relevant 2008 Make Good Shares or 2009 Make Good Shares to the
Investors. “After
Tax Net Income”
shall
mean the Company’s operating income after taxes for the fiscal year ending
December 31, 2008 or December 31, 2009 (as relevant) in each case determined
in
accordance with GAAP as reported in the 2008 Annual Report or 2009 Annual Report
(as relevant). “Earnings
Per Share”
shall
mean the Company’s After Tax Net Income (for the relevant fiscal year) divided
by the weighted average number of shares of Common Stock of the Company
outstanding during
the calculation period, calculated on a fully diluted basis.
(b) In
connection with the foregoing,
the Make
Good Pledgor
agrees
that within three Trading Days following the Closing, the
Make
Good Pledgor will
deposit all 2008 Make Good Shares and 2009 Make Good Shares into escrow in
accordance with the Make Good Escrow Agreement along with stock powers executed
in blank (or such other signed instrument of transfer acceptable to the
Company’s transfer agent), and the handling and disposition of the 2008 Make
Good Shares and 2009 Make Good Shares shall be governed by this Section 4.11
and
the Make Good Escrow Agreement. The
Company shall notify the Investors as soon as the 2008 Make Good Shares and
2009
Make Good Shares have been deposited with the Make Good Escrow Agent.
The
Make
Good Pledgor
understands and agrees that the Investors’ right to receive 2008 Make Good
Shares and 2009 Make Good Shares pursuant to this Section 4.11 and the Make
Good
Escrow Agreement shall continue to run to the benefit of each Investor even
if
such Investor shall have transferred or sold all or any portion of its Shares,
and that each Investor shall have the right to assign its rights to receive
all
or any such shares of Common Stock to other Persons in conjunction with
negotiated sales or transfers of any of its Shares. The Make
Good
Pledgor represents and warrants that it has carefully considered and understands
its obligations and rights under this Section
4.11 and
the Make Good Escrow Agreement, and in furtherance thereof (x) has consulted
with its legal and other advisors with respect thereto and (y) hereby forever
waives and agrees that it may not assert any equitable defenses in any
Proceeding involving either of the 2008 Make Good Shares and/or 2009 Make Good
Shares.
27
(c) The
Company covenants and agrees that upon any transfer of 2008 Make Good Shares
or
2009 Make Good Shares to the Investors in accordance with the Make Good Escrow
Agreement, the Company shall promptly instruct its Transfer Agent to reissue
such 2008 Make Good Shares or 2009 Make Good Shares in the applicable Investor’s
name and deliver the same as directed by such Investor.
(d) If
any
term or provision of this Section 4.11 contradicts or conflicts with any term
or
provision of the Make Good Escrow Agreement, the terms of the Make Good Escrow
Agreement shall control.
4.12. [RESERVED]
4.13. Further
Assurances. The Company will, and will cause all of the Company Entities and
their management to, use their best efforts to satisfy all of the closing
conditions under Section 5.1, and will not take any action which could frustrate
or delay the satisfaction of such conditions. In addition, either prior to
or
following the Closing, each Company Entity signatory hereto will, and will
cause
each other Company Entity and its management to, 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 any
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.
4.14. Closing
Escrow Holdback. The Company and Investors agree that, from the aggregate
Investment Amounts to be delivered into escrow pursuant to the Closing Escrow
Agreement, at the Closing $1,750,000 (“Total
Holdback Amount”)
shall
be deposited into escrow and administered in accordance with the Holdback Escrow
Agreement in order to incentivize the Company to satisfy the following
conditions:
(a) Independent
Board of Directors.
The
Company covenants and agrees that no later than 180 days following the Closing
Date, the Board of Directors of the Company shall be comprised of a minimum
of
five members (at least two of whom shall be fluent English speakers who
possess
experience such that he or she can fulfill his or her fiduciary obligations
and
other responsibilities as a director of
a
United States publicly listed company), and a majority of which shall be
“independent directors” as such term is defined in NASDAQ Marketplace Rule
4200(a)(15). Subject to the provisions of this Section 4.14(a), the
Company agrees that $750,000 (the “Board
Holdback Escrow Amount”)
of
the
Total Holdback Amount delivered to the Escrow Agent
pursuant
to the Closing Escrow Agreement shall remain in escrow post Closing pursuant
to
and subject to the provisions of the Holdback Escrow Agreement until such time
as the Company complies with the obligations set forth in this Section
4.14(a).
28
(b) Chief
Financial Officer.
The
Company covenants and agrees that no later than 180 days following the Closing
Date, the Company will hire a full-time chief financial officer who has
experience as the chief financial officer of a United States public reporting
company and who is (i) a certified public accountant, (ii) fluent in English,
and (iii) familiar with (x) GAAP and (y) auditing procedures and compliance
for
United States public companies (such a chief financial officer being referred
to
as a “Qualified
CFO”).
The
Company shall enter into an employment agreement with the Qualified CFO for
a
term of no less than two years. Should the Qualified CFO be dismissed at any
time prior to the later to occur of the second anniversary of (x) his or her
employment agreement or (y) the Closing Date, then the Company shall replace
the
Qualified CFO with a chief financial officer who fits the criteria set forth
herein as soon as practicable. By
9:00
a.m. (New York time) on the second Trading Day following the hiring of such
Qualified CFO, the Company will file a Current Report on Form 8-K disclosing
the
information required by Item 5.02 of Form 8-K. Subject to the provisions of
this
Section 4.14(b), the Company
agrees that $750,000 (the “CFO
Holdback Escrow Amount”)
of
the
Total Holdback Amount
delivered to the Escrow Agent
pursuant
to the Closing Escrow Agreement shall remain in escrow post Closing pursuant
to
and subject to the provisions of the Holdback Escrow Agreement until such time
as the Company complies with the obligations set forth in this Section
4.14(b).
(c) Investor
Relations Firm.
The
Company covenants and agrees that no later than sixty (60) days following the
Closing Date, the Company shall have hired either of CCG Elite, Hayden
Communications, or Integrated Corporate Relations as its investor relations
firm. Subject to the provisions of this Section 4.14(c), the
Company agrees that $250,000 (the
“IR
Holdback Amount”)
of the
Total Holdback Amount delivered
to the Escrow Agent
pursuant
to the Closing Escrow Agreement shall remain in escrow post Closing pursuant
to
and subject to the provisions of the Holdback Escrow Agreement, it being
understood that such IR Holdback Amount will be used by the Company to pay
such
firm. The Company may change such investor relations firm upon the prior written
consent of Pinnacle China Fund, L.P. unless the new investor relations firm
being hired by the Company is one of CCG
Elite, Hayden Communications, or Integrated Corporate Relations, in which such
case no consent will be required.
(d) Liquidated
Damages for Failure to Appoint Independent Board and Qualified
CFO.
The
Holdback Escrow Agreement provides for specified partial liquidated damages
(which the parties agree are not a penalty) should the Company fail for any
or
no reason to timely satisfy its obligations under Sections 4.14(a) or 4.14(b).
If
any
term or provision of this Section 4.14 as to the Board Holdback Escrow Amount,
CFO Holdback Escrow Amount, IR Holdback Amount and/or partial liquidated damages
is in contradiction of or conflicts with any term or provision of the Holdback
Escrow Agreement relating thereto, the terms of the Holdback Escrow Agreement
shall control.
29
4.15. Audit
Firm.
The
Company covenants and agrees that no later than sixty (60) days following the
Closing Date, the Company shall have hired Child, Xxx Xxxxxxx & Xxxxxxxx,
PLLC as the Company's independent public auditor.
4.16. Right
of First Refusal.
(a) From
the
date hereof until the earlier of (A) the one year anniversary of the Effective
Date (plus one additional day for each Trading Day following the Effective
Date
of any Registration Statement during which either (1) the Registration
Statement is not effective or (2) the prospectus forming a portion of the
Registration Statement is not available for the resale of all Registrable
Securities (as defined in the Registration Rights Agreement)) or (B) July 31,
2009 (the "Trigger
Date"),
the
Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or its Subsidiaries'
equity or equity equivalent securities, including, without limitation, any
debt,
preferred stock or other instrument or security that is, at any time during
its
life and under any circumstances, convertible into or exchangeable or
exercisable for shares of Common Stock or Common Stock Equivalents (any such
offer, sale, grant, disposition or announcement being referred to as a
"Subsequent
Placement")
unless
the Company shall have first complied with this Section 4.16. If the Company
desires to engage in a Subsequent Placement it shall deliver to each of the
Investors a written notice to such effect specifying the general terms of the
offering the Company desires to make (including, without limitation, all
information relating to price, structure and amount of such offering) and for
a
period of at least twenty Business Days after the giving of such notice the
Company agrees to negotiate in good faith with any Investors responding to
such
notice the terms of a sale of the Company’s securities to such responding
Investors.
(b) In
the
event that the Company shall receive an offer regarding the purchase of the
Company’s securities or a Subsequent Placement contemplated in the last sentence
of Section 4.16(a) shall not have closed by the 45th
Business
Day following the delivery to the Investors of the written notice for such
Subsequent Placement, and in either event prior to any Subsequent Placement,
the
Company shall deliver to each Investor hereunder a written notice
(the "Offer
Notice")
of any
proposed or intended issuance or sale or exchange (the "Offer")
of the
securities being offered (the "Offered
Securities")
in a
Subsequent Placement, which Offer Notice shall (v) identify and describe the
Offered Securities, (w) include the final form of documents and agreements
governing the Subsequent Placement, (x) specify the price and other terms
upon which the Offered Securities are to be issued, sold or exchanged, and
the
number or amount of the Offered Securities to be issued, sold or exchanged,
(y) identify the persons or entities (if known) to which or with which the
Offered Securities are to be offered, issued, sold or exchanged and (z) offer
to
issue and sell to or exchange with such Investors all of the Offered Securities,
under the same terms and conditions, allocated among such Investors (a) based
on
such Investor's pro rata portion of the total Investment Amount hereunder (the
"Basic
Amount"),
and
(b) with respect to each Investor that elects to purchase its Basic Amount,
any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Investors as such Investor shall indicate it will purchase or acquire
should the other Investors subscribe for less than their Basic Amounts (the
"Undersubscription
Amount"),
which
process shall be repeated until the Investors shall have an opportunity to
subscribe for any remaining Undersubscription Amount.
30
(c) To
accept
an Offer, in whole or in part, such Investor must deliver a written notice
to
the Company prior to the end of the fifth Business Day after such Investor's
receipt of the Offer Notice (the "Offer
Period"),
setting forth the portion of such Investor's Basic Amount that such Investor
elects to purchase and, if such Investor shall elect to purchase all of its
Basic Amount, the Undersubscription Amount, if any, that such Investor elects
to
purchase (in either case, the "Notice
of Acceptance").
If
the Basic Amounts subscribed for by all Investors are less than the total of
all
of the Basic Amounts, then each Investor who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in addition
to
the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; provided,
however,
that if
the Undersubscription Amounts subscribed for exceed the difference between
the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available
Undersubscription Amount"),
each
Investor who has subscribed for any Undersubscription Amount shall be entitled
to purchase only that portion of the Available Undersubscription Amount as
the
Basic Amount of such Investor bears to the total Basic Amounts of all Investors
that have subscribed for Undersubscription Amounts, subject to rounding by
the
Company to the extent its deems reasonably necessary.
(d) The
Company shall have twenty Business Days from the expiration of the Offer Period
above to (i) offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the
Investors (the "Refused
Securities"),
but
only upon terms and conditions (including, without limitation, unit prices
and
interest rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer Notice and
(ii) to publicly announce (a) the execution of such Subsequent Placement
Agreement (as defined below), and (b) either (x) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (y) the
termination of such Subsequent Placement Agreement, which shall be filed with
the Commission on a Current Report on Form 8-K with such Subsequent Placement
Agreement and any documents contemplated therein filed as exhibits thereto.
If
no disclosure has been made by the Company by the end of the twenty Business
Day
period referred to in this subsection (d), the Subsequent Placement shall be
deemed to have been abandoned and the Investors shall no longer be deemed to
be
in possession of any non-public information with respect to the
Company.
(e) In
the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in this Section
4.16), then each Investor may, at its sole option and in its sole discretion,
reduce the number or amount of the Offered Securities specified in its Notice
of
Acceptance to an amount that shall be not less than the number or amount of
the
Offered Securities that such Investor elected to purchase pursuant to Section
4.16(c) above multiplied by a fraction, (i) the numerator of which shall be
the
number or amount of Offered Securities the Company actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to Investors
pursuant to Section 4.16(c) above prior to such reduction) and (ii) the
denominator of which shall be the original amount of the Offered Securities.
In
the event that any Investor so elects to reduce the number or amount of Offered
Securities specified in its Notice of Acceptance, the Company may not issue,
sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Investors in accordance with Section 4.16(b) above.
31
(f) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Investors shall acquire from the Company, and the Company shall
issue to the Investors, the number or amount of Offered Securities specified
in
the Notices of Acceptance, as reduced pursuant to Section 4.16(e) above if
the
Investors have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Investors of any Offered Securities is subject in all cases
to the preparation, execution and delivery by the Company and the Investors
of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Investors and their respective counsel (such
agreement, the “Subsequent
Placement Agreement”).
(g) Any
Offered Securities not acquired by the Investors or other persons in accordance
with Section 4.16(f) above may not be issued, sold or exchanged until they
are
again offered to the Investors under the procedures specified in this
Agreement.
(h) In
exchange for the Company’s willingness to agree to these procedures, each
Investor hereby irrevocably agrees that it will hold in strict confidence any
and all Offer Notices, the information contained therein, and the fact that
the
Company is contemplating a Subsequent Placement, until such time as the Company
is obligated to make the disclosures required by Section 4.16(d), or unless
it
notifies the Company in writing that it no longer desires to receive Offer
Notices.
(i) The
rights contained in this Section shall not apply to the issuance and sale by
the
Company of (i) shares of Common Stock or Common Stock Equivalents to employees,
officers, directors, or consultants of the Company, as compensation for their
services to the Company or any of its direct or indirect Subsidiaries
pursuant
to arrangements approved by the Board of Directors of the Company,
(ii)
shares of Common Stock or Common Stock Equivalents issued as consideration
for
the acquisition of another company or business in which the shareholders of
the
Company do not have an ownership interest, and where the primary purpose is
not
to raise capital for the Company or any Subsidiary, which acquisition has been
approved by the Board of Directors of the Company, or (iii) up to an aggregate
of $250,000 worth of shares of Common Stock or Common Stock Equivalents measured
in terms of market value at the time of the issuance of such Common Stock or
Common Stock Equivalents issued to non-Affiliates in connection with services
rendered to the Company pursuant to arrangements approved by the Board of
Directors of the Company.
ARTICLE
5.
CONDITIONS
PRECEDENT TO CLOSING
5.1. Conditions
Precedent to the Obligations of the Investors to Purchase Shares.
The
obligation of each Investor to acquire Shares at the Closing is subject to
the
satisfaction or waiver by such Investor, at or before the Closing, of each
of
the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Existing Company Entities and the Selling
Stockholder contained herein shall be true and correct in all material respects
as of the date when made and as of the Closing as though made on and as of
such
date;
32
(b) Performance.
The
Existing Company Entities, Selling Stockholder and the Make Good Pledgor shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents
to be
performed, satisfied or complied with by it at or prior to the
Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably could have or result in a Material Adverse Effect
or a
material adverse change with respect to the Company or the
Subsidiaries;
(e) WFOE
Intellectual Property Rights.
The
WFOE shall provide to the Investors evidence acceptable to the Investors that
all Intellectual Property Rights are either (i) validly owned by the WFOE,
or
(ii) (a) if owned by any Person other than the WFOE or its predecessor, subject
to valid and binding Intellectual Property Right Licensing Agreements which
may
not be terminated for any reason until any such Intellectual Property Right
covered thereby is validly owned by the WFOE, or (b) if owned by the predecessor
of the WFOE, the application for the change of the registered owner information
from that of the WFOE’s predecessor to the WFOE’s current name, address and
other related updates which is or may be required by relevant PRC authorities
in
charge of such Intellectual Property is submitted by the WFOE to the relevant
PRC authority on or before the Closing.
(f) PRC
and BVI Opinions.
The
Company shall have delivered to the Investors, and the Investors shall be able
to rely upon, the legal opinions that the Company shall have received from
its
legal counsel in the PRC (which, among other things, shall confirm the legality
under applicable PRC law of the restructuring being effected with BVI in
connection with the Exchange) and in the British Virgin Islands;
(g) Closing
Officer’s Certificate.
At the
Closing, the Company shall have delivered to each Investor an officer’s
certificate to the effect that each of the conditions specified in Sections
5.1(a) - 5.1(e) is satisfied in all respects;
(h) Company
Agreements.
The
Company shall have delivered:
(i) This
Agreement, duly executed by the Company, BVI and WFOE;
(ii) The
Closing Escrow Agreement, duly executed by the Company and the Escrow
Agent;
33
(iii) The
Make
Good Escrow Agreement, duly executed by all parties thereto (other than the
Investors);
(iv) The
Registration Rights Agreement, duly executed by the Company; and
(v) Lockup
Agreements, duly executed by the Company and each officer of the Company and
each member of the Board of Directors of the Company.
(i) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with Section
2.2(a); and
(j) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5.
5.2. Conditions
Precedent to the Obligations of the Company and the Selling Stockholder to
Sell
Securities.
The
obligation of the Company and the Selling Stockholder to sell Securities at
the
Closing is subject to the satisfaction or waiver by the Company, at or before
the Closing, of each of the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of each Investor contained herein shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made on and as of such date;
(b) Performance.
Each
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or
prior to the Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Investor
Deliverables.
Each
Investor shall have delivered the Registration Rights Agreement, the Closing
Escrow Agreement and the Make Good Escrow Agreement, each duly executed by
such
Investor and a completed Questionnaire (as such term is defined in the
Registration Rights Agreement) in the form attached as Annex B hereto;
and
(e) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5.
ARTICLE
6.
MISCELLANEOUS
6.1. Fees
and Expenses.
Each
party shall pay the fees and expenses of its advisers, counsel, accountants
and
other experts, if any, and all other expenses incurred by such party incident
to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents. Notwithstanding the foregoing, the Company shall pay
the
reasonable fees and expenses, including attorney's fees and expenses, up to
a
maximum of $15,000 in the aggregate, incurred by Black River Asset Management
LLC in connection with the transactions contemplated by the Transaction
Documents. The Company shall pay all stamp and other taxes and duties levied
in
connection with the sale of the Shares.
34
6.2. Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.
6.3. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via (i) facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section or (ii) electronic mail (i.e., Email) prior to 6:30 p.m. (New
York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via (i) facsimile
at
the facsimile number specified in this Section or (ii) electronic mail (i.e.,
Email) on a day that is not a Trading Day or later than 6:30 p.m. (New York
City
time) on any Trading Day, or (c) the Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given, if
sent
by any means other than facsimile or Email transmission. The address for such
notices and communications shall be as follows:
If
to the Company:
|
First
Growth Investors, Inc.
|
000 Xxxxxxx Xxxxxx |
Hanting District, Weifang, Shandong Province |
People's Republic of China 261101 |
Facsimile: 00-000-0000000 |
Attn.: President |
Email: xxxxxxxxxxx0000@000.xxx |
With a copy to: | Xxxxxx Xxxxxx LLP |
00xx Xxxxx |
Xxx Xxxxxxxx Xxxxxx |
0 Xxxxxxxxx Xxxxx |
Xxxxxxx, Xxxx Xxxx |
Facsimile: x000 0000 0000 |
Email:Xxxxx.Xxx@xxxxxxxxxxxx.xxx |
Attn.: Xxxxx Xxx, Esq. |
If
to the
Selling Stockholder: To
the
address set forth on its signature page hereof;
35
If
to an
Investor: To
the
address set forth under such Investor’s name on the signature
pages hereof;
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
6.4. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Investors holding a majority of the
Securities at the time of the waiver or amendment and, prior to Closing, the
Selling Stockholder. In addition, Sections 3.2, 4.7(b) and Article VI may not
be
waived or amended except in a written instrument signed by the Investors holding
a majority of the Securities, the Company and the Selling Stockholder. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent
to a
waiver or modification of any provision of any Transaction Document unless
the
same consideration is also offered to all Investors who then hold Shares.
6.5. Termination.
This
Agreement may be terminated prior to Closing:
(a) by
written agreement of the Investors and the Company, a copy of which shall be
provided to the Escrow Agent; and
(b) by
the
Company, the Selling Stockholder, or an Investor (as to itself but no other
Investor) upon written notice to the other, with a copy to the Escrow Agent,
if
the Closing shall not have taken place by 6:30 p.m. Eastern time on the Outside
Date; provided, that the right to terminate this Agreement under this
Section 6.5(b) shall not be available to any Person whose failure to comply
with its obligations under this Agreement has been the cause of or resulted
in
the failure of the Closing to occur on or before such time.
In
the
event of a termination pursuant to Section 6.5(a) or 6.5(b), each Investor
shall
have the right to a return of up to its entire Investment Amount deposited
with
the Escrow Agent pursuant to Section 2.2(b)(i), without interest or deduction.
The Company covenants and agrees to cooperate with such Investor in obtaining
the return of its Investment Amount, and shall not communicate any instructions
to the contrary to the Escrow Agent.
In
the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Investors. Upon a termination in accordance with
this
Section 6.5, the Company, terminating Selling Stockholder and the terminating
Investor(s) shall not have any further obligation or liability (including as
arising from such termination) to the other and no Investor will have any
liability to any other Investor under the Transaction Documents as a result
therefrom.
6.6. Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
36
6.7. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. Neither the Company nor the Selling
Stockholder may assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors. Any Investor may assign
any
or all of its rights under this Agreement to any Person to whom such Investor
assigns or transfers any Shares, provided such transferee agrees in writing
to
be bound, with respect to the transferred Shares, by the provisions hereof
that
apply to the “Investors.”
6.8. No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Section 4.7 (as to each Investor Party).
6.9. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of
a Transaction Document, then the prevailing party in such Proceeding shall
be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.
37
6.10. Survival.
The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.
6.11. Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
6.12. Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.13. Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Investor
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Investor may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
6.14. Replacement
of Shares.
If any
certificate or instrument evidencing any Shares is mutilated, lost, stolen
or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares.
If a
replacement certificate or instrument evidencing any Shares is requested due
to
a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
6.15. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Investors, the Company and
the
Selling Stockholder will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive
in
any action for specific performance of any such obligation the defense that
a
remedy at law would be adequate.
6.16. Payment
Set Aside.
To the
extent that the Company or any Selling Stockholder makes a payment or payments
to any Investor pursuant to any Transaction Document or an Investor enforces
or
exercises its rights thereunder, and such payment or payments or the proceeds
of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
or such Selling Stockholder, a trustee, receiver or any other person under
any
law (including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment
had
not been made or such enforcement or setoff had not occurred.
38
6.17. Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under any Transaction Document are several and
not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Shares pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in
any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. Each of the Company and the Selling Stockholder
acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple
Investors and not because it was required or requested to do so by any
Investor.
6.18. Limitation
of Liability.
Notwithstanding anything herein to the contrary, each of the Company and the
Selling Stockholder acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate
of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities
of
such Investor.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOLLOW]
39
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
FIRST GROWTH INVESTORS, INC. | ||
|
|
|
By: | /s/ Gao Zhentao | |
Name: Gao Zhentao |
||
Title: Director |
BRIGHT STAND INTERNATIONAL LIMITED | ||
|
|
|
By: | /s/ Xxxxxxxx Xxxxx | |
Name: Xx. Xxxxx Xxxxxxxx
Title: Director
|
WEIFANG YUHE POULTRY CO., LTD. | ||
|
|
|
By: | /s/ Han Chengxiang | |
Name: Xx. Xxx Chengxiang
Title: Legal
Representative
|
Only as to Sections 4.11 and 4.13 herein: | ||
|
|
|
By: | /s/ Xxxxxxxx Xxxxx | |
Xx. Xxxxx Xxxxxxxx |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR SELLING STOCKHOLDER FOLLOWS]
40
IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement
as
of the date first written above.
NAME
OF SELLING STOCKHOLDER
|
||
|
|
|
By: | /s/ Xxxxxxxx Xxxxx | |
Name: Xxxxxxxx
Xxxxx
Title:
|
||
Investment Amount: ____________________________ | ||
Tax ID No.: ____________________________ |
ADDRESS FOR NOTICE | ||
c/o: First Growth Investors, Inc. | ||
Street: 000 Xxxxxxx Xxxxxx, Xxxxxxx District | ||
City/State/Zip: Weifang, Shandong Province, People’s Republic of China | ||
Attention: Xxxxxxxx Xxxxx | ||
Tel: 00 000 000 0000 | ||
Fax: 00 000 0000 | ||
|
Email: ____________________________ |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOR INVESTORS FOLLOW]
41
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME OF INVESTOR | ||
Xxxxx
Xxxx
|
||
|
|
|
By: | /s/Xxxxx Xxxx | |
Name: Xxxxx
Xxxx
Title:
|
Investment Amount: $ 30,000 | ||
Tax ID No.:00-0000000 | ||
ADDRESS FOR NOTICE | ||
c/o:
____________________________
|
||
Street: Rm.301 Xx.000 Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxx Xx | ||
Xxxx/Xxxxx/Xxx: Xxxxxxxx 000000 P.R. CHINA | ||
Attention: Xxxxx Xxxx | ||
Tel: 00-00-00000000 | ||
Fax: 00-00-00000000 | ||
DELIVERY
INSTRUCTIONS
(if
different from above)
|
||
c/o:
____________________________
|
||
Street:
____________________________
|
||
City/State/Zip: ____________________________ | ||
Attention: ____________________________ | ||
Tel: ____________________________ |
42
NAME OF INVESTOR | ||
Westpark Capital, L. P. | ||
|
|
|
By: | /s/ Xxxxxxx X. Xxxxxxxxx | |
Name: Xxxxxxx
X. Xxxxxxxxx
Title: General
Partner
|
Investment Amount: $ 116,875 | |
Tax ID No.: ____________________________ | |
ADDRESS FOR NOTICE | |
c/o: Westpark Capital, L.P. | |
Street: 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000 | |
Xxxx/Xxxxx/Xxx: Xxxxx, XX 00000 | |
Attention: Xxxxxxx X. Xxxxxxxxx | |
Tel: 000-000-0000 | |
Fax: 000-000-0000 | |
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o: ____________________________ | |
Street: ____________________________ | |
City/State/Zip: ____________________________ | |
Attention: ____________________________ | |
Tel: ____________________________ |
43
NAME OF INVESTOR | ||
Xxxxxx Xx | ||
|
|
|
By: | /s/ Xxxxxx Xx | |
Name: Xxxxxx
Xx
Title:
|
Investment Amount: $ 100,000.00 | |
Tax ID No.: ____________________________ | |
ADDRESS FOR NOTICE | |
c/o: 00X, Xxxx Xxxxx xx Xxxxxx Xxxxx | |
Xxxxxx: Xx. 0, Xxxxxx | |
Xxxx/Xxxxx/Xxx: Xxxx Xxxx, X.X.X. 310007 | |
Attention: Xx Xxxxxx | |
Tel: 0000-000-00000000 | |
Fax: 0000-000-00000000 | |
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o: ____________________________ | |
Street: ____________________________ | |
City/State/Zip: ____________________________ | |
Attention: ____________________________ | |
Tel: ____________________________ |
44
NAME OF INVESTOR | ||
Xxxxxxx
Xxxx
|
||
|
|
|
By: | /s/ Xxxxxxx Xxxx | |
Name: Xxxxxxx
Xxxx
Title:
|
Investment Amount: $ 100,000.00 | |
Tax ID No.: ____________________________ | |
ADDRESS FOR NOTICE | |
c/o: ____________________________ | |
Street: Rm 1701, 21 Building, 000 Xxxxx Xx | |
Xxxx/Xxxxx/Xxx: Xxxxxxxx, 000000 PRC | |
Attention: Xxxxxxx Xxxx | |
Tel: 00-00-00000000 | |
Fax: 00-00-00000000 | |
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o: ____________________________ | |
Street: ____________________________ | |
City/State/Zip: ____________________________ | |
Attention: ____________________________ | |
Tel: ____________________________ |
45
NAME OF INVESTOR | ||
Xx
Xxxxx
|
||
|
|
|
By: | /s/ Xx Xxxxx | |
Name: Xx
Xxxxx
Title:
|
Investment Amount: $ 50,000.00 | |
Tax ID No.: ____________________________ | |
ADDRESS FOR NOTICE | |
c/o: ____________________________ | |
Street: 3-52-402 Jinhui Garden, Xxxxxxxx Xxxx | |
Xxxx/Xxxxx/Xxx: Xxxxxxxx, 000000 XX Xxxxx | |
Attention: Xx Xxxxx | |
Tel: 00-00-00000000 | |
Fax: 00-00-00000000 | |
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o: ____________________________ | |
Street: ____________________________ | |
City/State/Zip: ____________________________ | |
Attention: ____________________________ | |
Tel: ____________________________ |
46
NAME OF INVESTOR | ||
Ancora
Greater China Fund, LP
|
||
|
|
|
By: |
/s/
Xxxx
Xxxxxxxxxx
|
|
Name: Xxxx
Xxxxxxxxxx
Title: Managing
Partner
|
Investment Amount: $ 100,000.00 | |
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o: Ancora
Greater China Fund, LP, One Chagrin Highlands, 0000 Xxxxxx Xx
#000
|
|
Xxxxxx: 0-00-000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxx | |
Xxxx/Xxxxx/Xxx:
Xxxxxxxxx, XX 00000
|
|
Attention:
Xxxx
X. Xxxxxxxxxx
|
|
Tel:
000-000-0000
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o: ____________________________ | |
Street: ____________________________ | |
City/State/Zip: ____________________________ | |
Attention: ____________________________ | |
Tel: ____________________________ |
47
NAME OF INVESTOR | ||
Atlas
Allocation Fund, L.P.
|
||
|
|
|
By: |
/s/
Xxxxx
X Xxxxxx
|
|
Name: Xxxxx
X Xxxxxx
Title: President
|
Investment
Amount: $
111,250.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Altas Capital
|
|
Street:
000
Xxxxxxxx Xxxxx, Xxxxx 000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx, XX 00000
|
|
Attention:
Xxxxx
Xxxxxxx
|
|
Tel:
000-000-0000
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o:
Banc
of America Securities Inc.
|
|
Street:
000
Xxxx Xxxxxx, Xxxxx 0000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx,
XX 00000
|
|
Attention:
Xxxxx
Xxxxxxx
|
|
Tel:
000-000-0000
|
48
NAME OF INVESTOR | ||
Xxxxxx
X. Xx
|
||
|
|
|
By: |
/s/
Xxxxxx
X. Xx
|
|
Name: Xxxxxx
X. Xx
Title:
|
Investment
Amount: $
20,000.00
|
|
Tax
ID No.:
###-##-####
|
|
ADDRESS FOR NOTICE | |
c/o:
Xxxxxx X. Xx
|
|
Street:
0000
Xxxx Xxxxx Xxxxxx, Xxxxx 000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxxxx, XX 00000
|
|
Attention:
Xxxxxx
X. Xx
|
|
Tel:
000-000-0000
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o:
____________________________
|
|
Street: ____________________________
|
|
City/State/Zip:
____________________________
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
49
NAME OF INVESTOR | ||
Investment
Hunter, LLC
|
||
|
|
|
By: |
/s/
Xxxx
Xxxxx
|
|
Name: Xxxx
Xxxxx
Title: Manager
|
Investment
Amount: $
1,500,000.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Investment Hunter, LLC
|
|
Street:
X.X.
Xxx 000000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx, XX 00000-0000
|
|
Attention:
Xxxx
Xxxxx
|
|
Tel:
000-000-0000
|
|
Fax:
0000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o:
____________________________
|
|
Street:
____________________________
|
|
City/State/Zip:
____________________________
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
50
NAME OF INVESTOR | ||
BLACK
RIVER COMMODITY SELECT FUND
LTD.
|
||
|
|
|
By: |
/s/
Xxxxxxxxx
Xxxxxxx
|
|
Name: Xxxxxxxxx
Xxxxxxx
Title: Principal
|
Investment
Amount: $
3,000,000.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Black River Asset Management
LLC
|
|
Street:
00000
Xxxxxxxxxx Xxxxx
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxxxxxx, XX 00000
|
|
Attention:
Xxxxx
Xxxxx
|
|
Tel:
000-000-0000
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o:
____________________________
|
|
Street: ____________________________
|
|
City/State/Zip:
____________________________
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
51
NAME OF INVESTOR | ||
BLACK
RIVER SMALL CAPITALIZATION FUND
LTD.
|
||
|
|
|
By: |
/s/
Xxxxxxxxx
Xxxxxxx
|
|
Name: Xxxxxxxxx
Xxxxxxx
Title: Principal
|
Investment
Amount: $
4,000,000.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Black River Asset Management
LLC
|
|
Street:
00000
Xxxxxxxxxx Xxxxx
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxxxxxx, XX 00000
|
|
Attention:
Xxxxx
Xxxxx
|
|
|
|
Tel:
000-000-0000
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
c/o:
____________________________
|
|
Street:
____________________________
|
|
City/State/Zip:
____________________________
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
52
NAME OF INVESTOR | ||
Chestnut
Ridge Partners,
LP
|
||
|
|
|
By: |
/s/
Xxxxxxx
Xxxx
|
|
Name: Xxxxxxx
Xxxx
Title: CFO
|
Investment
Amount: $
111,250.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o: ____________________________
|
|
Street:
00
Xxxx Xxxxxxxxx
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxxxxx Xxxx, XX
00000
|
|
Attention:
Xxxxxxx
Xxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o: Xxxxxxx
Sachs & Co
|
|
Street:
0
Xxx Xxxx Xxxxx, 00xx Xxxxx
|
|
Xxxx/Xxxxx/Xxx:
Xxx Xxxx, XX 00000
|
|
Attention:
Simba
Mhungu
|
|
Tel:
000-000-0000
|
53
NAME OF INVESTOR | ||
Hua-Mei
21st
Century Partners,
LP
|
||
|
|
|
By: |
/s/
Xxxxx
X. Xxxxx
|
|
Name: Xxxxx
X. Xxxxx
Title: Managing
director
|
Investment
Amount: $
200,000.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Guerrilla Capital
Management
|
|
Street:
000
Xxxx Xxx 0xx Xx
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxx Xxxx, XX
00000
|
|
Attention:
Xxxxx
Xxxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o: ____________________________
|
|
Street:
____________________________
|
|
City/State/Zip:
____________________________
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
54
NAME OF INVESTOR | ||
Xxxxxxxxx
Partners,
L.P.
|
||
|
|
|
By: |
/s/
Xxxxxx
X. Xxxxxx
|
|
Name: Xxxxxx
X. Xxxxxx
Title: Managing
Director
|
Investment
Amount: $
116,875.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o: ____________________________
|
|
Street:
0000
Xxxxx Xxxxx
Xx.
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx, XX
00000
|
|
Attention:
Xxxxxx
X.
Xxxxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o:.Banc
of American Securities
|
|
Street:
000
Xxxx Xxxxxx, Xxxxx 0000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx,
XX 00000
|
|
|
|
Attention:
Xxxxx
Xxxxx
|
|
Tel:
000-000-0000
|
55
NAME OF INVESTOR | ||
Xxxxx
X Xxxxxx
Xx.
|
||
|
|
|
By: |
/s/
Xxxxx
X Xxxxxx Xx.
|
|
Name: Xxxxx
X Xxxxxx Xx.
Title:
|
Investment
Amount: $
100,000.00
|
|
Tax
ID No.:
###-##-####
|
|
ADDRESS FOR NOTICE | |
c/o:
Xxxxx X
Xxxxxx
|
|
Street:
0000
Xxxxxx Xxxxxxx
#000
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx, XX
00000
|
|
Attention:
Xxxxx
X Xxxxxx
Xx.
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o:.
____________________________
|
|
Street:
____________________________
|
|
City/State/Zip:
____________________________
|
|
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
56
NAME OF INVESTOR | ||
Octagon
Capital
Partners
|
||
|
|
|
By: |
/s/
Xxxxxx
Xxxx
|
|
Name: Xxxxxx
Xxxx
Title: General
Partner
|
Investment
Amount: $
31,250.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Xxxxxx
Xxxx
|
|
Street:
000
Xxxx 00xx Xxxxxx,
#00X
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxx Xxxx, XX
00000
|
|
Attention:
Xxxxxx
Xxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o:.
____________________________
|
|
Street:
____________________________
|
|
City/State/Zip:
____________________________
|
|
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
57
NAME OF INVESTOR | ||
Guerrilla
Partners
LP
|
||
|
|
|
By: |
/s/
Xxxxx
X.
Xxxxx
|
|
Name: Xxxxx
X. Xxxxx
Title: Managing
director
|
Investment
Amount: $
200,000.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Guerrilla Capital
Management
|
|
Street:
000
Xxxx Xxx 0xx
Xx
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxx Xxxx, XX
00000
|
|
Attention:
Xxxxx
Xxxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o:.
____________________________
|
|
Street:
____________________________
|
|
City/State/Zip:
____________________________
|
|
|
|
Attention:
____________________________
|
|
Tel:
____________________________
|
58
NAME OF INVESTOR | ||
Pinnacle
China Fund
L.P.
|
||
|
|
|
By: |
/s/
Xxxxx
X.
Xxxx
|
|
Name: Xxxxx
X. Xxxxx
Title: Managing
director
|
Investment
Amount: $
3,750,000
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
Pinnacle China Fund
L.P.
|
|
Street:
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 000,
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxxxx, XX
00000
|
|
Attention:
Xxxxx
X.
Xxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o:.
Banc of American Securities
|
|
Street:
000 Xxxx Xxxxxx, Xxxxx 0000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx,
XX 00000
|
|
|
|
Attention:
Xxxxx
Xxxxx
|
|
Tel:
000-000-0000
|
59
NAME OF INVESTOR | ||
The
Pinnacle
Fund,
L.P.
|
||
|
|
|
By: |
/s/
Xxxxx
X. Xxxxx
|
|
Name: Xxxxx
X. Xxxxx
Title: Managing
director
|
Investment
Amount: $
3,750,000.00
|
|
Tax
ID No.:
00-0000000
|
|
ADDRESS FOR NOTICE | |
c/o:
The Pinnacle Fund
L.P.
|
|
Street:
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 000,
|
|
|
|
Xxxx/Xxxxx/Xxx:
Xxxxx, XX
00000
|
|
Attention:
Xxxxx
X.
Xxxx
|
|
|
|
Tel:
000-000-0000
|
|
|
|
Fax:
000-000-0000
|
|
DELIVERY
INSTRUCTIONS
(if
different from above)
|
|
|
|
c/o:.Banc
of American Securities
|
|
Street:
000 Xxxx Xxxxxx, Xxxxx 0000
|
|
Xxxx/Xxxxx/Xxx:
Xxxxxx,
XX 00000
|
|
|
|
Attention:
Xxxxx
Xxxxx
|
|
Tel:
000-000-0000
|
60
NAME OF INVESTOR | ||
Xxxxxx Partners, LP | ||
|
|
|
By: | /s/ Xxxxxx Xxxxx | |
Name: Xxxxxx Xxxxx |
||
Title: CFO |
Investment Amount: $ 67,500.00 | ||
Tax
ID No.:
00-0000000
|
||
ADDRESS FOR NOTICE | ||
c/o: Xxxxxx Asset Management | ||
Street: 000 Xxxx Xxxxxx, 00xx Xxxxx | ||
Xxxx/Xxxxx/Xxx: Xxx Xxxx, XX 00000 | ||
Attention: Xxxxxx Xxxxx | ||
Tel: 000-000-0000 | ||
Fax: 000-000-0000 | ||
DELIVERY INSTRUCTIONS
(if
different from above)
|
||
c/o:.
_____________________________
|
||
Street:
_____________________________
|
||
City/State/Zip:
__________________________
|
||
Attention:
_____________________________
|
||
Tel:
___________________________________
|
61
NAME OF INVESTOR | ||
Xxxxxx-GEPT
Partners, LP
|
||
|
|
|
By: | /s/ Xxxxxx Xxxxx | |
Name: Xxxxxx Xxxxx |
||
Title: CFO |
Investment Amount: $ 45,000.00 | ||
Tax ID No.: 00-0000000 | ||
ADDRESS
FOR NOTICE
|
||
c/o: Xxxxxx Asset Management | ||
Street: 000 Xxxx Xxxxxx, 00xx Xxxxx | ||
Xxxx/Xxxxx/Xxx: Xxx Xxxx, XX 00000 | ||
Attention: Xxxxxx Xxxxx | ||
Tel: 000-000-0000 | ||
Fax: 000-000-0000 | ||
DELIVERY
INSTRUCTIONS
(if
different from above)
|
||
c/o:.
____________________________________
|
||
Street: ___________________________________ | ||
City/State/Zip: _____________________________ | ||
Attention: ________________________________ | ||
Tel: ______________________________________ | ||
62
NAME OF INVESTOR | ||
Ardsley Partners Fund II, LP | ||
By: | /s/ Xxxxx Xxxxxx | |
Name: Xxxxx Xxxxxx |
||
Title: Partner |
Investment Amount: $ 1,478,125.00 | ||
Tax ID No.: 00-0000000 | ||
ADDRESS FOR NOTICE | ||
c/o: Ardsley Partners | ||
Street: 000 Xxxxxx Xx., 0xx Xxxxx | ||
Xxxx/Xxxxx/Xxx: Xxxxxxxx, XX 00000 | ||
Attention: Xxxxx Xxxxxx | ||
Tel: 000-000-0000 | ||
Fax: 000-000-0000 | ||
DELIVERY
INSTRUCTIONS
(if
different from above)
|
||
c/o:.
________________________________
|
||
Street: _______________________________ | ||
City/State/Zip: _________________________ | ||
Attention: _____________________________ | ||
Tel: ___________________________________ |
63
NAME OF INVESTOR | ||
Xxxxxx Xxxxxx | ||
|
|
|
By: | /s/ Xxxxx Xxxxxx | |
Name: Xxxxx Xxxxxx |
||
Title:
|
Investment Amount: $ 37,500.00 | ||
Tax
ID No.:
###-##-####
|
||
ADDRESS FOR NOTICE | ||
c/o: Ardsley Partners | ||
Street:
000
Xxxxxx Xx., 0xx
Xxxxx
|
||
Xxxx/Xxxxx/Xxx:
Xxxxxxxx, XX 00000
|
||
Attention:
Xxxxx
Xxxxxx
|
||
Tel:
000-000-0000
|
||
Fax:
000-000-0000
|
||
DELIVERY
INSTRUCTIONS
(if
different from above)
|
||
c/o:. _________________________________ | ||
Street: ________________________________ | ||
City/State/Zip:
__________________________
|
||
Attention: _______________________________ |
64
NAME OF INVESTOR | ||
Ardsley Offshore Fund, LP | ||
|
|
|
By: | /s/ Xxxxx Xxxxxx | |
Name: Xxxxx Xxxxxx |
||
Title: Agent/Advisor |
Investment Amount: $ 1,478,125.00 | ||
Tax ID No.: 00-0000000 | ||
ADDRESS FOR NOTICE | ||
c/o:
Ardsley Partners
|
||
Street: 000 Xxxxxx Xx., 0xx Xxxxx | ||
Xxxx/Xxxxx/Xxx: Xxxxxxxx, XX 00000 | ||
Attention: Xxxxx Xxxxxx | ||
Tel: 000-000-0000 | ||
Fax: 000-000-0000 | ||
DELIVERY INSTRUCTIONS
(if
different from above)
|
||
c/o:.
_____________________________________
|
||
Street: ___________________________________ | ||
City/State/Zip: _____________________________ | ||
Attention: _________________________________ | ||
Tel: ______________________________________ |
65
NAME OF INVESTOR | ||
Ardsley Partners Institutional Fund, LP | ||
|
|
|
By: | /s/ Xxxxx Xxxxxx | |
Name: Xxxxx
Xxxxxx
|
||
Title: Partner |
Investment Amount: $ 953,125.00 | ||
Tax ID No.: 00-0000000 | ||
ADDRESS FOR NOTICE | ||
c/o:
Ardsley Partners
|
||
Street: 000 Xxxxxx Xx., 0xx Xxxxx | ||
Xxxx/Xxxxx/Xxx: Xxxxxxxx, XX 00000 | ||
Attention: Xxxxx Xxxxxx | ||
Tel: 000-000-0000 | ||
Fax: 000-000-0000 | ||
DELIVERY INSTRUCTIONS
(if
different from above)
|
||
c/o:. _________________________________________ | ||
Street: ________________________________________ | ||
City/State/Zip: __________________________________ | ||
Attention: _____________________________________ | ||
Tel: __________________________________________ |
66
APPENDIX
A
SCHEDULE
OF INVESTORS
67
EXHIBIT
A
FORM
OF
CLOSING ESCROW AGREEMENT
68
EXHIBIT
B
FORM
OF
REGISTRATION RIGHTS AGREEMENT
69
EXHIBIT
C
FORM
OF
LOCKUP AGREEMENT
70
EXHIBIT
D
FORM
OF
MAKE GOOD ESCROW AGREEMENT
71
EXHIBIT
E
FORM
OF
HOLDBACK ESCROW AGREEMENT
72