EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of December 6,
2004, by and among SinoFresh HealthCare, Inc., a Florida corporation, with
headquarters located at 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx 00000 (the
"COMPANY"), and each of the purchasers set forth on the signature pages hereto
(the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT");
B. Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement (i) 6% senior secured
convertible debentures of the Company, in the form attached hereto as EXHIBIT
"A", in the aggregate principal amount as set forth on the signature pages
hereto (together with any debenture(s) issued in replacement thereof or as a
dividend thereon or otherwise with respect thereto in accordance with the terms
thereof, the "DEBENTURES"), convertible into shares of common stock, no par
value, of the Company (the "COMMON STOCK"), upon the terms and subject to the
limitations and conditions set forth in such Debentures and (ii) warrants, in
the form attached hereto as EXHIBIT "B" to purchase shares of Common Stock (the
"WARRANTS");
C. Each Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Debentures and number of Warrants as is
set forth immediately below its name on the signature pages hereto;
D. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as EXHIBIT "C" (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws;
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Security Agreement, in the form
attached hereto as EXHIBIT "D" (the "SECURITY AGREEMENT") and an Intellectual
Property Security Agreement, in the form attached hereto as EXHIBIT "E" (the
"INTELLECTUAL PROPERTY SECURITY AGREEMENT"), pursuant to which the Company has
agreed to grant a security interest in the assets of the Company to secure the
obligations of the Company to the Buyers;
F. Contemporaneous with the execution and delivery of this Agreement,
SinoFresh Corporation, a Florida corporation and a wholly-owned Subsidiary (as
defined herein) ("SINOFRESH CORPORATION") of the Company is executing and
delivering a Guaranty Agreement, in the form attached hereto as EXHIBIT "F" (the
"GUARANTY AGREEMENT"), guaranteeing the obligations of the Company to the
Buyers;
G. Contemporaneous with the execution and delivery of this Agreement,
SinoFresh Corporation and the Buyers are executing and delivering a Security
Agreement, in the form attached
hereto as EXHIBIT "G" (the "SUBSIDIARY SECURITY AGREEMENT") and an Intellectual
Property Security Agreement, in the form attached hereto as EXHIBIT "H" (the
"SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT"), pursuant to which
SinoFresh Corporation has agreed to grant a security interest in the assets of
SinoFresh Corporation to secure the obligations of SinoFresh Corporation to the
Buyers.
NOW THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
a. PURCHASE OF DEBENTURES AND WARRANTS. On the Closing Date
(as defined below), the Company shall issue and sell to each Buyer and each
Buyer severally agrees to purchase from the Company such principal amount of
Debentures and a Warrant to purchase such number of shares of Common Stock as is
set forth immediately below such Buyer's name on the signature pages hereto.
b. FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall
pay the purchase price for the Debentures and the Warrants to be issued and sold
to it at the Closing (as defined below) (the "PURCHASE Price") by wire transfer
of immediately available funds to the Company, in accordance with the Company's
written wiring instructions, against delivery of the Debentures in the principal
amount equal to the Purchase Price and the number of Warrants as is set forth
immediately below such Buyer's name on the signature pages hereto, and (ii) the
Company shall deliver such Debentures and Warrants duly executed on behalf of
the Company, to such Buyer, against delivery of such Purchase Price.
c. CLOSING DATE. Subject to the satisfaction (or written
waiver) of the conditions thereto set forth in Sections 5 and 6 below, the date
and time of the issuance and sale of the Debentures and the Warrants pursuant to
Section 1(a) of this Agreement (the "CLOSING DATE") shall be simultaneous with
the execution and delivery of this Agreement by the parties, or such other
mutually agreed upon time. The closing of the transactions contemplated by
Section 1(a) of this Agreement (the "CLOSING") shall occur on the Closing Date
at such location as may be agreed to by the parties.
2. BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and
not jointly) represents and warrants to the Company solely as to such Buyer
that:
a. INVESTMENT PURPOSE. As of the Closing Date the Buyer is
purchasing the Debentures and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Debentures pursuant to this Agreement
(the "CONVERSION SHARES") and the Warrants and the shares of Common Stock
issuable upon exercise thereof (the "WARRANT SHARES" and, collectively with the
Debentures, Warrants and Conversion Shares, the "SECURITIES") for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; provided, however, that by making the representations herein, the
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.
b. ACCREDITED INVESTOR STATUS. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D (an "ACCREDITED
INVESTOR").
c. RELIANCE ON EXEMPTIONS. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of
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United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.
d. INFORMATION. The Buyer and its advisors, if any, have been
furnished with all information relating to the business, finances and operations
of the Company and information relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors; provided, however, that
the Buyer is relying on the Company's representation that all such information
which would otherwise constitute material nonpublic information has been
disclosed to the public prior to or promptly following such disclosure to the
Buyer. Neither such inquiries nor any other due diligence investigation
conducted by Buyer or any of its advisors or representatives shall modify, amend
or affect Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below. The Buyer understands that its investment in the
Securities involves a significant degree of risk.
e. GOVERNMENTAL REVIEW. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
f. TRANSFER OR RE-SALE. The Buyer understands that except as
provided in the Registration Rights Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred
unless (i) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (ii) the Buyer shall have delivered to the Company
an opinion of counsel that shall be in form, substance and scope customary for
opinions of counsel in comparable transactions to the effect that the Securities
to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration, which opinion shall have been accepted by the Company,
(iii) the Securities are sold or transferred to an "affiliate" (as defined in
Rule 144 promulgated under the 1933 Act (or a successor rule) ("RULE 144")) of
the Buyer who agrees to sell or otherwise transfer the Securities only in
accordance with this Section 2(f) and who is an Accredited Investor, (iv) the
Securities are sold pursuant to Rule 144, or (v) the Securities are sold
pursuant to Regulation S under the 1933 Act (or a successor rule) ("REGULATION
S"), and the Buyer shall have delivered to the Company an opinion of counsel
that shall be in form, substance and scope customary for opinions of counsel in
corporate transactions, which opinion shall have been accepted by the Company.
Notwithstanding the foregoing or anything else contained herein to the contrary,
the Securities may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement.
g. LEGENDS. The Buyer understands that the Debentures and the
Warrants and, until such time as the Conversion Shares and the Warrant Shares
have been registered under the 1933 Act as contemplated by the Registration
Rights Agreement or otherwise may be sold pursuant to Rule 144 or Regulation S
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, the Conversion Shares and the Warrant Shares
may bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities may not be sold, transferred or assigned in the absence
of an effective registration statement for the securities under said
Act, or an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, which
opinion shall have been accepted by the
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issuer, that registration is not required under said Act or unless
sold pursuant to Rule 144 or Regulation S under said Act."
h. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly
and validly authorized by, and duly executed and delivered on behalf of, the
Buyer, and this Agreement constitutes the valid and binding agreement of the
Buyer enforceable in accordance with its terms.
i. RESIDENCY. The Buyer is a resident of the jurisdiction set
forth immediately below such Buyer's name on the signature pages hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the Company's Disclosure Schedule annexed hereto, the Company
represents and warrants to each Buyer that:
a. ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated and
conducted. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the business,
operations, assets, financial condition or prospects of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith. "SUBSIDIARIES" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
b. AUTHORIZATION; ENFORCEMENT.
(i) The Company has all requisite corporate power and
authority to enter into and perform this Agreement, the Registration Rights
Agreement, the Debentures, the Warrants, the Security Agreement and the
Intellectual Property Security Agreement and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in accordance with
the terms hereof and thereof. The execution and delivery of this Agreement, the
Registration Rights Agreement, the Debentures, the Warrants, the Security
Agreement and the Intellectual Property Security Agreement by the Company and
the consummation by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Debentures and the Warrants
and the issuance and reservation for issuance of the Conversion Shares and
Warrant Shares issuable upon conversion or exercise thereof) have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board of Directors, or its stockholders is
required. This Agreement has been duly executed and delivered by the Company by
its authorized representative, and such authorized representative is the true
and official representative with authority to sign this Agreement and the other
documents executed in connection herewith and bind the Company accordingly. This
Agreement constitutes, and upon execution and delivery by the Company of the
Registration Rights Agreement, the Debentures, the Warrants, the Security
Agreement and the Intellectual Property Security Agreement, each of such
instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
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(ii) SinoFresh Corporation has all requisite corporate
power and authority to enter into and perform the Guaranty Agreement, the
Subsidiary Security Agreement and the Subsidiary Intellectual Property Security
Agreement, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of the Guaranty Agreement, the Subsidiary Security
Agreement and the Subsidiary Intellectual Property Security Agreement by
SinoFresh Corporation and the consummation by it of the transactions
contemplated thereby have been duly authorized by SinoFresh Corporation's Board
of Directors and no further consent or authorization of SinoFresh Corporation,
its Board of Directors, or its stockholders is required. This Agreement has been
duly executed and delivered by SinoFresh Corporation by its authorized
representative, and such authorized representative is the true and official
representative with authority to sign this Agreement and the other documents
executed in connection herewith and bind SinoFresh Corporation accordingly. This
Agreement constitutes, and upon execution and delivery by SinoFresh of the
Guaranty Agreement, the Subsidiary Security Agreement and the Subsidiary
Intellectual Property Security Agreement, will constitute, a legal, valid and
binding obligation of SinoFresh Corporation enforceable against SinoFresh
Corporation in accordance with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company is set forth in the Company's Disclosure Schedule.
The number of shares of Common Stock issued and outstanding and the number of
shares reserved for issuance pursuant to securities (other than the Debentures
and the Warrants) exercisable for, or convertible into or exchangeable for
shares of Common Stock are set forth in the Company's Disclosure Schedule. The
classes and series of preferred stock designated and the number of such shares
issued and outstanding are set forth in the Company's Disclosure Schedule. All
of such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and nonassessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. As of the date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of
its Subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except the Registration Rights Agreement) and
(iii) there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Debentures, the Warrants,
the Conversion Shares or the Warrant Shares.
d. ISSUANCE OF SHARES. The Conversion Shares and Warrant
Shares are duly authorized and reserved for issuance and, upon conversion of the
Debentures and exercise of the Warrants in accordance with their respective
terms, will be validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue thereof and
shall not be subject to preemptive rights or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof.
e. ACKNOWLEDGMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares and Warrant Shares upon conversion of the
Debentures or exercise of the Warrants. The Company further acknowledges that
its obligation to issue Conversion Shares and Warrant Shares upon conversion of
the Debentures or exercise of the Warrants in accordance with this Agreement,
the
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Debentures and the Warrants is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
shareholders of the Company.
f. NO CONFLICTS. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Debentures, the Warrants,
the Security Agreement and the Intellectual Property Security Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares), and the execution,
delivery and performance of the Guaranty Agreement, the Subsidiary Security
Agreement and the Subsidiary Intellectual Property Security Agreement by
SinoFresh Corporation and the consummation by SinoFresh Corporation of the
transactions contemplated thereby, will not (i) conflict with or result in a
violation of any provision of the certificate of incorporation, as amended, (the
"CERTIFICATE OF INCORPORATION") of the Company or any of its Subsidiaries or the
by-laws, as amended, (the "BY-LAWS") of the Company or any of its Subsidiaries,
or (ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its Subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted in
violation of any law, ordinance or regulation of any governmental entity
material to the business of the Company and its Subsidiaries. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, neither the Company nor SinoFresh
Corporation is required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third party in order
for (i) the Company to execute, deliver or perform any of its obligations under
this Agreement, the Registration Rights Agreement, the Debentures, the Warrants,
the Security Agreement or the Intellectual Property Security Agreement, by the
Company in accordance with the terms hereof or thereof or to issue and sell the
Debentures and the Warrants in accordance with the terms hereof and to issue the
Conversion Shares upon conversion of the Debentures and the Warrant Shares upon
exercise of the Warrants, or (ii) SinoFresh Corporation to execute, deliver or
perform the Guaranty, the Subsidiary Security Agreement or the Subsidiary
Intellectual Property Security Agreement in accordance with the terms thereof.
All consents, authorizations, orders, filings and registrations which either the
Company or SinoFresh Corporation is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company is not in violation of the listing requirements of the Over-the-Counter
Bulletin Board (the "OTCBB") and does not reasonably anticipate that the Common
Stock will be delisted by the OTCBB in the foreseeable future. The Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing.
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g. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 2002,
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein, being hereinafter
referred to herein as the "SEC DOCUMENTS"). The Company has made available to
each Buyer true and complete copies of the SEC Documents, except for such
exhibits and incorporated documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC (when read together with any subsequent amendments), 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. None of
the statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior the date hereof). As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company
has no liabilities, contingent or otherwise, of the type customarily reflected
on financial statements and the notes thereto, other than (i) liabilities
incurred in the ordinary course of business subsequent to December 31, 2003 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in such financial statements, which, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company.
h. ABSENCE OF CERTAIN CHANGES. Since December 31, 2003, there
has been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition,
results of operations or prospects of the Company or any of its Subsidiaries.
i. ABSENCE OF LITIGATION. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse Effect. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.
j. PATENTS, COPYRIGHTS, ETC. The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights ("INTELLECTUAL PROPERTY") necessary to enable it to conduct
its business as now operated (and, to the Company's knowledge, as presently
contemplated to be operated in the future); there is no claim or action by any
person pertaining to, or proceeding pending, or to the Company's
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knowledge threatened, which challenges the right of the Company or of a
Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, to the Company's knowledge, as
presently contemplated to be operated in the future); to the Company's
knowledge, the Company's or its Subsidiaries' current and intended products,
services and processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing.
k. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
l. TAX STATUS. The Company and each of its Subsidiaries has
made or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to the statute of limitations relating to
the assessment or collection of any foreign, federal, state or local tax. None
of the Company's tax returns is presently being audited by any taxing authority.
m. CERTAIN TRANSACTIONS. Except for arm's length transactions
pursuant to which the Company or any of its Subsidiaries makes payments in the
ordinary course of business upon terms no less favorable than the Company or any
of its Subsidiaries could obtain from third parties, none of the officers,
directors, or employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (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 officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
n. PERMITS; COMPLIANCE. The Company and each of its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and there is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the Company Permits.
Neither the Company nor any of its Subsidiaries is in conflict with, or in
default or violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. Since December 31,
2003, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.
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o. ENVIRONMENTAL MATTERS. There are, with respect to the
Company or any of its Subsidiaries, no past or present violations of
Environmental Laws (as defined below), releases of any material into the
environment, actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any of its Subsidiaries has received
any notice with respect to any of the foregoing, nor is any action pending or,
to the Company's knowledge, threatened in connection with any of the foregoing.
The term "ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively,
"HAZARDOUS MATERIALS") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder. Other than those that are or were
stored, used or disposed of in compliance with applicable law, no Hazardous
Materials are contained on or about any real property currently owned, leased or
used by the Company or any of its Subsidiaries, and no Hazardous Materials were
released on or about any real property previously owned, leased or used by the
Company or any of its Subsidiaries during the period the property was owned,
leased or used by the Company or any of its Subsidiaries, except in the normal
course of the Company's or any of its Subsidiaries' business. To the knowledge
of the Company and its Subsidiaries, there are no underground storage tanks on
or under any real property owned, leased or used by the Company or any of its
Subsidiaries that are not in compliance with applicable law.
p. TITLE TO PROPERTY. The Company and its Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as would not have a Material Adverse
Effect. Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect.
q. INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
r. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, 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 generally
accepted accounting principles 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.
9
s. FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of
its Subsidiaries, nor any current director or officer, nor, to the knowledge of
the Company and its Subsidiaries, any past director, past officer, agent,
employee or other person acting on behalf of the Company or any Subsidiary has,
in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
t. SOLVENCY. The Company (after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time
incurred in connection therewith as such debts mature.
u. NO INVESTMENT COMPANY. The Company is not, and upon the
issuance and sale of the Securities as contemplated by this Agreement will not
be an "investment company" as defined under the Investment Company Act of 1940
(an "INVESTMENT COMPANY"). The Company is not controlled by an Investment
Company.
v. DISCLOSURE. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyers in connection with the transactions contemplated hereby is true and
correct in all material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading. No
event or circumstance has occurred or exists with respect to the Company or any
of its Subsidiaries or its or their business, properties, prospects, operations
or financial conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not been
so publicly announced or disclosed.
w. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF SECURITIES.
The Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyers' purchase of the Securities. The Company further represents to
each Buyer that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
x. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the Securities to the Buyers. The issuance of the
Securities to the Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) for purposes of any stockholder
approval provisions applicable to the Company or its securities.
10
y. NO BROKERS. The Company has taken no action which would
give rise to any claim by any person for brokerage commissions, transaction fees
or similar payments relating to this Agreement or the transactions contemplated
hereby.
4. COVENANTS.
a. BEST EFFORTS. The parties shall use their best efforts to
satisfy timely each of the conditions described in Sections 5 and 6, inclusive,
of this Agreement.
b. FORM D; BLUE SKY LAWS. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Buyers at the
applicable closing pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to each Buyer on or prior to the Closing Date.
c. USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Debentures and Warrants as set forth in the Company's Disclosure
Schedule. The Company shall not, directly or indirectly, use the proceeds from
the sale of the Debentures and the Warrants for any loan to or investment in any
other corporation, partnership, enterprise or other person (except in connection
with its currently existing direct or indirect Subsidiaries).
d. EXPENSES. At the Closing, the Company shall reimburse, or
advance to, the Buyers for reasonable expenses incurred by them in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and the other agreements to be executed in connection herewith
("DOCUMENTS"), including, without limitation, attorneys' and consultants' fees
and expenses, transfer agent fees, fees for stock quotation services, fees
relating to any amendments or modifications of the Documents or any consents or
waivers of provisions in the Documents, fees for the preparation of opinions of
counsel, escrow fees, and costs of restructuring the transactions contemplated
by the Documents. The Company shall reimburse, or pay directly, the Buyer's
counsel's fees in the preparation of the Documents, in the amount of $24,000, of
which $14,000 has been previously paid, and such counsel's reasonable out of
pocket expenses. When possible, the Company must pay these fees directly,
otherwise the Company must make immediate payment for reimbursement to the
Buyers for all fees and expenses immediately upon written notice by the Buyer or
the submission of an invoice by the Buyer If the Company fails to reimburse the
Buyer in full within three (3) business days of the written notice or submission
of invoice by the Buyer, the Company shall pay interest on the total amount of
fees to be reimbursed at a rate of 15% per annum.
e. FINANCIAL INFORMATION. The Company agrees to send, or make
available on XXXXX, the following reports to each Buyer until such Buyer
transfers, assigns, or sells all of the Securities: (i) within ten (10) days
after the filing with the SEC, a copy of its Annual Report on Form 10-KSB its
Quarterly Reports on Form 10-QSB and any Current Reports on Form 8-K; (ii)
within one (1) day after release, copies of all press releases issued by the
Company or any of its Subsidiaries; and (iii) contemporaneously with the making
available or giving to the shareholders of the Company, copies of any notices or
other information the Company makes available or gives to such shareholders.
f. AUTHORIZATION AND RESERVATION OF SHARES. The Company shall
at all times have authorized, and reserved for the purpose of issuance, a
sufficient number of shares of Common Stock to provide for the full conversion
or exercise of the outstanding Debentures and Warrants and issuance of the
Conversion Shares and Warrant Shares in connection therewith (based on the
Conversion
11
Price of the Debentures or Exercise Price of the Warrants in effect from time to
time) and as otherwise required by the Debentures. Except in the case of
combinations of Common Stock (by any reverse stock split, recapitalization,
reorganization, reclassification or otherwise), the Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion of
Debentures and exercise of the Warrants without the consent of each Buyer. The
Company shall at all times maintain the number of shares of Common Stock so
reserved for issuance at an amount ("RESERVED AMOUNT") equal to no less than the
number of shares of Common Stock that is then actually issuable upon full
conversion of the Debentures and upon exercise of the Warrants (based on the
Conversion Price of the Debentures or the Exercise Price of the Warrants in
effect from time to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance ("AUTHORIZED AND RESERVED SHARES") is below
the Reserved Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations under this Section 4(f), in
the case of an insufficient number of authorized shares, obtain stockholder
approval of an increase in such authorized number of shares, and voting the
management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is
sufficient to meet the Reserved Amount.
g. LISTING. The Company shall promptly secure the listing of
the Conversion Shares and Warrant Shares upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and, so long as any Buyer
owns any of the Securities, shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all the Conversion Shares and
the Warrant Shares from time to time issuable upon conversion of the Debentures
or exercise of the Warrants. The Company will obtain and, so long as any Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock
on the OTCBB or any equivalent replacement exchange, the Nasdaq National Market
("NASDAQ"), the Nasdaq SmallCap Market ("NASDAQ SMALLCAP"), the New York Stock
Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and will comply in
all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the National Association of Securities Dealers ("NASD")
and such exchanges, as applicable. The Company shall promptly provide to each
Buyer copies of any notices it receives from the OTCBB and any other exchanges
or quotation systems on which the Common Stock is then listed regarding the
continued eligibility of the Common Stock for listing on such exchanges and
quotation systems.
h. CORPORATE EXISTENCE. So long as a Buyer beneficially owns
any Debentures, each of the Company and each of its Subsidiaries shall maintain
its corporate existence and shall not sell all or substantially all of its
assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company's assets, where the surviving or successor
entity in such transaction (i) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection herewith and
(ii) is a publicly traded corporation whose Common Stock is listed for trading
on the Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
i. NO INTEGRATION. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
1933 Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.
j. ADDITIONAL ISSUANCES. Until the Company has filed with the
SEC a Registration Statement registering the resale of the Registrable
Securities (as such terms are defined in the Registration Rights Agreement) in
accordance with the Registration Rights Agreement, and such
12
Registration Statement has been declared effective by the SEC, the Company shall
not issue any of its Common Stock, nor issue any other security convertible or
exchangeable for, or exercisable into, Common Stock, nor enter into any
agreement to do any of the foregoing, except for issuances of capital stock upon
exercise or conversion of securities outstanding as of the date of this
Agreement.
k. REPORTING COMPANY. So long as any Buyer beneficially owns
any of the Securities, the Company shall timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate, or take any action that would result in the termination of, the
registration of its Common Stock under Section 12 of the 1934 Act or otherwise
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination.
l. NO SHORTING. As long as any principal amount is owing to
the Buyer under such Buyer's Debenture, such Buyer shall not, and shall cause
its affiliates to not, directly or indirectly, engage in "short sales" of the
Company's Common Stock. For purposes of clarification only, the Company hereby
specifically acknowledges that at any time any Buyer delivers a Notice of
Conversion (in accordance with such Buyer's Debenture), such Buyer (i) shall be
deemed to be the owner of the shares of Common Stock underlying the amount so
converted and (ii) may sell up to such number of shares of common stock at any
time thereafter and shall not be deemed to be engaged in a "short sale" in
violation of this Section 4(l).
m. ADDITIONAL REGISTRATION STATEMENTS. Prior to the effective
date of the registration statement (the "REGISTRATION STATEMENT") required to be
filed by the Company pursuant to Section 2(a) of the Registration Rights
Agreement, the Company shall not file with the SEC any registration statement
under the Securities Act of 1933, as amended (other than as required under the
Registration Rights Agreement), except for a registration statement on Form S-8
for the Company's existing 2002 Stock Option Plan.
n. INCLUSION OF SECURITIES IN REGISTRATION STATEMENT. The
Company shall not include for registration in the Registration Statement the
sale or resale of any additional securities other than (i) approximately
2,421,470 shares of common stock underlying warrants (as described in the
Company Disclosure Schedule), (ii) approximately 968,490 shares of common stock
(as described in the Company Disclosure Schedule), and (iii) up to approximately
329,000 shares of common stock underlying the Bristol Warrant (as described in
the Company Disclosure Schedule).
5. CONDITIONS TO THE COMPANY'S OBLIGATION. The obligation of the
Company hereunder to issue and sell the Debentures and the Warrants to a Buyer
at the Closing is subject to the satisfaction, at or before the Closing Date of
each of the following conditions thereto, provided that these conditions are for
the Company's sole benefit and may be waived by the Company at any time in its
sole discretion:
a. The applicable Buyer shall have executed this Agreement,
the Registration Rights Agreement, the Security Agreement, the Intellectual
Property Security Agreement, the Subsidiary Security Agreement, and the
Subsidiary Intellectual Property Security Agreement and delivered the same to
the Company.
b. The applicable Buyer shall have delivered the Purchase
Price in accordance with Section 1(b) above.
c. The representations and warranties of the applicable Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at
13
that time (except for representations and warranties that speak as of a specific
date), and the applicable Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the applicable
Buyer at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
6. CONDITIONS TO EACH BUYER'S OBLIGATION. The obligation of each
Buyer hereunder to purchase the Debentures and the Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement, the
Registration Rights Agreement, the Security Agreement and the Intellectual
Property Security Agreement and delivered the same to such Buyer.
b. SinoFresh Corporation shall have executed the Guaranty
Agreement, the Subsidiary Security Agreement, and the Subsidiary Intellectual
Property Security Agreement, and delivered the same to such Buyer.
c. The Company shall have delivered to such Buyer duly
executed Debentures (in such denominations as such Buyer shall request) and
Warrants in accordance with Section 1(a) above.
d. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate or certificates, executed by the principal
executive officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such Buyer
including, but not limited to certificates with respect to the Company's and
SinoFresh Corporation's Certificate of Incorporation, By-laws and Board of
Directors' resolutions relating to the transactions contemplated hereby.
e. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
f. No event shall have occurred which could reasonably be
expected to have a Material Adverse Effect on the Company.
g. The Conversion Shares and Warrant Shares shall have been
authorized for quotation on the OTCBB and trading in the Common Stock on the
OTCBB shall not have been suspended by the SEC or the OTCBB.
14
h. Such Buyer shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the same form as EXHIBIT "I"
attached hereto.
i. The Company shall have satisfied, through the proceeds from
the sale of the Debentures, its and its Subsidiaries' obligations to Invest Linc
Equity Fund II and Invest Linc Emerging Growth Equity Fund I, L.L.C., and their
affiliates (collectively the "INVEST LINC FUNDS") and obtained releases by the
Invest Linc Funds of all of the Invest Linc Funds' liens, claims, encumbrances
and security interests against the Company's and its Subsidiaries' assets.
7. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. THE PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. THE PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT ANY PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. THE PARTIES AGREE THAT A FINAL NON-APPEALABLE
JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT
SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS' FEES,
INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.
b. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
c. HEADINGS. The headings of this Agreement are for
convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
d. SEVERABILITY. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform to such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
15
f. NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
SinoFresh HealthCare, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to:
Xxxxxxxxx Traurig, P.A.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.
With copy to:
Xxxxxx Xxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000)-000-0000
Each party shall provide notice to the other party of any change in
address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its
rights hereunder to any person that purchases Securities in a private
transaction from a Buyer or to any of its "affiliates," as that term is defined
under the 1934 Act, without the consent of the Company; provided, however, a
Buyer agrees not to assign its rights hereunder to any person known to be a
beneficial owner holder of five percent (5%) or more of the outstanding Common
Stock of the Company.
h. THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
16
i. SURVIVAL. The representations and warranties of the Company
and the agreements and covenants set forth in Sections 3, 4 and 7 shall survive
the closing hereunder notwithstanding any due diligence investigation conducted
by or on behalf of the Buyers. The Company agrees to indemnify and hold harmless
each of the Buyers and all their stockholders, partners, members, managers,
officers, directors, employees and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in Sections 3 and 4 hereof
or any of its or its Subsidiaries' covenants and obligations under this
Agreement, the Registration Rights Agreement, the Security Agreement, the
Intellectual Property Security Agreement, the Guaranty Agreement, the Subsidiary
Security Agreement, or the Subsidiary Intellectual Property Security Agreement,
including advancement of expenses as they are incurred.
j. PUBLICITY. The Company and each of the Buyers shall have
the right to review a reasonable period of time before issuance of any press
releases, SEC, OTCBB (or other applicable trading market) or NASD filings, or
any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of any of the Buyers, to make any press release or SEC, OTCBB (or other
applicable trading market) or NASD filings with respect to such transactions as
is required by applicable law and regulations (although each of the Buyers shall
be consulted by the Company in connection with any such press release prior to
its release and shall be provided with a copy thereof and be given an
opportunity to comment thereon). Subject to the foregoing, the Company agrees to
file with the SEC a Form 8-K within four (4) business days of the Closing Date
disclosing this transaction.
k. FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. NO STRICT CONSTRUCTION. 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.
m. REMEDIES. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Buyers by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the
Buyers shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Agreement
and to enforce specifically the terms and provisions hereof, without the
necessity of showing economic loss and without any bond or other security being
required.
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IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
SINOFRESH HEALTHCARE, INC.
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Chief Executive Officer
[signature page continues on next page]
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BUYERS:
BUSHIDO CAPITAL MASTER FUND L.P.
By: Bushido Capital Partners, Ltd.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
President
JURISDICTION: Cayman Islands
ADDRESS: [OMITTED]
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
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GAMMA OPPORTUNITY CAPITAL PARTNERS, LP
By: /s/ Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Director
JURISDICTION: Cayman Islands
ADDRESS: [OMITTED]
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
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DCOFI MASTER LDC
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Authorized Signatory
JURISDICTION: Cayman Islands
ADDRESS: [OMITTED]
Xxx Xxxx, XX 00000
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
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00
XXXXX X. XXXXXX TRUST
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Trustee
RESIDENCE: Florida
ADDRESS: [OMITTED]
Xxxxxxx, XX 00000
Facsimile:
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
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22
BLUEGRASS GROWTH FUND LP
By: Bluegrass Growth Fund Partners LLC
By: /s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Managing Member
JURISDICTION: Delaware
ADDRESS: [OMITTED]
Xxx Xxxx, XX 00000
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
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BLUEGRASS GROWTH FUND LTD
By: /s/ Xxxxx Xxxxx
Xxxxx Xxxxx
Director
JURISDICTION: Cayman Islands
ADDRESS: [OMITTED]
Xxx Xxxx, XX 00000
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
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/s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
JURISDICTION: Connecticut
ADDRESS: [OMITTED]
Xxxxxx, XX 00000
Facsimile: ____________________
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $25,000
Number of Warrants: 22,727
Aggregate Purchase Price: $25,000
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/s/ Xxxxxxxxxxx X. Xxxxx
Xxxxxxxxxxx X. Xxxxx
JURISDICTION: Kansas
ADDRESS: [OMITTED]
Xxxx Xxxx, XX 00000
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $55,000
Number of Warrants: 50,000
Aggregate Purchase Price: $55,000
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ASSET MANAGERS INTERNATIONAL LTD.
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Authorized Signatory
JURISDICTION: England
ADDRESS: [OMITTED]
Xxxxxx, X 0 X0XX, XX
Attention:
Facsimile: [OMITTED]
Telephone: [OMITTED]
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Debentures: $250,000
Number of Warrants: 227,274
Aggregate Purchase Price: $250,000
27
