SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT
(this “Agreement”), dated as
of June 30, 2008, by and among Environment Ecology Holding Co. of
China a Florida corporation, with headquarters located at 391 Hun Xx
Xxxx, Xxxx Xxx Street, Xi’an, Shaanxi Province, P.R. China (the “Company”), and Trafalgar Capital Specialized
Investment Fund, Luxembourg (the “Buyer”).
WITNESSETH:
WHEREAS, the Company and the
Buyer are executing and delivering this Agreement in reliance upon an exemption
from securities registration pursuant to Section 4(2) and/or Rule 506 of
Regulation D (“Regulation D”) as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933
Act”);
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Buyer(s), as provided herein, and the Buyer(s) shall
purchase up to Six Million Dollars ($6,000,000) of secured convertible
redeemable debentures (the “Debentures”), of
which: (a) Two Million Five Hundred Thousand Dollars ($2,500,000) shall be
funded on the date hereof (the “First Closing”) and
(b) up to an additional Three Million Five Hundred Thousand Dollars ($3,500,000)
shall be funded at the discretion of the Buyer following the request of the
Company (the “Second
Closing”) (each individually referred to as a “Closing” collectively
referred to as the “Closings”)for a total
purchase price of up to Six Million Dollars ($6,000,000), (the “Purchase Price”). For
the avoidance of doubt, there shall be no non-usage fees or obligation to fund
or request any amount beyond that funded at the First Closing; and
WHEREAS, 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 the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
there under, and applicable state securities laws; and
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering Irrevocable Transfer Agent Instructions substantially
in the form attached hereto as Exhibit B (the “Irrevocable Transfer Agent
Instructions”); and
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Security Agreement substantially in the form attached
hereto as Exhibit
C, (the “Security Agreement”)
pursuant to which the Company has agreed to provide the Buyer a security
interest in Pledged Property (as this term is defined in the Security Agreement
dated the date hereof) to secure Company’s obligations under this Agreement, the
Debenture, the Registration Rights Agreement, the Security Agreement and the
Irrevocable Transfer Agent Instructions (collectively, the “Transaction
Documents”) or any other obligations of the Company to the Buyer;
NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF
DEBENTURES.
(a) Purchase
of Debentures. Subject to the satisfaction (or waiver) of the terms
and conditions of this Agreement, the Buyer agrees to purchase at the Closings
(as defined herein) and the Company agrees to sell and issue to the Buyer, at
such Closings,
Debentures in amounts corresponding purchased at such
Closings. The Debentures purchased by Buyer shall have a
maturity date of two (2) years from the First Closing. Upon execution
hereof by Buyer, the Buyer shall wire transfer the portion of the Purchase Price
necessary to purchase the Debentures to be acquired in the First Closing to:
“Xxxxx X. Xxxxxxx XX,
P.A. as Escrow Agent for Trafalgar – Environment Ecology” (“Escrow
Agent”). If the Buyer and Seller agree to consummate the Second
Closing, the Buyer shall wire transfer the portion of the Purchase Price
necessary to purchase the Debentures to be acquired in the Second Closing to
Escrow Agent.
(b) Closing
Dates. The First Closing of the purchase and sale of the Debentures
shall take place on the date hereof, subject to notification of satisfaction of
the conditions to the First Closing set forth herein and in Sections 6 and 7
below (or such later date as is mutually agreed to by the Company and the
Buyer(s)) (the “First
Closing Date”). The Second Closing of the purchase and
sale of the Debentures shall occur only if requested by the Company and upon the
consent of the Buyer, at which time such Second Closing take place on a date
mutually agreed to by the Company and Buyer, subject to notification of
satisfaction of the conditions to the Second Closing set forth herein and in
Sections 6 and 7 below (or such later date as is mutually agreed to by the
Company and the Buyer(s)) (the “Second Closing Date”)
(collectively referred to a the “Closing
Dates”). The Closings shall occur on their respective Closing
Dates at the offices of Xxxxx X. Xxxxxxx XX, P.A., 0000 Xxxxxxxx Xxx, Xxxx
Xxxxx, XX 00000 (or such other place as is mutually agreed to by the
Company and the Buyer(s).
(c) Escrow
Arrangements; Form of Payment. Upon execution hereof by Buyer and
pending the Closings and disbursement, the Purchase Price for the Debentures to
be purchased at the First Closing shall be deposited in an escrow account (the
“Escrow Account”) with Xxxxx X. Xxxxxxx XX, P.A., as escrow agent (the “Escrow
Agent”), pursuant to the terms of the Escrow Agreement. Subject to
the satisfaction of the terms and conditions of this Agreement, on the First
Closing Date, (i) the Escrow Agent shall deliver to the Company in accordance
with the terms of the Escrow Agreement that portion of the Escrow Funds (as that
term is defined in the Escrow Agreement) equal to the gross amount of the
Debentures being purchased by the Buyer on the First Closing Date as set forth
on Schedule I (minus the fees and expenses as set forth herein which
shall be paid directly from the Escrow Funds at such Closing) by wire transfer
of immediately available funds and (ii) the Company shall deliver to the
Buyer, Debentures which the Buyer is purchasing duly executed on behalf of the
Company. Prior to the Second Closing Date, the Buyer shall deposit
the Purchase Price for the Debentures to be purchased at such Closings into the
Escrow Account. Subject to the satisfaction of the terms and
conditions of this Agreement, on the Second Closing Date (i) the Escrow Agent
shall deliver to the Company in accordance with the terms of the Escrow
Agreement that portion of the Escrow Funds (as that term is defined in the
Escrow Agreement) equal to the gross amount of the Debentures being purchased by
the Buyer on such Closing Date (minus the fees and expenses as set forth herein
which shall be paid directly from the Escrow Funds at such Closing) by wire
transfer of immediately available funds and (ii) the Company shall deliver
to the Buyer, Debentures which such Buyer(s) is purchasing duly executed on
behalf of the Company along with the shares of Common Stock to be issued
pursuant to Section 4(f) hereof.
(d) The
Debentures shall contain provisions that provide that in the event the Euro
strengthens against the U.S. Dollar during the life of the Debenture, the Buyer
shall be afforded an adjustment to compensate for any such movement in either
conversions or redemptions.
2. BUYER’S REPRESENTATIONS AND
WARRANTIES.
The Buyer
represents and warrants that:
(a) Investment
Purpose. The Buyer is acquiring the Debentures for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act.
(b) Accredited Investor
Status. The Buyer is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on
Exemptions. The Buyer understands that the Debentures are
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
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
(d) Information. The
Buyer and its advisors (and his or, its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information he deemed material to making an informed investment
decision regarding his purchase of the Debentures, which have been requested by
such Buyer. The Buyer and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Debentures
involves a high degree of risk. The Buyer is in a position regarding
the Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables such Buyer to obtain information from the
Company in order to evaluate the merits and risks of this
investment. The Buyer has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Debentures.
(e) No Governmental
Review. The Buyer 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 Debentures, or the fairness or
suitability of the investment in the Debentures, nor have such authorities
passed upon or endorsed the merits of the offering of the
Debentures.
(f) Transfer or
Resale. The Buyer understands that: (i) the Debentures have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, or (B) such Buyer shall have delivered to
the Company an opinion of counsel, in a generally acceptable form, to the effect
that such securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration requirements;
(ii) any sale of such securities made in reliance on Rule 144 under the 1933 Act
(or a successor rule thereto) (“Rule 144”) may
be made only in accordance with the terms of Rule 144 and further, if Rule 144
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(g) Legends. The
Buyer understands that the certificates or other instruments representing the
Debentures and all certificates or other instruments representing the shares of
the Company’s common stock into which the Debentures are converted shall bear a
restrictive legend in substantially the following form (and a stop transfer
order may be placed against transfer of such certificates):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, GENERALLY ACCEPTABLE
TO COMPANY’S COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.
The
legend set forth above shall be removed and the Company within three (3)
business days shall issue a certificate without such legend to the holder of the
security upon which it is stamped, if, unless otherwise required by state
securities laws, (i) in connection with a sale transaction, provided the
securities are registered under the 1933 Act or (ii) in connection with a sale
transaction, after such holder provides the Company with an opinion of counsel,
which opinion shall be in form, substance and scope reasonably acceptable to
counsel for the Company, to the effect that a public sale, assignment or
transfer of the securities may be made without registration under the 1933
Act.
(h) Authorization,
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(i) Receipt of
Documents. The Buyer and his or its counsel has received and
read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein, and the Transaction Documents; (ii) all
due diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; and (iii)
answers to all questions the Buyer submitted to the Company regarding an
investment in the Company; and the Buyer has relied on the information contained
therein and has not been furnished any other documents, literature, memorandum
or prospectus.
(j) Due Formation
Buyer. If the Buyer is a corporation, trust, partnership or
other entity that is not an individual person, it has been formed and validly
exists and has not been organized for the specific purpose of purchasing the
Debentures and is not prohibited from doing so.
(k) No Legal Advice From the
Company. The Buyer acknowledges, that it had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with his or its own legal counsel and investment and tax
advisors. The Buyer is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.
Except as
otherwise provided in the Company Disclosure Schedule delivered herewith, the
Company represents and warrants as of the date hereof and as of the Closing Date
to the Buyer that:
(a) Organization and
Qualification. The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(b) Authorization, Enforcement,
Compliance with Other Instruments. (i) The Company has
the requisite corporate power and authority to enter into and perform this
Agreement, the Transaction Documents, and any related agreements, and to issue
the Debentures in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Transaction Documents and any
related agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Debentures, have been duly authorized by the Company’s Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement, the Transaction Documents
and any related agreements have been duly executed and delivered by the Company,
(iv) this Agreement, the Transaction Documents and any related agreements
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies. The Company knows of no reason why the Company cannot
perform any of the Company’s obligations under this Agreement or the Transaction
Documents.
(c) Capitalization. The
authorized capital stock of the Company consists of 100,000,000 shares of Common
Stock, par value $0.001 per share and shares of preferred stock, par value
$0.001 per share. As of the date hereof (not including any shares
issued pursuant to this transaction), the Company has 30,662,114 shares of
Common Stock issued and outstanding and 100,000 shares of preferred stock issued
and outstanding. All of such outstanding shares have been validly
issued and are fully paid and nonassessable. No shares of Common
Stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company. As of the date of
this Agreement, other than as disclosed in the attached schedule 3(c), (i) 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, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act and (iv) there
are no outstanding registration statements and there are no outstanding comment
letters from the SEC or any other regulatory agency. There are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Debentures as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company’s Articles of Incorporation, as amended and as in effect
on the date hereof (the “Articles of
Incorporation”), and the Company’s By-laws, as in effect on the date
hereof (the “By-laws”), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto other than stock
options issued to employees and consultants.
(d) Issuance of
Securities. The Debentures are duly authorized and, upon
issuance in accordance with the terms hereof, shall be duly issued, fully paid
and nonassessable, are free from all taxes, liens and charges with respect to
the issue thereof.
(e) No
Conflicts. The execution, delivery and performance of this
Agreement, the Transaction Documents and any related agreements by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Articles of Incorporation or
the By-laws or (ii), to the best knowledge of the Company, 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 the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including United States federal and state securities laws and regulations and
the rules and regulations of The OTC Bulletin Board on which the Common Shares
are quoted) applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected. To the best knowledge of the Company, neither the Company
nor its subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or, any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not
being conducted, and shall not be conducted in violation of any material law,
ordinance, or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under or contemplated by this Agreement in accordance
with the terms hereof. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof, except for any required post-Closing notice filings under applicable
United States federal or state securities laws, if any.
(f) SEC
Documents: Financial Statements. Except as set forth on the attached
schedule, since June 1, 2006 the Company has filed, or furnished, as applicable,
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC under the Exchange Act (the foregoing materials,
including the exhibits and schedules thereto, and such financial statements and
documents incorporated by reference therein, being hereinafter referred to as
the “SEC Documents”). The Company has delivered to the Buyer or its
representatives, or made available through the SEC’s website at
xxxx://xxx.xxx.xxx, true and complete copies of the SEC Documents. As
of their respective dates, the financial statements of the Company included in
the SEC Documents (the “Financial Statements”) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such Financial Statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and, fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(g) No Material
Misstatement or Omission. None of the Company’s SEC Documents
at the time of filing, none of the materials provided to the Buyer by the
Company and none of the representation and warranties made in this Agreement or
any of the other Transaction Documents include any untrue statements
of material fact, nor do the Company’s SEC Documents at the time of filing and
none of the representations and warranties made in this Agreement or any of the
other Transaction Documents omit to state any material fact required to be
stated therein necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
(h) Absence of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby or (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the Transaction Documents have a
material adverse effect on the business, operations, properties, financial
condition or results of operations of the Company and its
subsidiaries taken as a whole.
(i) Acknowledgment Regarding
Buyer’s Purchase of the Debentures. The Company acknowledges
and agrees that the Buyer is acting solely in the capacity of an arm’s length
purchaser with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that the Buyer is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by the Buyer or any of their respective representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Buyer’s purchase of the Debentures. The
Company further represents to the Buyer that the Company’s decision to enter
into this Agreement has been based solely on the independent evaluation by the
Company and its representatives.
(j) No General
Solicitation. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the 0000 Xxx) in connection with the offer or sale of the
Debentures.
(k) No Integrated
Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Debentures under the
1933 Act or cause this offering of the Debentures to be integrated with prior
offerings by the Company for purposes of the 1933 Act.
(l) Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.
(m) Intellectual Property
Rights. The Company and its subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other similar rights
of others, and, to the knowledge of the Company there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
(n) Environmental
Laws. The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval.
(o) Title. Any
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(p) Insurance. The
Company and each of its current and future acquired subsidiaries are or will be
upon acquisition by the Company insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which
the Company and its subsidiaries are engaged. Neither the Company nor
any such subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(q) Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(r) Internal Accounting
Controls. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, and (iii)
the recorded amounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) No Material Adverse
Breaches, etc. Neither the Company nor any of its subsidiaries
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a material adverse
effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Neither
the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company’s officers, has or is
expected to have a material adverse effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.
(t) Tax
Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(u) Certain
Transactions. Except for arm’s length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options or stock grants disclosed to the Buyer, none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(v) Fees and Rights of First
Refusal. The Company is not obligated to offer the securities
offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.
4. COVENANTS.
(a) Best
Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b) Form
D. The Company agrees to file a Form D with respect to the
Debentures as required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Debentures, or obtain an exemption for the Debentures
for sale to the Buyer at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of any such action so taken to the Buyer on or prior to the
Closing Date.
(c) Reporting
Status. Until the date on which none of the Debentures are
outstanding (the “Registration
Period”), the Company shall file in a timely manner all reports required
to be filed with the SEC pursuant to the 1934 Act and the regulations of the SEC
thereunder, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
(d) Use of
Proceeds. The Company will use the net proceeds from the sale
of the Debentures for working capital purposes.
(e) Reservation of
Shares. The Company shall take all action reasonably necessary
to at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the issuance of
the shares upon conversion of the Debentures. If at any time the
Company does not have available such shares of Common Stock as shall from time
to time be sufficient to effect the issuance of all shares upon conversion of
the Debentures, the Company shall file a preliminary proxy statement with the
Securities and Exchange Commission within ten (10) business day and shall call
and hold a special meeting of the shareholders as soon as practicable after such
occurrence, for the sole purpose of increasing the number of shares
authorized. The Company’s management shall recommend to the
shareholders to vote in favor of increasing the number of shares of Common Stock
authorized. Management shall also vote all of its shares in favor of
increasing the number of authorized shares of Common Stock.
(f) Fees and
Expenses.
(i) Each
of the Company and the Buyer shall pay all costs and expenses incurred by such
party in connection with the negotiation, investigation, preparation, execution
and delivery of this Agreement the Transaction Documents and any other documents
relating to this transaction.
(ii) The
Company has agreed to pay a legal and documentation review fee to Buyer of
Twenty Thousand Dollars ($20,000), Five Thousand Dollars ($5,000) of which has
been paid prior to this date and the remainder of which shall be paid directly
from the proceeds of the First Closing.
(iii) The
Company has agreed to pay a Due Diligence Fee to Buyer of Ten Thousand Dollars
($10,000), one-half of which has been paid prior to this date and one-half of
which shall be paid directly from the proceeds of the First
Closing.
(iv) On
each Closing Date, the Company shall issue to the Buyer two million five hundred
thousand (2,500,000) restricted shares of Common Stock.
(v) The
Company shall pay to the Buyer a Commitment Fee equal to six percent (6%) of the
principal amount of each Debenture issued which shall be paid directly from the
proceeds of the Closing at which such Debenture is issued.
(vi) The
Company shall pay to the Buyer a Facility Fee equal to two percent (2%) of the
principal amount of each Debenture issued which shall be paid directly from the
proceeds of the Closing at which such Debenture is issued.
(vii) The
Company shall pay One Hundred Twenty Thousand Dollars ($120,000) of prepaid
accounting expenses to Greentree Financial Group, Inc. which shall be paid
directly from the proceeds of the First Closing.
(g) Corporate Existence.
So long as any of the Debentures remain outstanding, the Company shall not
directly or indirectly consummate any merger, reorganization, restructuring,
reverse stock split consolidation, sale of all or substantially all of the
Company’s assets or any similar transaction or related transactions (each such
transaction, an “Organizational
Change”) unless, prior to the consummation an Organizational Change, the
Company obtains the written consent of the Buyer . In the case of any
Organizational Change, the Company will make appropriate provision with respect
to such holders’ rights and interests to insure that the provisions of this
Section 4(g) will thereafter be applicable to the Debentures.
(h) Transactions With
Affiliates. So long as any Debentures are outstanding, the Company shall
not, and shall cause each of its subsidiaries not to, enter into, amend, modify
or supplement, or permit any subsidiary to enter into, amend, modify or
supplement any agreement, transaction, commitment, or arrangement with any of
its or any subsidiary’s officers, directors, persons who were officers or
directors at any time during the previous two (2) years, stockholders who
beneficially own five percent (5%) or more of the Common Stock, or Affiliates
(as defined below) or with any individual related by blood, marriage, or
adoption to any such individual or with any entity in which any such entity or
individual owns a five percent (5%) or more beneficial interest (each a “Related Party”),
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any investment in an Affiliate of the
Company, (c) any agreement, transaction, commitment, or arrangement
on an arms-length basis on terms no less favorable than terms which would have
been obtainable from a person other than such Related Party, (d) any agreement
transaction, commitment, or arrangement which is approved by a majority of the
disinterested directors of the Company, for purposes hereof, any director who is
also an officer of the Company or any subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. “Affiliate” for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. “Control” or “controls” for
purposes hereof means that a person or entity has the power, direct or indirect,
to conduct or govern the policies of another person or entity.
(i) Transfer
Agent. The Company covenants and agrees that, in the event
that the Company’s agency relationship with the transfer agent should be
terminated for any reason prior to a date which is two (2) years after the
Closing Date, the Company shall immediately appoint a new transfer
agent.
(j) Restriction on Issuance of
the Capital Stock. So long as any of the principal of or interest on the
Debenture remains unpaid, the Company shall not, without the prior written
consent of the Buyer, (i) issue or sell shares of Common Stock or Preferred
Stock without consideration or for a consideration per share less than the bid
price of the Common Stock determined immediately prior to its issuance provided
that upon such sale with Buyer’s consent, the Fixed Conversion Price in the
Debentures shall be reset to an amount equal to eighty-five percent of such
sales price (the “Reset Price”) if such Reset Price would be lower than the then
current Fixed Conversion Price, (ii) issue or sell any warrant, option, right,
contract, call, or other security instrument granting the holder thereof, the
right to acquire Common Stock without consideration or for a consideration less
than such Common Stock’s bid price value determined immediately prior to it’s
issuance, (iii) enter into any security instrument granting the holder a
security interest in any and all assets of the Company or any subsidiary of the
Company (whether now owned or acquired in the future while the Debentures are
outstanding) unless such security interest is junior to the security interest
held by the Holder hereunder and under the Security Agreement and in no way or
manner diminishes Holder’s rights hereunder or under the Security Agreement,,
(iv) permit any subsidiary of the Company (whether now owned or acquired in the
future while the Debentures are outstanding) to enter into any security
instrument granting the holder a security interest in any and all assets of such
subsidiary or (v) file any registration statement on Form
S-8. Notwithstanding anything to the contrary herein or in any other
Transaction Document, the Company shall be permitted to issue up to seventy five
thousand dollars ($75,000) worth of Common Stock per year as compensation to key
employees.
(k) Restriction on “Short”
Position. Neither the Buyer nor any of its affiliates have an
open short position in the Common Stock of the Company, and the Buyer agrees
that it shall not, and that it will cause its affiliates not to, engage in any
short sales with respect to the Common Stock as long as any Debentures shall
remain outstanding.
(l) Restriction on Incurring
Additional Secured Debt. The Company shall
not incur any additional secured debt or permit any subsidiary of the
Company to incur any additional secured debt without the Holder’s prior written
consent unless the security interest on such secured debt is junior to the
security interest held by the Holder hereunder and under the Security
Agreement.
5. TRANSFER AGENT
INSTRUCTIONS.
The
Company shall enter into irrevocable transfer agent instructions in
substantially the form attached hereto as Exhibit C (the “Irrevocable Transfer
Agent Instructions”) and shall pay the law offices of Xxxxx X. Xxxxxxx XX, P.A.
a cash fee of One Hundred Dollars ($100) for every occasion they act pursuant to
the Irrevocable Transfer Agent Instructions.
6. CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Debentures to the
Buyer at each Closing is subject to the satisfaction of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole
discretion:
(a) The
Buyer shall have executed this Agreement and the Transaction Documents and
delivered the same to the Company.
(b) The
Buyer shall have delivered to the Company the Purchase Price for Debentures to
be purchased at such Closing (minus the fees and expenses as set forth herein
which shall be paid directly at the Closing) by wire transfer of
immediately available U.S. funds pursuant to the wire instructions provided by
the Company.
(c) The
representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of each Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to such Closing Date.
(d) The
Company shall have filed a form UCC-1 with regard to the Pledged Property and
Pledged Collateral as detailed in the Security Agreement dated the date hereof
and provided proof of such filing to the Buyer.
(e) The
Company shall have executed such other documents as are reasonably required by
the Buyer.
7. CONDITIONS TO THE BUYER’S
OBLIGATION TO PURCHASE.
The
obligation of the Buyer hereunder to disburse to the Company the net proceeds of
the Purchase Price at each Closing is subject to the satisfaction, of each of
the following conditions, provided that these conditions are for the Buyer’s
sole benefit and may be waived by the Buyer at any time in its sole
discretion:
(a) The
Company shall have executed this Agreement the Transaction Documents and any
other documents relating to this transaction and delivered the same to the
Buyer.
(b) The
trading in the Common Shares on the over-the-counter bulletin board shall not
have been suspended for any reason.
(c) The
representations and warranties of the Company in this Agreement, the Debentures
and the Transaction Documents shall be true and correct in all material respects
(except to the extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without further
qualification) as of the date when made and as of the Closing Dates as though
made at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Dates. If requested by the Buyer, the Buyer
shall have received a certificate, executed by the President of the Company,
dated as of the respective Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer.
(d) The
Company shall have executed and delivered to the Buyer the
Debentures.
(e) The
Buyer shall have received an opinion of counsel from counsel to the Company in a
form satisfactory to the Buyer(s).
(f) The
Company shall have provided to the Buyer a certificate of good standing from the
secretary of state from the state in which the company is
incorporated.
(g) As
of the Closing Date, the Company shall have reserved out of its authorized and
unissued Common Stock, solely for the purpose of issuing shares of Common Stock
upon conversion of the Debenture, shares of Common Stock to effect the issuance
of the shares of Common Stock: (1) upon conversion of the Debenture in
accordance with the Fixed Conversion Price.
(h) The
Irrevocable Transfer Agent Instructions, in form and substance satisfactory to
Buyer, shall have been
delivered to and acknowledged in writing by the Company’s transfer
agent.
(i) The
Company shall provide to the Buyer an acknowledgement, to the satisfaction of
the Buyer, from the Company’s independent certified public accountants as to its
ability to provide all consents required in order to file a registration
statement in connection with this transaction.
(j) The
Company shall file a form UCC-1 or such other forms as may be required to
perfect the Buyer’s interest in the Pledged Collateral as detailed in the
Security Agreement dated the date hereof, providing the Buyer with a senior lien
on all of the Company’s assets and intellectual property and provided proof of
such filing to the Buyer.
(k) The
Company shall have provided the Buyer with evidence of an aggressive investor
relations program with a firm recommended by the Buyer.
(l) The
Company shall have delivered to the Buyer the shares of Common Stock required
under Section 4(f) hereof.
8. INDEMNIFICATION.
(a) In
consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Debentures hereunder, and in addition to all of the Company’s
other obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Buyer and each other holder of the Debentures,
and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Buyer Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Buyer Indemnitee is a party to the
action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Buyer Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement, the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, or the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim brought or made against
such Buyer Indemnitee by a third party and arising out of or resulting from a
material misrepresentations by the Company under this Agreement or
due to a material breach by the Company of its obligations under this Agreement
and the execution, delivery, performance or enforcement of this Agreement or any
other instrument, document or agreement executed pursuant hereto by any of the
Indemnities, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Debentures or
the status of the Buyer or holder of the Debentures, as a Buyer of
Debentures in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable
law.
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Buyer’s other obligations under this Agreement, the Buyer
shall defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Indemnitees
or any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Buyer
in this Agreement, the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby executed by the Buyer, (b)
any breach of any covenant, agreement or obligation of the Buyer contained in
this Agreement, the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby executed by the Buyer, or (c) any
cause of action, suit or claim brought or made against such Company Indemnitee
based on material misrepresentations or due to a material breach and arising out
of or resulting from the execution, delivery, performance or enforcement of this
Agreement, the Transaction Documents or any other certificate instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnities. To the extent that the foregoing undertaking by the
Buyer may be unenforceable for any reason, the Buyer shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
9. GOVERNING LAW:
MISCELLANEOUS.
(a) Governing
Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida without regard to the
principles of conflict of laws. The parties further agree that any
action between them shall be heard in Broward County, Florida and expressly
consent to the jurisdiction and venue of the State Court sitting in Broward
County, Florida and the United States District Court for the Southern District
of Florida for the adjudication of any civil action asserted pursuant to this
Paragraph.
(b) Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
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.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement,
Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyer, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.
(f) Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
|
If
to the Company, to:
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Environment
Ecology Holding Co. of China
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391
Hun Xx Xxxx, Dong Xin Street
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Xi’an
Shaanxi Province, P.R. China
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Attention: Xx.
Xxx Xxxxx Xx, President
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Telephone:
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With
a copy to:
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JPF
Securities Law, LLC
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00000
Xxxxxx Xxxxx, Xxxxx 000X
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Xxxxxxxxx,
XX 00000
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Attention: Xxxxx
X. Xxxxxxxxxxxx, Esq. LLM
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Telephone:
(000) 000-0000
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Facsimile: (000)
000-0000
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If
to the Buyer:
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Trafalgar
Capital Specialized Investment Fund
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0-00
Xxx Xxxxxxx Xxxxx
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XX
0000
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X-0000
Xxxxxxxxxx
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Attention:
Xxxxxx Xxxxx, Chairman of the Board of
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Trafalgar
Capital Sarl, General Partner
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Facsimile:
011-44-207-405-0161 and
001-786-323-1651
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With
Copy to:
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Xxxxx
X. Xxxxxxx XX, P.A.
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0000
Xxxxxxxx Xxx
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Xxxx
Xxxxx, XX 00000
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Attention: Xxx
Xxxxxxx, Esq.
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Telephone: (000)
000-0000
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Facsimile: (000)
000-0000
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If to the
Buyer, to its address and facsimile number on Schedule I, with copies to the
Buyer’s counsel as set forth on Schedule I. Each party shall provide
five (5) days’ prior written notice to the other party of any change in address
or facsimile number.
(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. Neither the Company nor any Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other party hereto.
(h) No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
(i) Survival. Unless
this Agreement is terminated under Section 9(l), the representations and
warranties of the Company and the Buyer contained in Sections 2 and 3, the
agreements and covenants set forth in Sections 4, 5 and 9, and the
indemnification provisions set forth in Section 8, shall survive the Closing for
a period of two (2) years following the date on which the Debentures are
redeemed in full. The Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Publicity. The
Company and the Buyer shall have the right to approve, before issuance any press
release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to issue any press release
or other public disclosure with respect to such transactions required under
applicable securities or other laws or regulations (the Company shall use its
best efforts to consult the Buyer in connection with any such press release or
other public disclosure prior to its release and Buyer shall be provided with a
copy thereof upon release thereof).
(k) Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby. Furthermore, the Company agrees to
execute such other documents as are reasonably required by the
Buyer. It shall be deemed a default of this Agreement and the
Transaction Documents if the Company or the referenced shareholders fail to sign
such agreements within one business day of the date of request by the
Buyer.
(l) Termination. In
the event that the Closing shall not have occurred with respect to the Buyer on
or before five (5) business days from the date hereof due to the Company’s or
the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided, however, that
if this Agreement is terminated by the Company pursuant to this Section 9(l),
the Company shall remain obligated to pay the Buyer for the legal and
documentation review fee described in Section 4(f) above.
(m) No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Buyer and the Company
have caused this Securities Purchase Agreement to be duly executed as of the
date first written above.
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COMPANY:
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ENVIRONMENT
ECOLOGY HOLDING CO. OF CHINA
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By:
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Name: Xxx
Xxxxx Li
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Title: President
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BUYER:
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TRAFALGAR
CAPITAL SPECIALIZED
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INVESTMENT
FUND, LUXEMBOURG
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By: Trafalgar
Capital Sarl
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Its: General
Partner
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By:
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Name: Xxxxxx
Xxxxx
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Title: Chairman
of the Board
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EXHIBIT
A
FORM OF REGISTRATION RIGHTS
AGREEMENT
EXHIBIT
B
FORM OF IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS
EXHIBIT
C
FORM OF SECURITY
AGREEMENT
