FORM OF SECURITIES PURCHASE AGREEMENT
FORM
OF SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of December ___, 2007, by and among Wonder Auto Technology, Inc.,
a
Nevada corporation (the “Company”),
and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and
collectively, the “Purchasers”).
A. The
Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities
Act”),
and
Rule 506 of Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission (the
“Commission”)
under
the Securities Act.
B. Each
Purchaser, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, that aggregate
number of shares of common stock, par value $0.0001 per share (the “Common
Stock”),
of
the Company, set forth below such Purchaser’s name on the signature page of this
Agreement (which aggregate amount for all Purchasers together shall be ________
shares of Common Stock and shall be collectively referred to herein as the
“Shares”).
C. The
Company has engaged Xxxxx Xxxxxxx & Co. as its exclusive placement agent
(the “Placement
Agent”)
for
the offering of the Shares on a “best efforts” basis.
D. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in
the
form attached hereto as Exhibit
A
(the
“Registration
Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide certain
registration rights with respect to the Shares under the Securities Act and
the
rules and regulations promulgated thereunder and applicable state securities
laws.
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
For all
purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the
Company’s Knowledge, threatened in writing against the Company, any Subsidiary
or any of their respective properties or any officer, director or employee
of
the Company or any Subsidiary acting in his or her capacity as an officer,
director or employee before or by any federal, state, county, local or foreign
court, arbitrator, governmental or administrative agency, regulatory authority,
stock market, stock exchange or trading facility.
“Affiliate”
means,
with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144. With respect to a Purchaser, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as
such
Purchaser will be deemed to be an Affiliate of such Purchaser.
“Agreement”
shall
have the meaning ascribed to such term in the Preamble.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Buy-In”
has
the
meaning set forth in Section 4.1(f).
“Buy-In
Price”
has
the
meaning set forth in Section 4.1(f).
“Closing”
means
the closing of the purchase and sale of the Shares pursuant to this
Agreement.
“Closing
Bid Price”
means,
for any security as of any date, the last closing price for such security on
the
Principal Trading Market, as reported by Bloomberg, or, if the Principal Trading
Market begins to operate on an extended hours basis and does not designate
the
closing bid price then the last bid price of such security prior to
4:00:00 p.m., New York City Time, as reported by Bloomberg, or, if the
Principal Trading Market is not the principal securities exchange or trading
market for such security, the last closing price of such security on the
principal securities exchange or trading market where such security is listed
or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing
bid
price is reported for such security by Bloomberg, the average of the bid prices
of any market makers for such security as reported in the “pink sheets” by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall
be
the fair market value as mutually determined by the Company and the holder.
If
the Company and the holder are unable to agree upon the fair market value of
such security, then the Company shall, within two Business Days submit via
facsimile (a) the disputed determination to an independent, reputable investment
bank selected by the Company and approved by the holder or (b) the disputed
arithmetic calculation to the Company's independent, outside accountant. The
Company shall cause at its expense the investment bank or the accountant, as
the
case may be, to perform the determinations or calculations and notify the
Company and the holder of the results no later than ten Business Days from
the
time it receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may be, shall
be binding upon all parties absent demonstrable error. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all of the conditions set
forth
in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or waived, as the case
may be, or such other date as the parties may agree.
“Commission”
has
the
meaning set forth in the Recitals.
“Common
Stock”
has
the
meaning set forth in the Recitals, and also includes any securities into which
the Common Stock may hereafter be reclassified or changed.
“Company”
has
the
meaning set forth in the Preamble.
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“Company
Counsel”
means
Xxxxxx Xxxx Xxxxx Raysman & Xxxxxxx LLP.
“Company
Deliverables”
has
the
meaning set forth in Section 2.2(a).
“Company’s
Knowledge”
means
with respect to any statement made to the knowledge of the Company, that the
statement is based upon the actual knowledge of the executive officers of the
Company having responsibility for the matter or matters that are the subject
of
the statement.
“Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Deadline
Date”
has
the
meaning set forth in Section 4.1(f).
“Disclosure
Materials”
has
the
meaning set forth in Section 3.1(h).
“DTC”
has
the
meaning set forth in Section 4.1(c).
“Effective
Date”
means
the date on which the initial Registration Statement required by Section 2(a)
of
the Registration Rights Agreement is first declared effective by the
Commission.
“Environmental
Laws”
has
the
meaning set forth in Section 3.1(l).
“Escrow
Agent”
has
the
meaning set forth in Section 2.1(d)(i).
“Escrow
Agent Duties”
has
the
meaning set forth in Section 2.1(d)(iii)(A).
“Escrow
Amount”
has
the
meaning set forth in Section 2.1(d)(i).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, or any successor statute,
and
the rules and regulations promulgated thereunder.
“Fundamental
Transaction”
means
(i) any merger or consolidation of the Company with or into another Person,
in
which the Company is not the survivor and the stockholders of the Company
immediately prior to such merger or consolidation do not own, directly or
indirectly, at least fifty percent (50%) of the voting securities of the
surviving entity, (ii) any sale of all or substantially all of the Company’s
assets or acquisition by a third party of a majority of the Company’s Common
Stock, in each case, in one or a series of related transactions, (iii) any
tender offer or exchange offer (whether by the Company or another Person)
pursuant to which all or substantially all of the holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (iv) any reclassification of the Company’s Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (other than
as a result of a subdivision or combination of shares of Common
Stock).
“GAAP”
means
U.S. generally accepted accounting principles, as applied by the
Company.
“Indemnified
Person”
has
the
meaning set forth in Section 4.9(b).
“Intellectual
Property”
has
the
meaning set forth in Section 3.1(r).
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“Irrevocable
Transfer Agent Instructions”
means,
with respect to the Company, the Irrevocable Transfer Agent Instructions, in
the
form of Exhibit
D,
executed by the Company and delivered to and acknowledged in writing by the
Transfer Agent.
“Legend
Removal Date”
has
the
meaning set forth in Section 4.1(c).
“Lien”
means
any lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.
“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, prospects, business or financial condition
of the Company and the Subsidiaries, taken as a whole, or (iii) any adverse
impairment to the Company's ability to perform in any material respect on a
timely basis its obligations under any Transaction Document.
“Material
Permits”
has
the
meaning set forth in Section 3.1(p).
“Money
Laundering Laws”
has
the
meaning set forth in Section 3.1(kk).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“OFAC”
has
the
meaning set forth in Section 3.1(jj).
“Outside
Date”
means
the thirtieth day following the date of this Agreement.
“Placement
Agent”
has
the
meaning set forth in the Recitals.
“Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other
form of entity not specifically listed herein.
“Press
Release”
has
the
meaning set forth in Section 4.7.
“Principal
Trading Market”
means
the Trading Market on which the Common Stock is primarily listed on and quoted
for trading, which, as of the date of this Agreement and the Closing Date,
shall
be the NASDAQ Global Market.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a
deposition).
“Purchase
Price”
means
$8.65 per share.
“Purchaser”
or
“Purchasers”
has
the
meaning set forth in the Recitals.
“Purchaser
Deliverables”
has
the
meaning set forth in Section 2.2(b).
“Purchaser
Party”
has
the
meaning set forth in Section 4.9(a).
“Registration
Rights Agreement”
has
the
meaning set forth in the Recitals.
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“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).
“Regulation
D”
has
the
meaning set forth in the Recitals.
“Required
Approvals”
has
the
meaning set forth in Section 3.1(e).
“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).
“Secretary’s
Certificate”
has
the
meaning set forth in Section 2.2(a)(vi).
“Securities
Act”
has
the
meaning set forth in the Recitals.
“Shares”
has
the
meaning set forth in the Recitals.
“Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against
the box, and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps, “put equivalent positions”
(as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through
non-U.S. broker dealers or foreign regulated brokers.
“Stock
Certificates”
has
the
meaning set forth in Section 2.2(a)(ii).
“Subscription
Amount”
means
with respect to each Purchaser, the aggregate amount to be paid for the Shares
purchased hereunder as indicated on such Purchaser’s signature page to this
Agreement next to the heading “Aggregate Purchase Price (Subscription
Amount)”.
“Subsidiary”
means
any entity in which the Company, directly or indirectly, owns capital stock
or
holds an equity or similar interest.
“Trading
Affiliate”
has
the
meaning set forth in Section 3.2(h).
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
Principal Trading Market (other than the OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) 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 in the “pink sheets” by 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),
(ii) and (iii) 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 the OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.
5
“Transaction
Documents”
means
this Agreement, the schedules and exhibits attached hereto (including the
Registration Rights Agreement and the Irrevocable Transfer Agent Instructions)
and any other documents or agreements executed in connection with the
transactions contemplated hereunder.
“Transfer
Agent”
means
Securities Transfer Corporation, or any successor transfer agent for the
Company.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
(a) Amount.
Subject
to the terms and conditions set forth in this Agreement, at the Closing, the
Company shall issue and sell to each Purchaser, and each Purchaser shall,
severally and not jointly, purchase from the Company, such number of Shares
equal to the quotient resulting from dividing (i) the Subscription Amount for
such Purchaser by (ii) the Purchase Price, rounded up to the nearest whole
Share.
(b) Closing.
The
Closing of the purchase and sale of the Shares shall take place at the offices
of Xxxxxxxxxx Xxxxxxx PC, 1251 Avenue of the Americas, New York, New York on
the
Closing Date or at such other locations or remotely by facsimile transmission
or
other electronic means as the parties may mutually agree.
(c) Form
of Payment.
On the
Closing Date, (i) the Company and the Placement Agent shall instruct the Escrow
Agent to wire the Escrow Amount in accordance with the terms of Section 2.1(d),
and (ii)
the
Company shall irrevocably instruct the Transfer Agent to deliver to each
Purchaser one or more stock certificates, free and clear of all restrictive
and
other legends (except as expressly provided in Section 4.1(b) hereof),
evidencing the number of Shares such Purchaser is purchasing as is set
forth
on such
Purchaser’s signature page to this Agreement next to the heading “Number of
Shares to be Acquired”,
within
three (3) Business Days after the Closing, duly executed on behalf of the
Company and registered in the name of such Purchaser.
(d) Escrow.
(i)
Simultaneously with the execution and delivery of this Agreement by a Purchaser,
such Purchaser shall promptly cause a wire transfer of immediately available
funds (U.S. dollars) in an amount representing such Purchaser’s Subscription
Amount to be paid to a non-interest bearing escrow account of Xxxxxxxxxx Xxxxxxx
PC (the “Escrow
Agent”)
set
forth on Exhibit
G
attached
hereto (the aggregate amounts received being held in escrow by the Escrow Agent
are referred to herein as the “Escrow
Amount”).
The
Escrow Agent shall hold the Escrow Amount in escrow in accordance with Section
2.1(d)(ii) below.
(ii) The
Escrow Agent shall continue to hold the Escrow Amount in escrow in accordance
with and subject to this Agreement, from the date of its receipt of the funds
constituting the Escrow Amount until the soonest of:
(A)
the
termination of this Agreement in accordance with Section 6.18, in which case,
if
the Escrow Agent then holds any portion of the Escrow Amount, then: (1) in
the
event of a termination by the Company, the Escrow Agent shall return the portion
of the Escrow Amount received from each Purchaser which it then holds, to each
such Purchaser, and in the event of a termination by a Purchaser, the Escrow
Agent shall return the portion of the Escrow Amount received from such Purchaser
which it then holds, to such Purchaser, in accordance with written wire transfer
instructions received from the Purchaser; and (2) if the Escrow Agent has not
received written wire transfer instructions from any Purchaser before the
30th
day
after such termination date, then the Escrow Agent may, in its sole and absolute
discretion, either (x) deposit that portion of the Escrow Amount to be returned
to such Purchaser in a court of competent jurisdiction on written notice to
such
Purchaser, and the Escrow Agent shall thereafter have no further liability
with
respect to such deposited funds, or (y) continue to hold such portion of the
Escrow Amount pending receipt of written wire transfer instructions from such
Purchaser or an order from a court of competent jurisdiction; OR
6
(B)
the
Closing, receipt of written instructions from the Company and the Placement
Agent that the Closing shall have been consummated, in which case, the Escrow
Agent shall release the Escrow Amount constituting the aggregate purchase price
as follows: (1) to the Placement Agent, the fees payable to such Placement
Agent
(which fees shall be set forth in such instructions), (2) to the Company’s
Counsel, the fees payable to such Company Counsel, and (3) the balance of the
aggregate purchase price to the Company.
(iii) The
Company and the Purchasers acknowledge and agree for the benefit of the Escrow
Agent (which shall be deemed to be a third party beneficiary of this Section
2.1(d)) as follows:
(A) The
Escrow Agent: (i) is not responsible for the performance by the Company, the
Purchasers or Placement Agent of this Agreement or any of the Transaction
Documents or for determining or compelling compliance therewith; (ii) is only
responsible for (A) holding the Escrow Amount in escrow pending receipt of
written instructions from the Company and the Placement Agent directing the
release of the Escrow Amount, and (B) disbursing the Escrow Amount in accordance
with the written instructions from the Company or the Placement Agent (or the
Purchaser in accordance with Section 2.1(d)(ii)(A)), each of the
responsibilities of the Escrow Agent in clause (A) and (B) is ministerial in
nature, and no implied duties or obligations of any kind shall be read into
this
Agreement against or on the part of the Escrow Agent (collectively, the
“Escrow
Agent Duties”);
(iii)
shall not be obligated to take any legal or other action hereunder which might
in its judgment involve or cause it to incur any expense or liability unless
it
shall have been furnished with indemnification acceptable to it, in its sole
discretion; (iv) may rely on and shall be protected in acting or refraining
from
acting upon any written notice, instruction (including, without limitation,
wire
transfer instructions, whether incorporated herein or provided in a separate
written instruction), instrument, statement, certificate, request or other
document furnished to it hereunder and believed by it to be genuine and to
have
been signed or presented by the proper Person, and shall have no responsibility
for making inquiry as to, or for determining, the genuineness, accuracy or
validity thereof, or of the authority of the Person signing or presenting the
same; and (v) may consult counsel satisfactory to it, and the opinion or advice
of such counsel in any instance shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or advice of such counsel.
Documents and written materials referred to in this Section 2.1(d)(iii)(A)
include, without limitation, e-mail and other electronic transmissions capable
of being printed, whether or not they are in fact printed; and any such e-mail
or other electronic transmission may be deemed and treated by the Escrow Agent
as having been signed or presented by a Person if it bears, as sender, the
Person’s e-mail address.
(B) The
Escrow Agent shall not be liable to anyone for any action taken or omitted
to be
taken by it hereunder, except in the case of Escrow Agent’s gross negligence or
willful misconduct in breach of the Escrow Agent Duties. IN NO EVENT SHALL
THE
ESCROW AGENT BE LIABLE FOR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE
OR LOSS (INCLUDING BUT NOT LIMITED TO LOST PROFITS) WHATSOEVER, EVEN IF THE
ESCROW AGENT HAS BEEN INFORMED OF THE LIKELIHOOD OF SUCH LOSS OR DAMAGE AND
REGARDLESS OF THE FORM OF ACTION.
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(C) The
Company hereby indemnifies and holds harmless the Escrow Agent from and against
any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees and expenses, which the Escrow Agent may
suffer or incur by reason of any action, claim or proceeding brought against
the
Escrow Agent arising out of or relating to the performance of the Escrow Agent
Duties, unless such action, claim or proceeding is exclusively the result of
the
willful misconduct, bad faith or gross negligence of the Escrow Agent.
(D) The
Escrow Agent has acted as legal counsel to the Placement Agent in connection
with this Agreement and the other Transaction Documents, is merely acting as
a
stakeholder under this Agreement and is, therefore, hereby authorized to
continue acting as legal counsel to the Placement Agent including, without
limitation, with regard to any dispute arising out of this Agreement, the other
Transaction Documents, the Escrow Amount or any other matter. The Purchasers
hereby expressly consent to permit the Escrow Agent to represent the Placement
Agent in connection with all matters relating to this Agreement, including,
without limitation, with regard to any dispute arising out of this Agreement,
the other Transaction Documents, the Escrow Amount or any other matter, and
hereby waives any conflict of interest or appearance of conflict or impropriety
with respect to such representation. Each of the Purchasers has consulted with
its own counsel specifically about this Section 2.1(d) to the extent they deemed
necessary, and has entered into this Agreement after being satisfied with such
advice.
(E) The
Escrow Agent shall have the right at any time to resign for any reason and
be
discharged of its duties as escrow agent hereunder (including without limitation
the Escrow Agent Duties) by giving written notice of its resignation to the
Company, the Placement Agent and the Purchasers at least ten (10) calendar
days
prior to the specified effective date of such resignation. All obligations
of
the Escrow Agent hereunder shall cease and terminate on the effective date
of
its resignation and its sole responsibility thereafter shall be to hold the
Escrow Amount, for a period of ten (10) calendar days following the effective
date of resignation, at which time,
(I) if
a
successor escrow agent shall have been appointed and have accepted such
appointment in a writing to both the Company and the Purchasers, then upon
written notice thereof given to each of the Purchasers, the Escrow Agent shall
deliver the Escrow Amount to the successor escrow agent, and upon such delivery,
the Escrow Agent shall have no further liability or obligation; or
(II) if
a
successor escrow agent shall not have been appointed, for any reason whatsoever,
the Escrow Agent shall at its option in its sole discretion, either (A) deliver
the Escrow Amount to a court of competent jurisdiction selected by the Escrow
Agent and give written notice thereof to the Company, the Placement Agent and
the Purchasers, or (B) continue to hold the Escrow Amount in escrow pending
written direction from the Company and the Placement Agent in form and formality
satisfactory to the Escrow Agent.
(F) In
the
event that the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions with respect to the Escrow Amount or
any
portion thereunder which, in its sole discretion, are in conflict either with
other instructions received by it or with any provision of this Agreement,
the
Escrow Agent shall have the absolute right to suspend all further performance
of
its duties under this Agreement (except for the safekeeping of such Escrow
Amount) until such uncertainty or conflicting instructions have been resolved
to
the Escrow Agent’s sole satisfaction by final judgment of a court of competent
jurisdiction, joint written instructions from the Company, the Placement Agent
and all of the Purchasers, or otherwise. In the event that any controversy
arises between the Company and one or more of the Purchasers or any other party
with respect to this Agreement or the Escrow Amount, the Escrow Agent shall
not
be required to determine the proper resolution of such controversy or the proper
disposition of the Escrow Amount, and shall have the absolute right, in its
sole
discretion, to deposit the Escrow Amount with the clerk of a court selected
by
the Escrow Agent and file a suit in interpleader in that court and obtain an
order from that court requiring all parties involved to litigate in that court
their respective claims arising out of or in connection with the Escrow Amount.
Upon the deposit by the Escrow Agent of the Escrow Amount with the clerk of
such
court in accordance with this provision, the Escrow Agent shall thereupon be
relieved of all further obligations and released from all liability
hereunder.
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(G) The
provisions of this Section 2.1(d) shall survive any termination of this
Agreement.
2.2 Closing
Deliveries.
(a)
On
or
prior to the Closing, the Company shall issue, deliver or cause to be delivered
to each Purchaser the following (the “Company
Deliverables”):
(i) this
Agreement, duly executed by the Company;
(ii) irrevocable
instructions from the Company to the Transfer Agent to deliver to each
Purchaser
one or
more stock certificates, free and clear of all restrictive and other legends
(except as provided in Section
4.1(b)
hereof),
evidencing the Shares subscribed for by Purchaser hereunder, registered in
the
name of such Purchaser as set forth on the Stock Certificate Questionnaire
included as Exhibit
B-2
hereto
(the “Stock
Certificates”),
within three (3) Business Days of Closing;
(iii) a
legal
opinion of Company Counsel, dated as of the Closing Date and in the form
attached hereto as Exhibit
C,
executed by such counsel and addressed to the Purchasers and the Placement
Agent;
(iv) the
Registration Rights Agreement, duly executed by the Company;
(v) duly
executed Irrevocable Transfer Agent Instructions acknowledged in writing by
the
Transfer Agent;
(vi) a
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
dated
as of the Closing Date, (a) certifying the resolutions adopted by the Board
of
Directors of the Company or a duly authorized committee thereof approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Shares, (b) certifying the current versions of the
certificate or articles of incorporation, as amended, and by-laws of the Company
and (c) certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company, in the
form attached hereto as Exhibit
E;
(vii) the
Compliance Certificate referred to in Section 5.1(h);
(viii) a
certificate evidencing the formation and good standing of the Company in such
entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction, as of a date within five (5) days
of
the Closing Date; and
(ix) a
certified copy of the Certificate of Incorporation, as certified by the
Secretary of State of the State (or comparable office) of such entity’s
jurisdiction of formation, as of a date within ten (10) days of the Closing
Date.
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(b) On
or
prior to the Closing, each Purchaser shall deliver or cause to be delivered
to
the Company the following (the “Purchaser
Deliverables”):
(i) this
Agreement, duly executed by such Purchaser;
(ii) its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price” indicated below such
Purchaser’s name on the applicable signature page hereto under the heading
“Aggregate Purchase Price (Subscription Amount)” by wire transfer to the escrow
account set forth on Exhibit
G
attached
hereto;
(iii) the
Registration Rights Agreement, duly executed by such Purchaser;
(iv) a
fully
completed and duly executed Selling Stockholder Questionnaire in the form
attached as Annex B to the Registration Rights Agreement; and
(v) a
fully
completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits B-1
and
B-2,
respectively.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
The
Company hereby represents and warrants as of the date hereof and the Closing
Date (except for the representations and warranties that speak as of a specific
date, which shall be made as of such date), to each of the Purchasers and the
Placement Agent that, except as set forth in the Schedules delivered herewith
and the SEC Reports filed with the Commission:
(a) Subsidiaries.
The
Company has no direct or indirect Subsidiaries other than those listed in the
SEC Reports. Except as disclosed in the SEC Reports, the Company owns, directly
or indirectly, all of the capital stock or comparable equity interests of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.
(b) Organization
and Qualification.
The
Company and each of its Subsidiaries is an entity 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 corporate power and authority to own or lease and use its properties
and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each of its Subsidiaries
is
duly qualified to conduct business 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, would not have a Material Adverse Effect, and no Proceeding has been
instituted, is pending, or, to the Company’s Knowledge, has been threatened in
writing in any such jurisdiction revoking, limiting or curtailing or seeking
to
revoke, limit or curtail such power and authority or qualification.
10
(c) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents
to
which it is a party by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including, but not limited to,
the
sale and delivery of the Shares) have been duly authorized by all necessary
corporate action on the part of the Company, and no further corporate action
is
required by the Company, its Board of Directors or its stockholders in
connection therewith other than in connection with the Required Approvals.
Each
of the Transaction Documents to which it is a party has been (or upon delivery
will have been) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its
terms, except (i) 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 or (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. There are no stockholder agreements, voting
agreements, or other similar arrangements with respect to the Company’s capital
stock to which the Company is a party or, to the Company’s Knowledge, between or
among any of the Company’s stockholders.
(d) No
Conflicts.
The
execution, delivery and performance by the Company of the Transaction Documents
to which it is a party and the consummation by the Company of the transactions
contemplated hereby or thereby (including, without limitation, the issuance
of
the Shares) do not and will not (i) conflict with or violate any provisions
of
the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or otherwise result in a violation of the organizational documents of
the
Company, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would result in a default) under, result in
the
creation of any Lien upon any of the properties or assets of the Company or
any
Subsidiary 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 a Company
or
Subsidiary debt or otherwise) to which the Company 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) subject to the Required Approvals, conflict with or result
in
a violation of any law, rule, regulation, order, judgment, injunction, decree
or
other restriction of any court or governmental authority to which the Company
or
a Subsidiary is subject (including federal and state securities laws and
regulations and the rules and regulations, assuming the correctness of the
representations and warranties made by the Purchasers herein, of any
self-regulatory organization to which the Company or its securities are subject,
including all applicable Trading Markets), or by which any property or asset
of
the Company or a Subsidiary is bound or subject, except in the case of clauses
(ii) and (iii) such as would not, individually or in the aggregate, have a
Material Adverse Effect.
(e) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Shares), 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 applicable 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 filing of any requisite notices and/or application(s)
to the Principal Trading Market for the issuance and sale of the Common Stock
and the listing of the Common Stock for trading or quotation, as the case may
be, thereon in the time and manner required thereby, and (v) the filings
required in accordance with Section 4.7 of this Agreement (collectively, the
“Required
Approvals”).
(f) Issuance
of the Shares.
The
Shares have been duly authorized and, when issued and paid for in accordance
with the terms of the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable and free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed
by
applicable securities laws, and shall not be subject to preemptive or similar
rights. Assuming the accuracy of the representations and warranties of the
Purchasers in this Agreement, the Shares will be issued in compliance with
all
applicable federal and state securities laws.
11
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock
of
the Company) has been set forth in the SEC Reports and has changed since the
date of such SEC Reports only to reflect stock option and warrant exercises
that
do not, individually or in the aggregate, have a material affect on the issued
and outstanding capital stock, options and other securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and,
to
the Company’s Knowledge, none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase any
capital stock of the Company. Except as specified in the SEC Reports: (i) no
shares of the Company's capital stock are subject to preemptive rights or any
Liens established by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
or
exercisable or exchangeable for, any shares of capital stock of the Company;
(iii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing indebtedness
of the Company or by which the Company is or may become bound; (iv) there are
no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company is obligated to register
the
sale of any of their securities under the Securities Act (except the
Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of the Company or which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security
of
the Company; and (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
the Shares.
(h) SEC
Reports.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as
the
“SEC
Reports”
and
together with this Agreement and the Schedules to this Agreement (if any),
the
“Disclosure
Materials”),
on a
timely basis or has received 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 filing dates, or to the extent corrected by a subsequent
restatement, 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. All material agreements to which the Company
or
any Subsidiary is a party or to which the property or assets of the Company
or
any of its Subsidiaries are subject are included as part of or specifically
identified in the SEC Reports.
12
(i) Financial
Statements. The
financial statements of the Company 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 (or to the extent corrected by a subsequent restatement). 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 except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present
in
all material respects the financial position of the Company and its consolidated
subsidiaries taken as a whole 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, year-end audit adjustments.
(j) Tax
Matters.
The
Company and each of its Subsidiaries (i) has accurately and timely prepared
and
filed (or has received a valid extension of such time of filing and has filed
prior to the expiration of any such extension) all foreign, federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) 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, with respect to which adequate reserves have
been
set aside on the books of the Company and (iii) 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,
except, in the case of clauses (i) and (ii) above, where the failure to so
pay
or file any such tax, assessment, charge or return would not have a Material
Adverse Effect. There are no unpaid taxes in any material amount claimed to
be
due by the Company or any of its Subsidiaries by the taxing authority of any
jurisdiction.
(k) Material
Changes.
Since
the date of the latest financial statements included within the SEC Reports,
except as specifically disclosed in the SEC Reports, (i) there have been no
events, occurrences or developments that have had or would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (ii) the Company has not incurred any material 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
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the manner in which it keeps its accounting books and records,
(iv) the Company has not 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 (other than
in
connection with repurchases of unvested stock issued to employees of the
Company), and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except Common Stock issued in the ordinary
course as dividends on outstanding preferred stock or pursuant to existing
Company stock option or stock purchase plans or executive and director corporate
arrangements disclosed in the SEC Reports.
(l) Environmental
Matters.
To the
Company’s Knowledge, neither the Company nor any of its Subsidiaries is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to
the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous
or
toxic substances (collectively, “Environmental
Laws”),
and
there is no Proceeding pending or, to the Company’s Knowledge, threatened in
writing that might lead to such a claim.
(m) 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 a Material Adverse
Effect. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any
of
its Subsidiaries under the Exchange Act or the Securities Act.
13
(n) Employment
Matters.
No
material labor dispute exists or, to the Company’s Knowledge, is imminent with
respect to any of the employees of any Subsidiaries of the Company which would
have a Material Adverse Effect.
(o) Compliance.
Neither
the Company nor any of its Subsidiaries (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 the Company or any of its
Subsidiaries under), nor has the Company or any of its Subsidiaries received
written 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 having jurisdiction over
the
Company or its properties or assets, or (iii) is or has been in violation of,
or
in receipt of written notice that it is in violation of, any statute, rule
or
regulation of any governmental authority applicable to the Company, except
in
each case as would not, individually or in the aggregate, have a Material
Adverse Effect.
(p) Regulatory
Permits.
The
Company and each of its Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct its respective business as currently
conducted and as described in the SEC Reports, except where the failure to
possess such permits, individually or in the aggregate, has not and would not
have, individually or in the aggregate, a Material Adverse Effect (“Material
Permits”),
and
(i) neither the Company nor any of its Subsidiaries has received any notice
of
Proceedings relating to the revocation or modification of any such Material
Permits and (ii) the Company is unaware of any facts or circumstances that
the
Company would reasonably expect to give rise to the revocation or modification
of any Material Permit.
(q) Title
to Assets.
Except
for property that is specifically the subject of, and covered by, other
representations and warranties as to ownership or title contained herein, the
Company and its Subsidiaries have good and marketable title in fee simple to
all
real property. The Company and its Subsidiaries have good and marketable title
to all personal property owned by them which is material to the business of
the
Company and its Subsidiaries, taken as whole, in each case free and clear of
all
Liens except such as do not materially affect the value of such property and
do
not interfere with the use made and proposed to be made of such property by
the
Company and any of its Subsidiaries. Any real property and facilities held
under
lease by the Company and any of its Subsidiaries are held, to the Company’s
Knowledge, by them under valid, subsisting and enforceable leases with such
exceptions as are not material and, to the Company’s Knowledge, do not interfere
with the use made and proposed to be made of such property and buildings by
the
Company and its Subsidiaries.
(r) Patents
and Trademarks.
The
Company and its Subsidiaries own, possess, license or have other rights to
use
all foreign and domestic patents, patent applications, trade and service marks,
trade and service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and
other
intellectual property (collectively, the “Intellectual
Property”)
necessary for the conduct of their respective businesses as now conducted or
as
proposed to be conducted or which could reasonably be expected to result in
a
Material Adverse Effect if the Company fails to maintain such protection on
its
Intellectual Property. Except as set forth in the SEC Reports and except where
such violations or infringements would not have, either individually or in
the
aggregate, a Material Adverse Effect, (a) there are no rights of third
parties to any such Intellectual Property; and (b) to the Company’s Knowledge,
there is no infringement by third parties of any such Intellectual
Property.
14
(s) Insurance.
The
Company and each of the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
are sufficient for the operation of the businesses and locations in which the
Company and the Subsidiaries are engaged. Neither the Company nor any of its
Subsidiaries has received any notice of cancellation of any such insurance,
nor
does the Company or any Subsidiary have any knowledge that it will be unable
to
renew its existing insurance coverage for the Company and the Subsidiaries
as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a significant
increase in cost.
(t)
Transactions
With Affiliates and Employees.
Except
as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the Company’s Knowledge, none of the employees of the Company,
is presently a party to any transaction with the Company or to a presently
contemplated transaction (other than for services as employees, officers and
directors) that would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated under the Securities Act.
(u) Internal
Accounting Controls.
The
Company and each of its Subsidiaries have established a system of internal
accounting controls designed 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 and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any differences.
(v)
Xxxxxxxx-Xxxxx;
Disclosure Controls.
The
Company is in compliance in all material respects with all of the provisions
of
the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it, except where such
noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect. The Company maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act).
(w) Certain
Fees.
No
person
or entity will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
a
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company, other than the Placement Agent with respect to the offer and sale
of
the Shares (which placement agent fees are being paid by the Company).
(x) Private
Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2 of this Agreement and the accuracy of the information
disclosed in the Accredited Investor Questionnaires, no registration under
the
Securities Act is required for the offer and sale of the Shares by the Company
to the Purchasers under the Transaction Documents.
(y) Registration
Rights.
Other
than each of the Purchasers or as set forth in Schedule
3.1(y)
hereto,
no Person has any right to cause the Company to effect the registration under
the Securities Act of any securities of the Company other than those securities
which are currently registered on an effective registration statement on file
with the Commission.
(z) No
Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, none of the Company, its Subsidiaries nor any of their
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales
of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with
the
offer and sale by the Company of the Shares as contemplated hereby or (ii)
cause
the offering of the Shares pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which
any
of the securities of the Company are listed or designated.
15
(aa) Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, and the Company has taken no action designed to terminate the
registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the Commission is contemplating terminating
such
registration. The Company has not, in the 12 months preceding the date hereof,
received written notice from any Trading Market on which the Common Stock is
or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company
is in compliance in all material respects with the listing and maintenance
requirements for continued trading of the Common Stock on the Principal Trading
Market.
(bb) Investment
Company.
Neither
the Company nor any of its Subsidiaries is required to be registered as, and
is
not an Affiliate of, and immediately following the Closing will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
(cc) Questionable
Payments. Neither
the Company nor any of its Subsidiaries, nor, to the Company’s Knowledge, any
directors, officers, employees, agents or other Persons acting on behalf of
the
Company or any of its Subsidiaries has, in the course of its actions for, or
on
behalf of, the Company: (a) directly or indirectly, used any corporate funds
for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to foreign or domestic political activity; (b) made any direct or indirect
unlawful payments to any foreign or domestic governmental officials or employees
or to any foreign or domestic political parties or campaigns from corporate
funds; (c) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (d) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by and Person acting
on their behalf of which the Company is aware) where such failure to disclose
is
in violation of law.
(dd) Application
of Takeover Protections; Rights Agreements.
The
Company and its Board of Directors have taken all action (if any) deemed
necessary by the Company and the Board of Directors, 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 charter documents or the laws of
its
state of incorporation that is or could reasonably be expected to become
applicable to any of the Purchasers as a result of the Purchasers 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 Purchasers' ownership of the Shares. The Company has not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control
of
the Company.
(ee) Disclosure.
The
Company confirms that neither it nor any of its officers or directors nor any
other Person acting on its or their behalf has provided, and it has not
authorized the Placement Agent to provide, any Purchaser or its respective
agents or counsel with any information that it believes constitutes or could
reasonably be expected to constitute material, non-public information except
insofar as the existence, provisions and terms of the Transaction Documents
and
the proposed transactions hereunder may constitute such information, all of
which will be disclosed by the Company in the Press Release as contemplated
by
Section 4.7 hereof. The Company understands and confirms that the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, 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
(assuming for this purpose that the Company’s reports filed under the Exchange
Act are being incorporated into an effective registration statement filed by
the
Company under the Securities Act), except for the announcement of this Agreement
and related transactions.
16
(ff) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company (or
any Subsidiary) and an unconsolidated or other off balance sheet entity that
is
required to be disclosed by the Company in its Exchange Act filings and is
not
so disclosed or that otherwise would have a Material Adverse
Effect.
(gg) Acknowledgment
Regarding Purchasers’ Purchase of Shares.
The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that no Purchaser is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by any Purchaser or any of their respective representatives or agents
in
connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Purchasers’ purchase of the Shares.
(hh) Regulation
M Compliance.
The Company has not, and to the Company’s Knowledge no one acting on its behalf
has, (i) taken, directly or indirectly, any action designed to cause or to
result in the stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid
for, purchased, or paid any compensation for soliciting purchases of, any of
the
securities of the Company or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii) compensation paid
to
the Placement Agent in connection with the placement of the Shares.
(ii) PFIC.
Neither
the Company nor any Subsidiary 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.
(jj) OFAC.
Neither
the Company nor any Subsidiary nor, to the Company’s Knowledge, any director,
officer, agent, employee, Affiliate or Person acting on behalf of the Company
or
any Subsidiary is currently identified on the specially designated nationals
or
other blocked person list 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, in violation of
any
U.S. sanctions administered by OFAC.
(kk) Money
Laundering Laws.
The
operations of each of the Company and any Subsidiary are and have been conducted
at all times in compliance with any applicable 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 the Company and/or any Subsidiary
with respect to the Money Laundering Laws is pending or, to the Company’s
Knowledge, threatened.
17
(ll) Acknowledgment
Regarding Purchasers Trading Activity.
Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(h) and 4.12 hereof), it is understood and acknowledged
by the Company that, to the Company's Knowledge (i) that none of the Purchasers
have been asked to agree, nor has any Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Shares for any specified term; (ii) that past or future open market or other
transactions by any Purchaser, including Short Sales, and specifically
including, without limitation, Short Sales or “derivative” transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) that any Purchaser, and counter-parties in “derivative” transactions to
which any such Purchaser is a party, directly or indirectly, presently may
have
a “short” position in the Common Stock, and (iv) that each Purchaser shall not
be deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. The Company further
understands and acknowledges that, to the Company's Knowledge (a) one or more
Purchasers may engage in hedging activities at various times during the period
that the Shares are outstanding and (b) such hedging activities (if any) could
reduce the value of the existing stockholders’ equity interests in the Company
at and after the time that the hedging activities are being conducted. The
Company acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction Documents.
(mm) No
Additional Agreements. The
Company does not have any agreement or understanding with any Purchaser with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority.
Such
Purchaser 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 applicable Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company
or
other applicable like action, on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, 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) No
Conflicts.
The
execution, delivery and performance by such Purchaser of this Agreement and
the
Registration Rights Agreement and the consummation by such Purchaser of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Purchaser, (ii) conflict with, or
constitute a default (or an event which 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 of, any agreement, indenture or
instrument to which such Purchaser is a party, or (iii) result in a violation
of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Purchaser, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Purchaser to perform
its
obligations hereunder.
18
(c) Acquisition
and Disposition of Shares.
Such
Purchaser understands that the Shares are “restricted securities” and have not
been registered under the Securities Act or any applicable state securities
law
and is acquiring the Shares as principal for its own account and not with a
view
to, or for distributing or reselling such Shares or any part thereof in
violation of the Securities Act or any applicable state securities laws,
provided,
however,
that by
making the representations herein, such Purchaser does not agree to hold any
of
the Shares for any minimum period of time and reserves the right, subject to
the
provisions of this Agreement and the Registration Rights Agreement, at all
times
to sell or otherwise dispose of all or any part of such Shares pursuant to
an
effective registration statement under the Securities Act or under an exemption
from such registration and in compliance with applicable federal and state
securities laws. Such Purchaser is acquiring the Shares hereunder in the
ordinary course of its business. Such Purchaser does not presently have any
agreement, plan or understanding, directly or indirectly, with any Person to
distribute or effect any distribution of any of the Shares (or any securities
which are derivatives thereof) to or through any person or entity.
(d) Purchaser
Status.
At the
time such Purchaser 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.
(e) General
Solicitation.
Such
Purchaser is not purchasing the Shares as a result of any advertisement,
article, notice 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 advertisement.
(f) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Shares, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the Shares
and, at the present time, is able to afford a complete loss of such
investment.
(g) Access
to Information.
Such
Purchaser acknowledges that it has had the opportunity to review 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 Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser's right to rely on
the
truth, accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents. Such
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed decision with respect to its acquisition of the
Shares.
(h) Certain
Trading Activities.
Other
than with respect to the transactions contemplated herein, since the earlier
to
occur of (1) the time that such Purchaser was first contacted by the Company,
the Placement Agent or any other Person regarding the transactions contemplated
hereby and (2) the tenth (10th)
day
prior to the date of this Agreement, neither the Purchaser nor any Affiliate
of
such Purchaser which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Purchaser’s investments or trading
or information concerning such Purchaser’s investments, including in respect of
the Shares, and (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading
Affiliates”)
has
directly or indirectly, nor has any Person acting on behalf of or pursuant
to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any purchases or sales of the securities of the Company (including,
without limitation, any Short Sales involving the Company’s securities).
Notwithstanding the foregoing, in the case of a Purchaser and/or Trading
Affiliate that is, individually or collectively, a multi-managed investment
bank
or vehicle whereby separate portfolio managers manage separate portions of
such
Purchaser's or Trading Affiliate’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's or Trading Affiliate’s assets, the
representation set forth above shall apply only with respect to the portion
of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement. Other than to other Persons party
to
this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, no
Purchaser makes any representation, warranty or covenant hereby that it will
not
engage in Short Sales in the securities of the Company after the time that
the
transactions contemplated by this Agreement are first publicly announced as
described in Section 4.7.
19
(i) Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
any
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Purchaser.
(j) Independent
Investment Decision.
Such
Purchaser has independently evaluated the merits of its decision to purchase
Shares pursuant to the Transaction Documents, and such Purchaser confirms that
it has not relied on the advice of any other Purchaser’s business and/or legal
counsel in making such decision. Such Purchaser understands that nothing in
this
Agreement or any other materials presented by or on behalf of the Company to
the
Purchaser in connection with the purchase of the Shares constitutes legal,
tax
or investment advice. Such Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares. Such Purchaser
understands that the Placement Agent has acted solely as the agent of the
Company in this placement of the Shares and such Purchaser has not relied on
the
business or legal advice of the Placement Agent 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 Purchaser
in
connection with the transactions contemplated by the Transaction
Documents.
(k) Reliance
on Exemptions.
Such
Purchaser understands that the Shares being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and such Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgements and understandings
of
such Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of such Purchaser to acquire the
Shares.
(l) No
Governmental Review.
Such
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Shares or the fairness or suitability of the investment
in
the Shares nor have such authorities passed upon or endorsed the merits of
the
offering of the Shares.
(m) Regulation
M.
Such
Purchaser is aware that the anti-manipulation rules of Regulation M under the
Exchange Act may apply to sales of Common Stock and other activities with
respect to the Common Stock by the Purchasers.
(n) Private
Placement.
Purchaser acknowledges and agrees that (i) this placement has not been
registered under the Securities Act and the Shares are "restricted securities"
and may not be resold except as provided herein; (ii) the Purchaser, as a result
of the private nature of this placement, does not have the protection of Section
11 of the Securities Act; and (iii) the Company previously filed a registration
statement with the Commission with respect to a proposed public offering of
its
Common Stock, which registration statement was withdrawn effective September
12,
2007.
20
(o) Beneficial
Ownership.
The
purchase by such Purchaser of the Shares issuable to it at the Closing will
not
result in such Purchaser (individually or together with any other Person with
whom such Purchaser has identified, or will have identified, itself as part
of a
“group” in a public filing made with the Commission involving the Company’s
securities) acquiring, or obtaining the right to acquire, in excess of 19.999%
of the outstanding shares of Common Stock or the voting power of the Company
on
a post transaction basis that assumes that such Closing shall have occurred.
Such Purchaser does not presently intend to, alone or together with others,
make
a public filing with the Commission to disclose that it has (or that it together
with such other Persons have) acquired, or obtained the right to acquire, as
a
result of such Closing (when added to any other securities of the Company that
it or they then own or have the right to acquire), in excess of 19.999% of
the
outstanding shares of Common Stock or the voting power of the Company on a
post
transaction basis that assumes that each Closing shall have occurred.
(p) Selling
Stockholder Questionnaire.
Such
Purchaser agrees that the information provided by such Purchaser in the Selling
Stockholder Questionnaire, the form of which is attached as Annex B to the
Registration Rights Agreement, shall be accurate, true and complete in all
material respects.
The
Company and each of the Purchasers acknowledge and agree that no party to this
Agreement has made or makes any representations or warranties with respect
to
the transactions contemplated hereby other than those specifically set forth
in
this Article III and the Transaction Documents.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) Compliance
with Laws.
Notwithstanding any other provision of this Article IV, each Purchaser covenants
that the Shares may be disposed of only pursuant to an effective registration
statement under, and in compliance with the requirements of, 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 compliance with
any
applicable state and federal securities laws. In connection with any transfer
of
the Shares other than (i) pursuant to an effective registration statement,
(ii)
to the Company, (iii) pursuant to Rule 144 (provided
that the
Purchaser provides the Company with reasonable assurances (in the form of seller
and broker representation letters) that the securities may be sold pursuant
to
such rule) or Rule 144A, (iv) pursuant to Rule 144(k) following the applicable
holding period or (v) in connection with a bona fide pledge as contemplated
in
Section 4.1(b), the Company may require the transferor thereof to provide to
the
Company and the Transfer Agent an opinion of counsel selected by the transferor
and reasonably acceptable to the Company and the Transfer Agent, the form and
substance of which opinion shall be reasonably satisfactory to the Company
and
the Transfer Agent, to the effect that such transfer does not require
registration of such transferred Shares under the Securities Act. As a condition
of transfer, any such transferee shall agree in writing to be bound by the
terms
of this Agreement and shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.
(b) Legends.
Certificates evidencing the Shares shall bear any legend as required by the
“blue sky” laws of any state and a restrictive legend in substantially the
following form, until such time as they are not required under Section
4.1(c):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT
OR (B) 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 OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER
AGENT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
21
The
Company acknowledges and agrees that a Purchaser may from time to time pledge,
and/or grant a security interest in, some or all of the legended Shares in
connection with applicable securities laws, pursuant to a bona fide margin
agreement in compliance with a bona fide margin loan. Such a pledge 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 shall be required in connection with
a
subsequent transfer or foreclosure following default by the Purchaser transferee
of the pledge. No notice shall be required of such pledge, but Purchaser’s
transferee shall promptly notify the Company of any such subsequent transfer
or
foreclosure. Each Purchaser acknowledges that the Company shall not be
responsible for any pledges relating to, or the grant of any security interest
in, any of the Shares or for any agreement, understanding or arrangement between
any Purchaser and its pledgee or secured party. At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable documentation
as a
pledgee or secured party of Shares may reasonably request in connection with
a
pledge or transfer of the Shares, 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. Each Purchaser acknowledges and agrees
that, except as otherwise provided in Section 4.1(c), any Shares 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).
(c) Removal
of Legends.
The
legend set forth in Section 4.1(b) above shall be removed and the Company shall
issue a certificate without such legend or any other legend to the holder of
the
applicable Shares upon which it is stamped or issue to such holder by electronic
delivery at the applicable balance account at the Depository Trust Company
(“DTC”),
if
(i) such Shares are registered for resale under the Securities Act (provided
that, if the Purchaser is selling pursuant to the effective registration
statement registering the Shares for resale, the Purchaser agrees to only sell
such Shares during such time that such registration statement is effective
and
not withdrawn or suspended, and only as permitted by such registration
statement), (ii) such holder provides the Company with assurance, reasonably
acceptable to the Company, that the Shares are eligible to be sold or
transferred pursuant to Rule 144 (if the transferor is not an Affiliate of
the
Company), or (iii) such holder provides the Company assurance, reasonably
acceptable to the Company, that the Shares are eligible for sale under Rule
144(k). The Company shall cause Company Counsel to issue the legal opinion
referred to in the Irrevocable Transfer Agent Instructions to the Company’s
Transfer Agent on the Effective Date. Any fees (with respect to the Transfer
Agent, Company Counsel or otherwise) associated with the issuance of such
opinion or the removal of such legend shall be borne by the Company. Following
the Effective Date, or at such earlier time as a legend is no longer required
for certain Shares, the Company will no later than three (3) Trading Days
following the delivery by a Purchaser to the Company or the Transfer Agent
(with
notice to the Company) of a legended certificate representing such Shares
(endorsed or with stock powers attached, signatures guaranteed, and otherwise
in
form necessary to affect the reissuance and/or transfer) and an opinion of
counsel to the extent required by Section 4.1(a) (such third Trading Day, the
“Legend
Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing
such Shares that is free from all restrictive and other legends. The Company
may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section.
Certificates for Shares subject to legend removal hereunder may be transmitted
by the Transfer Agent to the Purchasers by crediting the account of the
Purchaser’s prime broker with DTC.
22
(d) Irrevocable
Transfer Agent Instructions.
The
Company shall issue irrevocable instructions consistent with Section 4.1(c)
hereof to its Transfer Agent, and any subsequent transfer agent, to issue
certificates registered in the name of each Purchaser or its respective
nominee(s), for the Shares in such amounts as specified from time to time by
each Purchaser to the Company in the form of Exhibit
D
attached
hereto (the “Irrevocable
Transfer Agent Instructions”).
The
Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 4.1(d) will be given
by
the Company to its transfer agent in connection with this Agreement, and that
the Shares shall otherwise be freely transferable on the books and records
of
the Company as and to the extent provided in this Agreement and the other
Transaction Documents and applicable law. The Company acknowledges that a breach
by it of its obligations under this Section 4.1(d) will cause irreparable harm
to a Purchaser. Accordingly, the Company acknowledges that the remedy at law
for
a breach of its obligations under this Section 4.1(d) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 4.1(d), that a Purchaser shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
(e) Acknowledgement.
Each
Purchaser hereunder acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell or otherwise transfer the Shares
or
any interest therein without complying with the requirements of the Securities
Act. While the above-referenced registration statement remains effective, each
Purchaser hereunder may sell the Shares in accordance with the plan of
distribution contained in the registration statement and if it does so it will
comply therewith and with the related prospectus delivery requirements unless
an
exemption therefrom is available. Each Purchaser, severally and not jointly
with
the other Purchasers, agrees that if it is notified by the Company in writing
at
any time after the date any legend is removed pursuant to Section 4.1(c) hereof
that the registration statement registering the resale of the Shares is not
effective or that the prospectus included in such registration statement no
longer complies with the requirements of Section 10 of the Securities Act,
the
Purchaser will refrain from selling such Shares until such time as the Purchaser
is notified by the Company that such registration statement is effective or
such
prospectus is compliant with Section 10 of the Exchange Act, unless such
Purchaser is able to, and does, sell such Shares pursuant to an available
exemption from the registration requirements of Section 5 of the Securities
Act.
Both the Company and its Transfer Agent, and their respective directors,
officers, employees and agents, may rely on this subsection (e) and each
Purchaser hereunder will indemnify and hold harmless each of such persons from
any breaches or violations of this paragraph.
(f) Buy-In.
If the
Company shall fail for any reason or for no reason to issue to a Purchaser
unlegended certificates within three (3) Business Days of receipt of all
documents necessary for the removal of the legend set forth above (the
“Deadline
Date”),
then,
in addition to all other remedies available to such Purchaser, if on or after
the Business Day immediately following such three (3) Business Day period,
such
Purchaser purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the holder of shares of
Common Stock that such Purchaser anticipated receiving from the Company without
any restrictive legend (a “Buy-In”),
then
the Company shall, within three (3) Business Days after such Purchaser’s request
and in such Purchaser’s sole discretion, either (i) pay cash to the Purchaser in
an amount equal to such Purchaser’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to such Purchaser a certificate or certificates
representing such shares of Common Stock and pay cash to the Purchaser in an
amount equal to the excess (if any) of the Buy-In Price over the product of
(a)
such number of shares of Common Stock, times (b) the Closing Bid Price on the
Deadline Date.
23
4.2 [Intentionally
Omitted.]
4.3
Furnishing
of Information.
In
order to enable the Purchasers to sell the Shares under Rule 144 of the
Securities Act, for a period of two years from the Closing, the Company shall
use its commercially reasonable efforts 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. During such two year period, if the Company is not required to
file reports pursuant to such laws, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Shares under Rule
144.
4.4
Reporting
Status.
Other
than in connection with a Fundamental Transaction, during the two year period
from and after the Effective Date, the Company shall not terminate its status
as
an issuer required to file reports under the Exchange Act even if the Exchange
Act or the rules and regulations thereunder would otherwise permit such
termination.
4.5
Form
D
and Blue Sky.
The
Company agrees to timely file a Form D with respect to the Shares as required
under Regulation D. The Company, on or before the Closing Date, shall take
such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Shares for sale to the Purchasers at the
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). The Company shall make all filings and reports relating to
the
offer and sale of the Shares required under applicable securities or “Blue Sky”
laws of the states of the United States following the Closing Date.
4.6 No
Integration.
The
Company shall not, and shall use its commercially reasonable 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 will 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 Purchasers, or that will be integrated with
the
offer or sale of the Shares for purposes of the rules and regulations of any
Trading Market such that it would require stockholder approval prior to the
closing of such other transaction unless stockholder approval is obtained before
the closing of such subsequent transaction.
4.7 Securities
Laws Disclosure; Publicity.
By 9:00
a.m., New York City time, on the Trading Day immediately following the execution
of this Agreement, the Company shall issue a press release (the “Press
Release”)
reasonably acceptable to the Placement Agent disclosing all material terms
of
the transactions contemplated hereby. On or before 9:00 a.m., New York City
time, on the second Trading Day immediately following the execution of this
Agreement, the Company will file a Current Report on Form 8-K with the
Commission describing the terms of the Transaction Documents (and including
as
exhibits to such Current Report on Form 8-K the material Transaction Documents
(including, without limitation, this Agreement and the Registration Rights
Agreement)). Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser or an Affiliate of any Purchaser, or include
the name of any Purchaser or an Affiliate of any Purchaser in any press release
or filing with the Commission (other than the Registration Statement) or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
(A) any registration statement contemplated by the Registration Rights Agreement
and (B) the filing of final Transaction Documents (including signature pages
thereto) with the Commission and (ii) to the extent such disclosure is required
by law, request of the Staff of the Commission or Trading Market regulations,
in
which case the Company shall provide the Purchasers with prior written notice
of
such disclosure permitted under this subclause (ii). From and after the issuance
of the Press Release, no Purchaser shall be in possession of any material,
non-public information received from the Company, any Subsidiary or any of
their
respective officers, directors, employees or agents, that is not disclosed
in
the Press Release unless a Purchaser shall have executed a written agreement
regarding the confidentiality and use of such information. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed
by the Company as described in this Section 4.7, such Purchaser will maintain
the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
24
4.8 Non-Public
Information.
Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company shall not, and shall
cause each Subsidiary and each of their respective officers, directors,
employees and agents, not to, provide any Purchaser with any material,
non-public information regarding the Company or any of its Subsidiaries from
and
after the filing of the Press Release without the express written consent of
such Purchaser and unless prior thereto such Purchaser shall have executed
a
written agreement regarding the confidentiality and use of such information.
In
the event of a breach of the foregoing covenant by the Company, and provided
that the Company shall have failed (following proper written request therefor)
to make an appropriate public disclosure promptly following such written request
consistent with the requirements of Regulation FD, any Subsidiary, or each
of
their respective officers, directors, employees and agents, in addition to
any
other remedy provided herein or in the Transaction Documents, a Purchaser shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material non-public information
without the prior approval by the Company, its Subsidiaries, or any of its
or
their respective officers, directors, employees or agents. No Purchaser shall
have any liability to the Company, its Subsidiaries, or any of their respective
officers, directors, employees or agents for any such disclosure.
4.9 Indemnification.
(a) Indemnification
of Purchasers.
In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold each Purchaser and its directors, officers,
stockholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities
Act
and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding
a
lack of such title or any other title) of such controlling person (each, a
“Purchaser
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 that any such Purchaser Party may suffer or incur as a result
of
any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction
Documents. The Company will not be liable to any Purchaser Party under
this Agreement to the extent, but only to the extent that a loss, claim, damage
or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents.
25
(b) Conduct
of Indemnification Proceedings.
Promptly
after receipt by any Person (the “Indemnified
Person”)
of
notice of any demand, claim or circumstances which would or might give rise
to a
claim or the commencement of any action, proceeding or investigation in respect
of which indemnity may be sought pursuant to Section 4.9(a), such Indemnified
Person shall promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person, and shall assume the payment of all fees and
expenses; provided,
however, that
the
failure of any Indemnified Person so to notify the Company shall not relieve
the
Company of its obligations hereunder except to the extent that the Company
is
actually and materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of
such Indemnified Person unless: (i) the Company and the Indemnified Person
shall
have mutually agreed to the retention of such counsel; (ii) the Company shall
have failed promptly to assume the defense of such proceeding and to employ
counsel reasonably satisfactory to such Indemnified Person in such proceeding;
or (iii) in the reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be inappropriate due
to
actual or potential differing interests between them. The Company shall not
be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.
4.10 Listing
of Shares.
Prior
to the execution of this Agreement or promptly following the date hereof, the
Company shall have taken or shall take all necessary action to cause the Shares
to be listed upon the Principal Trading Market, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing. Further, if the Company applies to have its Common Stock or other
securities listed on any other Trading Market, it shall include in such
application the Shares and will take such other action as is necessary to cause
the Shares to be listed on such other Trading Market as promptly as practicable.
4.11 Use
of
Proceeds.
The
Company intends to use the net proceeds from the sale of the Shares hereunder
for working capital and general corporate purposes.
4.12 Short
Sales After The Date Hereof.
Such
Purchaser shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in any transactions in the Company’s securities
(including, without limitation, any Short Sales involving the Company’s
securities) during the period from the date hereof until the earlier of such
time as (i) the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.7 or (ii) this Agreement is terminated
in
full pursuant to Section 6.18. Notwithstanding the foregoing, in the case of
a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser's assets, the
representation set forth above shall apply only with respect to the portion
of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement. Each
Purchaser understands
and acknowledges, severally and not jointly with any other Purchaser, that
the
Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with
shares included in such registration statement would be a violation of Section
5
of the Securities Act, as set forth in Item 65, Section 5 under Section A,
of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
26
ARTICLE
V.
CONDITIONS
PRECEDENT TO CLOSING
5.1 Conditions
Precedent to the Obligations of the Purchasers to Purchase
Shares.
The
obligation of each Purchaser to acquire Shares at the Closing is subject to
the
fulfillment to such Purchaser’s satisfaction, on or prior to the Closing Date,
of each of the following conditions, any of which may be waived by such
Purchaser (as to itself only):
(a) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects (except for those representations and
warranties which are qualified as to materiality, in which case such
representations and warranties shall be true and correct in all respects) as
of
the date when made and as of the Closing Date, as though made on and as of
such
date, except for such representations and warranties that speak as of a specific
date.
(b) Performance.
The
Company 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) Consents.
The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary for consummation of the purchase
and sale of the Shares at the Closing (including all Required Approvals), all
of
which shall be and remain so long as necessary in full force and
effect.
(e) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that has had or would reasonably be expected to have a Material Adverse
Effect.
(f) No
Suspensions of Trading in Common Stock; Listing.
The
Common Stock (i) shall be designated for quotation or listed on the Principal
Trading Market and (ii) shall not have been suspended, as of the Closing Date,
by the Commission or the Principal Trading Market from trading on the Principal
Trading Market nor shall suspension by the Commission or the Principal Trading
Market have been threatened, as of the Closing Date, either (A) in writing
by
the Commission or the Principal Trading Market or (B) by falling below the
minimum listing maintenance requirements of the Principal Trading
Market.
(g) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with Section
2.2(a).
(h) Compliance
Certificate.
The
Company shall have delivered to each Purchaser a certificate, dated as of the
Closing Date and signed by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 5.1(a) and (b) in the form attached hereto
as
Exhibit
F.
(i) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section 6.18 herein.
27
5.2 Conditions
Precedent to the Obligations of the Company to sell Shares.
The
Company's obligation to sell and issue the Shares at the Closing is subject
to
the fulfillment to the satisfaction of the Company on or prior to the Closing
Date of the following conditions, any of which may be waived by the
Company:
(a) Representations
and Warranties.
The
representations and warranties made by the Purchaser in Section 3.2 hereof
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, except for
representations and warranties that speak as of a specific date.
(b) Performance.
Such
Purchaser 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 Purchaser at
or
prior to the Closing Date.
(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) Consents.
The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary for consummation of the purchase
and sale of the Shares, all of which shall be and remain so long as necessary
in
full force and effect.
(e) Purchasers
Deliverables.
Such
Purchaser shall have delivered its Purchaser Deliverables in accordance with
Section 2.2(b).
(f) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section 6.18 herein.
ARTICLE
VI.
MISCELLANEOUS
6.1 Fees
and Expenses.
Except
as otherwise expressly set forth in the Company’s engagement letter with the
Placement Agent, the Company and the Purchasers shall each pay the fees and
expenses of their respective advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees, stamp taxes and other taxes
and
duties levied in connection with the sale and issuance of the Shares to the
Purchasers. Each party acknowledges that Xxxxxxxxxx Xxxxxxx PC has rendered
legal advice to the Placement Agent and not to such party in connection with
the
transactions contemplated hereby, and that such party has relied for such
matters on the advice of its own respective counsel.
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. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect
to
the intention of the parties under the Transaction Documents.
28
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 facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 5:00 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 facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:00 p.m., New York City time,
on
any Trading Day, (c) the Trading Day following the
date
of mailing, if sent by U.S. nationally recognized overnight courier service
with
next day delivery specified, or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications shall be as follows:
If
to the Company:
|
||
Xx.
00 Xxxx Xxxxxx
|
||
Xxxxx
District, Jinzhou City, Liaoning Province
|
||
People’x
Xxxxxxxx xx Xxxxx, 000000
|
||
Telephone
No.: (00) 000-0000000
|
||
Facsimile
No.: (00) 000-0000000
|
||
Attention:
Xxxxxxx Xxxx
|
||
E-mail:
xxxxxx@xxxx.xx
|
||
With
a copy to:
|
Xxxxxx
Xxxx Xxxxx Raysman & Xxxxxxx LLP
|
|
000
0xx Xxxxxx, X.X.
|
||
Xxxxxxxxxx,
X.X. 00000
|
||
Telephone
No.: (000) 000-0000
|
||
Facsimile
No.: (000) 000-0000
|
||
Attention:
Xxxxxx X. Xxxxx, Xx., Esq.
|
||
E-mail:
xxxxxx@xxxxxx.xxx
|
||
If
to a Purchaser:
|
To
the address set forth under such Purchaser’s name on the signature
page
|
|
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, in the case of an amendment, by the Company and each of
the
Purchasers holding or having the right to acquire a majority of the Shares
on a
fully-diluted basis at the time of such amendment or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. 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 Purchaser 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 Purchasers who then hold
Shares.
6.5 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.
29
6.6 Successors
and Assigns.
The
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties and their successors and permitted assigns. This Agreement, or
any
rights or obligations hereunder, may not be assigned by the Company without
the
prior written consent of the Purchasers. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns
or
transfers any Shares in compliance with the Transaction Documents and applicable
law, provided such transferee shall agree in writing to be bound, with respect
to the transferred Shares, by the terms and conditions of this Agreement that
apply to the “Purchasers”.
6.7 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 (i) the Placement
Agent is an intended third party beneficiary of Article III hereof and (ii)
the
Escrow Agent is an intended third party beneficiary of Section 2.1(d), and
the
Placement Agent or the Escrow Agent, as the case may be, may enforce the
provisions of such Section directly against the parties with obligations
thereunder.
6.8 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 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.
6.9 Survival.
Subject
to applicable statute of limitations, the representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery of the Shares.
6.10 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, or by e-mail delivery of a “.pdf” format data file, 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.
6.11 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.
30
6.12 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Purchaser
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 (or as otherwise mutually agreed upon by the parties), then
such Purchaser 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
6.13 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 and the Transfer Agent of such loss,
theft or destruction and the execution by the holder thereof of a customary
lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection
therewith or, if required by the Transfer Agent, a bond in such form and amount
as is required by the Transfer Agent. 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.
6.14 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchasers and the Company
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 agree to waive in any action for specific performance of
any
such obligation (other than in connection with any action for a temporary
restraining order) the defense that a remedy at law would be
adequate.
6.15 Payment
Set Aside.
To the
extent that the Company makes a payment or payments to any Purchaser pursuant
to
any Transaction Document or a Purchaser 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, 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.
6.16 Adjustments
in Share Numbers and Prices.
In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof and prior to the Closing, each reference in any Transaction
Document to a number of shares or a price per share shall be deemed to be
amended to appropriately account for such event.
31
6.17 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to the Transaction Documents has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which
may
have been made or given by any other Purchaser or by any agent or employee
of
any other Purchaser, and no Purchaser and any of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to
or
arising from any such information, materials, statement or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers 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 Purchaser acknowledges that no other Purchaser
has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Shares or enforcing its rights
under the Transaction Documents. Each Purchaser 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 Purchaser to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Transaction
Documents for the purpose of closing a transaction with multiple Purchasers
and
not because it was required or requested to do so by any Purchaser. The
Company’s obligations to each Purchaser under this Agreement are identical to
its obligations to each other Purchaser other than such differences resulting
solely from the number of Shares purchased by such Purchaser, but regardless
of
whether such obligations are memorialized herein or in another agreement between
the Company and a Purchaser.
6.18 Termination.
This
Agreement may be terminated and the sale and purchase of the Shares abandoned
at
any time prior to the Closing by either the Company or any Purchaser (with
respect to itself only) upon written notice to the other, if the Closing has
not
been consummated on or prior to 5:00 p.m., New York City time, on the Outside
Date; provided,
however,
that
the right to terminate this Agreement under this Section 6.18 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. Nothing in this Section 6.18 shall be deemed
to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of
its
obligations under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers and the Escrow Agent. Upon a termination
in accordance with this Section, the Company and the terminating Purchaser(s)
shall not have any further obligation or liability (including arising from
such
termination) to the other, and no Purchaser will have any liability to any
other
Purchaser under the Transaction Documents as a result therefrom.
32
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.
By:
|
|||
Name:
|
|||
Title:
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
NAME
OF PURCHASER: ____________________________
|
|
By:
____________________________
|
|
Name:
|
|
Title:
|
|
Aggregate
Purchase Price (Subscription Amount): $_____________
|
|
Number
of Shares to be Acquired: ______________________
|
|
Tax
ID No.: ____________________
|
|
Address
for Notice:
|
|
__________________________________
|
|
__________________________________
|
|
__________________________________
|
|
Telephone
No.: _______________________
|
|
Facsimile
No.: ________________________
|
|
E-mail
Address: ________________________
|
|
Attention:
_______________________
|
Delivery
Instructions:
(if
different than above)
c/o
_______________________________
Street:
____________________________
City/State/Zip:
______________________
Attention:
__________________________
Telephone
No.: ____________________________
EXHIBITS:
A:
|
Form
of Registration Rights Agreement
|
B-1:
|
Accredited
Investor Questionnaire
|
B-2:
|
Stock
Certificate Questionnaire
|
C:
|
Form
of Opinion of Company Counsel
|
D:
|
Irrevocable
Transfer
Agent Instructions
|
E:
|
Form
of Secretary’s Certificate
|
F:
|
Form
of Officer’s Certificate
|
G:
|
Wire
Instructions
|
SCHEDULES:
3.1(y)
Registration Rights
EXHIBIT
A
Form
of
Registration Rights Agreement
Instruction
Sheet
(to
be
read in conjunction with the entire Securities Purchase Agreement and
Registration Rights Agreement)
A. |
Complete
the following items in the Securities Purchase Agreement and/or
Registration Rights Agreement:
|
1.
|
Provide
the information regarding the Purchaser requested on the signature
page.
The Securities Purchase Agreement and the Registration Rights Agreement
must be executed by an individual authorized to bind the
Purchaser.
|
|
2.
|
Exhibit
B-1 –
Accredited Investor Questionnaire:
|
|
Provide
the information requested by the Accredited Investor
Questionnaire
|
||
3.
|
Exhibit
B-2
Stock Certificate Questionnaire:
|
|
Provide
the information requested by the Stock Certificate
Questionnaire
|
||
4.
|
Annex
B
to
the Registration Rights Agreement — Selling Securityholder Notice and
Questionnaire
|
|
Provide
the information requested by the Selling Securityholder Notice and
Questionnaire
|
||
5.
|
Return
the signed Securities Purchase Agreement and Registration Rights
Agreement
to:
|
Xxxxx
X.
Xxxxxxxxx
Xxxxx
Xxxxxxx & Co.
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
Email:
xxxxx.x.xxxxxxxxx@xxx.xxx
B.
|
Instructions
regarding the transfer of funds for the purchase of Shares is set
forth on
Exhibit
G
to
the Securities Purchase Agreement.
|
EXHIBIT
B-1
ACCREDITED
INVESTOR QUESTIONNAIRE
(ALL
INFORMATION WILL BE TREATED CONFIDENTIALLY)
This
Investor Questionnaire (“Questionnaire”)
must
be completed by each potential investor in connection with the offer and sale
of
the shares of the common stock, par value $0.0001 per share (the “Securities”),
of
Wonder Auto Technology, Inc., a Nevada corporation (the “Corporation”).
The
Securities are being offered and sold by the Corporation without registration
under the Securities Act of 1933, as amended (the “Act”),
and
the securities laws of certain states, in reliance on the exemptions contained
in Section 4(2) of the Act and on Regulation D promulgated thereunder and
in reliance on similar exemptions under applicable state laws. The Corporation
must determine that a potential investor meets certain suitability requirements
before offering or selling Securities to such investor. The purpose of this
Questionnaire is to assure the Corporation that each investor will meet the
applicable suitability requirements. The information supplied by you will be
used in determining whether you meet such criteria, and reliance upon the
private offering exemptions from registration is based in part on the
information herein supplied.
This
Questionnaire does not constitute an offer to sell or a solicitation of an
offer
to buy any security. Your answers will be kept strictly confidential. However,
by signing this Questionnaire, you will be authorizing the Corporation to
provide a completed copy of this Questionnaire to such parties as the
Corporation deems appropriate in order to ensure that the offer and sale of
the
Securities will not result in a violation of the Act or the securities laws
of
any state and that you otherwise satisfy the suitability standards applicable
to
purchasers of the Securities. All potential investors must answer all applicable
questions and complete, date and sign this Questionnaire. Please print or type
your responses and attach additional sheets of paper if necessary to complete
your answers to any item.
PART
A. BACKGROUND
INFORMATION
Name of Beneficial Owner of the Securities: _____________________________________________________________________________
Business Address:__________________________________________________________________________________________________
(Number
and Street)
_______________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: (___) ____________________________________________________________________________________________
If
a
corporation, partnership, limited liability company, trust or other
entity:
Type
of
entity: _________________________________________________
State
of
formation:______________________ Approximate
Date of formation: ____________________
Were
you
formed for the purpose of investing in the securities being
offered?
Yes
____ No
____
If
an individual:
Residence Address: ________________________________________________________________________________________________
(Number
and Street)
________________________________________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: (___) ____________________________________________________________________________________________
Age:
__________ Citizenship:
____________ Where
registered to vote: _______________
Set
forth
in the space provided below the state(s), if any, in the United States in
which
you maintained your residence during the past two years and the dates during
which you resided in each state:
Are
you a
director or executive officer of the Corporation?
Yes
____ No
____
Social
Security or Taxpayer Identification
No. _________________________________________
PART
B. ACCREDITED
INVESTOR QUESTIONNAIRE
In
order
for the Company to offer and sell the Securities in conformance with state
and
federal securities laws, the following information must be obtained regarding
your investor status. Please initial
each category applicable
to you as a Purchaser of Securities of the Company.
__ (1) |
A
bank as defined in Section 3(a)(2) of the Securities Act, or any
savings
and loan association
or other institution as defined in Section 3(a)(5)(A) of the Securities
Act whether
acting in its individual or fiduciary capacity;
|
__ (2) |
A
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of
1934;
|
__
(3)
|
An
insurance company as defined in Section 2(13) of the Securities Act;
|
__
(4)
|
An
investment company registered under the Investment Company Act of
1940 or
a business development company as defined in Section 2(a)(48) of
that Act;
|
__
(5)
|
A
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
|
__
(6)
|
A
plan established and maintained by a state, its political subdivisions,
or
any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in
excess
of $5,000,000;
|
__
(7)
|
An
employee benefit plan within the meaning of the Employee Retirement
Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such act, which is either
a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets
in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
|
__
(8)
|
A
private business development company as defined in Section 202(a)(22)
of
the Investment Advisers Act of
1940;
|
__
(9)
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code,
a corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the Securities,
with
total assets in excess of $5,000,000;
|
__ (10) |
A
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating
the merits and risks of investing in the
Company;
|
___(11) |
A
natural person whose individual net worth, or joint net worth with
that
person’s spouse,
at the time of his purchase exceeds
$1,000,000;
|
___(12) |
A
natural person who had an individual income in excess of $200,000
in each
of the two
most recent years, or joint income with that person’s spouse in excess of
$300,000,
in each of those years, and has a reasonable expectation of reaching
the same
income level in the current year;
|
___(13)
|
An
executive officer or director of the
Company;
|
___(14) |
An
entity in which all of the equity owners qualify under any of the
above
subparagraphs.
|
A.
|
FOR
EXECUTION BY AN INDIVIDUAL:
|
|||||||
By
|
||||||||
Date
|
||||||||
Print Name:
|
||||||||
B.
|
FOR
EXECUTION BY AN ENTITY:
|
|||||||
Entity
Name:
|
||||||||
By
|
||||||||
Date
|
||||||||
Print
Name:
|
||||||||
Title:
|
||||||||
C.
|
ADDITIONAL
SIGNATURES (if required by partnership, corporation or trust
document):
|
|||||||
Entity
Name:
|
||||||||
By
|
||||||||
Date
|
||||||||
Print
Name:
|
||||||||
Title:
|
||||||||
Entity
Name:
|
By
|
||||||||
Date
|
||||||||
Print
Name:
|
||||||||
Title:
|
||||||||
EXHIBIT
B-2
Stock
Certificate Questionnaire
Pursuant
to Section 2.2(b) of the Agreement, please provide us with the following
information:
1.
|
The
exact name that the Shares are to be registered in (this is the name
that
will appear on the stock certificate(s)). You may use a nominee name
if
appropriate:
|
||
2.
|
The
relationship between the Purchaser of the Shares and the Registered
Holder
listed in response to Item 1 above:
|
||
3.
|
The
mailing address, telephone and telecopy number of the Registered
Holder
listed in response to Item 1 above:
|
||
4.
|
The
Tax Identification Number (or, if an individual, the Social Security
Number) of the Registered Holder listed in response to Item 1
above:
|
EXHIBIT
C
Form
of
Opinion of Company Counsel
1. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of Nevada with the requisite corporate
power and authority to own, lease and operate its properties and assets, and
to
conduct its business as described in the SEC Reports, to execute and deliver
the
Transaction Documents and to perform its obligations thereunder, including,
without limitation, to issue, sell and deliver the Shares under the
Agreement.
2. As
of the
date of the Agreement, the Company has an authorized capitalization as set
forth
in the SEC Reports.
3. When
issued against payment therefore in accordance with the terms of the Agreement,
the Shares will be duly authorized, validly issued, fully paid and
nonassessable, and free of any and all liens and charges and preemptive right
or
similar rights contained in the Articles of Incorporation or Bylaws or any
agreement, note, lease, publicly filed mortgage deed or other instrument to
which the Company is a party or by which the Company is bound that has been
filed as an exhibit to the SEC Reports.
4. All
corporate action on the part of the Company necessary for the authorization,
execution and delivery by the Company of the Transaction Documents by the
Company, the authorization, sale, issuance and delivery of the Shares, and
the
performance by the Company of its obligations under the Transaction Documents
has been taken. The Transaction Documents have been duly and validly executed
and delivered by the Company and each of them constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
their respective terms.
5. The
execution and delivery by the Company of the Transaction Documents, the
performance by the Company of its obligations under the Transaction Documents,
and the issuance of the Shares do not and will not, as the case may be, violate
or constitute a default by the Company (or an event which, with the giving
of
notice or lapse of time or both, constitutes or would constitute a default)
under, give rise to any right of termination, cancellation or acceleration
under
(i) the Articles of Incorporation or Bylaws, (ii) any indenture, mortgage,
deed
of trust, bank loan or credit agreement or other evidence of indebtedness,
or
any license, lease, contract or other agreement or instrument to which the
Company is a party or by which any of its properties may be bound or affected,
and in each case which has been filed as an exhibit to the SEC Reports, (iii)
any provision of any applicable federal or state law, rule or regulation known
to us to be customarily applicable to transactions of this nature, or (iv)
any
decree, judgment or order known to us to be applicable to the Company or its
properties.
6. No
consent, approval or authorization of designation, declaration or filing with
any federal governmental authority is required in connection with the valid
execution and delivery of the Transaction Documents, the offer, sale or issuance
of the Shares, or the consummation by the Company of any other transaction(s)
contemplated by the Transaction Documents, except the filing with the SEC of
a
Form D pursuant to Regulation D under the Securities Act.
7. Assuming
the accuracy of the Purchasers’ representations contained in Section 3.2 of the
Agreement, registration of the offer, sale and issuance of the Shares in
conformity with the terms of the Agreement and the Securities Act is not
required.
8. The
Company is not, and, immediately after giving effect to the offering and sale
of
the Shares, will not be an “investment company” or an entity “controlled” by an
“investment company,” as such terms are defined in the Investment Company Act of
1940, as amended.
9. To
such
counsel’s knowledge, there are no written contracts, agreements or
understandings between the Company and any Person granting such person the
right
(other than rights which have been waived in writing or otherwise satisfied)
to
require the Company to include any securities of the Company in any registration
statement contemplated by Section 2 of the Registration Rights
Agreement.
EXHIBIT
D
Form
of
Irrevocable Transfer Agent Instructions
As
of
_________, ____
Securities
Transfer Corporation
0000
Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attn:
_________________
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement, dated as of December
__,
2007 (the “Agreement”),
by
and among Wonder
Auto Technology, Inc.,
a
Nevada corporation (the “Company”),
and
the purchasers named on the signature pages thereto (collectively, and including
permitted transferees, the “Holders”),
pursuant to which the Company is issuing to the Holders shares (the
“Shares”)
of
Common Stock of the Company, par value $0.0001 per share (the “Common
Stock”).
This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time and the
conditions set forth in this letter are satisfied), subject to any stop transfer
instructions that we may issue to you from time to time, if any, to issue
certificates representing shares of Common Stock upon transfer or resale of
the
Shares.
You
acknowledge and agree that so long as you have received (a) written
confirmation from the Company’s legal counsel that either (1) a
registration statement covering resales of the Shares has been declared
effective by the Securities and Exchange Commission (the “Commission”)
under
the Securities Act of 1933, as amended (the “Securities
Act”)
and
remains effective, having not been withdrawn or suspended at such time, or
(2) the Shares have been sold in conformity with Rule 144 under the
Securities Act (“Rule 144”)
or are
eligible for sale under Rule 144(k) and (b) if applicable, a copy of such
registration statement, then, unless otherwise required by law, within three
(3) business days of your receipt of a notice of transfer, you shall issue
the certificates representing the Shares registered in the names of such Holders
or transferees, as the case may be, and such certificates shall not bear any
legend restricting transfer of the Shares thereby and should not be subject
to
any stop-transfer restriction; provided,
however,
that if
such Shares are not registered for resale under the Securities Act because
the
related registration statement has been withdrawn or suspended or otherwise
is
not in effect at the time of such request or able to be sold under Rule 144,
then the certificates for such Shares shall bear the following
legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT
OR (B) 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 OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER
AGENT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
A
form of
written confirmation from the Company’s outside legal counsel that a
registration statement covering resales of the Shares has been declared
effective by the Commission under the Securities Act is attached hereto as
Annex I.
Please
be
advised that the Holders are relying upon this letter as an inducement to enter
into the Agreement and, accordingly, each Holder is a third party beneficiary
to
these instructions.
Please
execute this letter in the space indicated to acknowledge your agreement to
act
in accordance with these instructions.
Very
truly yours,
|
|
By:
__________________________________
|
|
Name:
________________________________
|
|
Title:
________________________________
|
|
Acknowledged
and Agreed:
|
|
SECURITIES
TRANSFER CORPORATION
|
|
By:
__________________________________
|
|
Name:
________________________________
|
|
Title:
________________________________
|
Date:
_________________, ______
Annex
I
FORM
OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT
Securities
Transfer Corporation
0000
Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attn:
_________________
|
||
|
|
|
|
|
Ladies
and Gentlemen:
We
are
counsel to Wonder Auto Technology, Inc., a Nevada corporation (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of December ___, 2007, entered into by and among the Company
and the buyers named therein (collectively, the “Purchasers”)
pursuant to which the Company issued to the Purchasers shares of the Company’s
common stock, $0.0001 par value per share (the “Common
Stock”).
Pursuant to that certain Registration Rights Agreement of even date, the Company
agreed to register the resale of the Common Stock (the “Registrable
Securities”),
under
the Securities Act of 1933, as amended (the “Securities
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ,
____,
the Company filed a Registration Statement on Form S-3 (File
No. 333- )
(the
“Registration
Statement”)
with
the Securities and Exchange Commission (the “Commission”)
relating to the Registrable Securities which names each of the Purchasers as
a
selling stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the Commission’s
staff has advised us by telephone that the Commission has entered an order
declaring the Registration Statement effective under the Securities Act at
____
[a.m.][p.m.] on __________, ____, and we have no knowledge, after telephonic
inquiry of a member of the staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the Commission and the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
This
letter shall serve as our standing notice to you that the Common Stock may
be
freely transferred by the Purchasers pursuant to the Registration Statement.
You
need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Purchasers or the
transferees of the Purchasers, as the case may be, as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated __________, 2007,
provided at the time of such reissuance, the Company has not otherwise notified
you that the Registration Statement is unavailable for the resale of the
Registrable Securities. This letter shall serve as our standing instructions
with regard to this matter.
|
|
|
|
|
|
|
Very
truly yours,
|
||
|
|
|
|
|
|
|
[NAME
OF COMPANY COUNSEL]
|
||
|
|
|
|
|
|
|
By:
|
|
___________________________________
|
CC:
|
Purchasers
|
|
Xxxxx
Xxxxxxx & Co.
|
||
EXHIBIT
E
Form
of
Secretary’s Certificate
The
undersigned hereby certifies that he is the duly elected, qualified and acting
Secretary of Wonder Auto Technology, Inc., a Nevada corporation (the
"Company"),
and
that as such he is authorized to execute and deliver this certificate in the
name and on behalf of the Company and in connection with the Securities Purchase
Agreement, dated as of December ___, 2007, by and among the Company and the
investors party thereto (the "Securities
Purchase Agreement"),
and
further certifies in his official capacity, in the name and on behalf of the
Company, the items set forth below. Capitalized terms used but not otherwise
defined herein shall have the meaning set forth in the Securities Purchase
Agreement.
1.
|
Attached
hereto as Exhibit
A
is
a true, correct and complete copy of the resolutions duly adopted
by the
Board of Directors of the Company by unanimous written consent. Such
resolutions have not in any way been amended, modified, revoked or
rescinded, have been in full force and effect since their adoption
to and
including the date hereof and are now in full force and effect.
|
2.
|
Attached
hereto as Exhibit
B
is
a true, correct and complete copy of the Certificate of Incorporation
of
the Company, together with any and all amendments thereto currently
in
effect, and no action has been taken to further amend, modify or
repeal
such Certificate of Incorporation, the same being in full force and
effect
in the attached form as of the date hereof.
|
3.
|
Attached
hereto as Exhibit
C
is
a true, correct and complete copy of the Bylaws of the Company and
any and
all amendments thereto currently in effect, and no action has been
taken
to further amend, modify or repeal such Bylaws, the same being in
full
force and effect in the attached form as of the date
hereof.
|
4.
|
Each
person listed below has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the Securities
Purchase Agreement and each of the Transaction Documents on behalf
of the
Company, and the signature appearing opposite such person’s name below is
such person’s genuine signature.
|
Name
|
Position
|
Signature
|
||
|
||||
|
Name:
|
|||
Title:
Secretary
|
I,
______________, President and Chief Executive Officer, hereby certify that
________ is the duly elected, qualified and acting Secretary of the Company
and
that the signature set forth above is his true signature.
Name:
|
|||
Title:
President and Chief Executive
Officer
|
EXHIBIT
A
Resolutions
EXHIBIT
B
Certificate
of Incorporation
EXHIBIT
C
Bylaws
EXHIBIT
F
Form
of
Officer’s Certificate
The
undersigned, the President and Chief Executive Officer of Wonder Auto
Technology, Inc., a Nevada corporation (the "Company"),
pursuant to Section 5.1(h) of the Securities Purchase Agreement, dated as of
December ___, 2007, by and among the Company and the investors signatory thereto
(the "Securities
Purchase Agreement"),
hereby represents, warrants and certifies as follows (capitalized terms used
but
not otherwise defined herein shall have the meaning set forth in the Securities
Purchase Agreement):
1.
|
The
representations and warranties of the Company contained in the Securities
Purchase Agreement are 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, except for such representations and warranties that speak
as of
a specific date.
|
2.
|
The
Company has 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.
|
IN
WITNESS WHEREOF,
the
undersigned has executed this certificate this ___ day of December,
2007.
Name:
|
|||
Title:
President and Chief Executive
Officer
|
EXHIBIT
G
Wire
Instructions
PNC
Bank New Jersey
|
|
Xxxxxxxx,
NJ
|
|
ABA
No.:
|
000000000
|
For
credit to:
|
Xxxxxxxxxx
Xxxxxxx PC
|
Special
Trust Account I
|
|
Account
No.:
|
8025720174
|
For
International wires please use SWIFT Code: XXXXXX00
Schedule
3.1(y)
Registration
Rights
None.