SECURITIES PURCHASE AGREEMENT
EXHIBIT
4.1
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of July 18, 2006, among GRC Holdings, Inc., a Texas corporation
(“GRC”)
and
its wholly-owned subsidiary, Logic Express Limited (“Logic
Express”),
and
its 82.76% owned subsidiary Shandong Missile Biologic Products Co., Ltd.
(“Shandong Missile”
or
the
“Company”),
the
selling stockholders identified on the signature pages hereto (each, a
“Selling
Stockholder,”
and
collectively, the “Selling
Stockholders”)
and the
investors identified on the signature pages hereto (each, an “Investor”
and
collectively, the “Investors”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated
thereunder, GRC and the Selling Stockholders desire to sell to each Investor,
and each Investor, severally and not jointly, desires to purchase from GRC
and
the Selling Stockholders, certain securities of GRC, as more fully described
in
this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, GRC, the Company, the Selling Stockholders and the
Investors agree as follows:
ARTICLE
1.
DEFINITIONS
1.1. Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting any Person or any of its respective properties
before or by any court, arbitrator, governmental or administrative agency,
regulatory authority (federal, state, county, local or foreign), stock market,
stock exchange or trading facility.
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144.
“Business
Day”
means
any day except Saturday, Sunday and any day which is a federal legal holiday
or
a day on which banking institutions in the State of New York are authorized
or
required by law or other governmental action to close.
“Buy-In”
has
the
meaning set forth in Section 4.1(c).
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“Closing”
means
the closing of the purchase and sale of the Securities pursuant to Article
II.
“Closing
Date”
means
the Business Day on which all of the conditions set forth in Sections 5.1 and
5.2 hereof are satisfied, or such other date as the parties may
agree.
“Closing
8-K”
means
the Form 8-K to be filed by the Company on the second Business Day following
the
Closing Date in accordance with Section 4.5.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of GRC, par value $.0001
per
share, and any securities into which such common stock may hereafter be
reclassified.
“Common
Stock Equivalents”
has the
meaning set forth in Section 4.13.
“Effective
Date”
means
the date that the initial Registration Statement required by Section 2(a) of
the
Registration Rights Agreement is first declared effective by the
Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exchange
Transaction”
shall
mean the transaction contemplated by the Share Exchange Agreement by and among
GRC, Logic Express and the shareholders of Logic Express of even date
herewith.
“GAAP”
means
U.S. generally accepted accounting principles.
“Intellectual
Property Rights”
has the
meaning set forth in Section 3.1(p).
“Investment
Amount”
means,
with respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to this Agreement.
“Investor
Deliverables”
has the
meaning set forth in Section 2.2(b).
“Investor
Party”
has the
meaning set forth in Section 4.7.
“Lien”
means
any lien, charge, encumbrance, security interest, right of first refusal 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 condition
(financial or otherwise) of the Company, taken as a whole, or (iii) an adverse
impairment to the Company’s ability to perform on a timely basis its obligations
under any Transaction Document.
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
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“Outside
Date”
means
July 21, 2006.
“Per
Unit Purchase Price”
equals
$1.8950.
“Person”
means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement,
among
the Company and the Investors, in the form of Exhibit
B
hereto.
“Registration
Statement”
means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Investors of the Shares and
the
Warrant Shares.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities”
means
the Shares, the Selling Stockholder Shares, the Warrants and the Warrant
Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Seller
Deliverables”
has the
meaning set forth in Section 2.2(a).
“Selling
Stockholder Shares” means
the
shares of Common Stock being offered and sold by the Selling Stockholder to
the
Investors hereunder in such number as is set forth below the Selling
Stockholder’s signature to this Agreement.
“Share
Delivery Date”
has
the
meaning set forth in Section 4.1(c).
"Share
Escrow Agreement"
means
the Share Escrow Agreement, dated as of the date hereof, among the Selling
Stockholders, GRC, the Investor Representative and the Escrow Agent, in the
form
of Exhibit
E
hereto.
“Shares”
means
the shares of Common Stock offered and sold to the Investors by GRC pursuant
to
this Agreement.
“Short
Sales”
include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect
stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
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“Trading
Day”
means
(i) a day on which the Common Stock is traded on a 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 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 National Market, the NASDAQ Capital Market or OTC Bulletin Board on
which
the Common Stock is listed or quoted for trading on the date in
question.
“Transaction
Documents”
means
this Agreement, the Warrants, the Registration Rights Agreement, the Share
Escrow Agreement and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Warrants”
means
the
Common Stock purchase warrants in the form of Exhibit
A,
which
are issuable to the Investors at the Closing.
“Warrant
Shares” means
the
shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
2.
PURCHASE
AND SALE
2.1. Closing.
(a) Subject
to the terms and conditions set forth in this Agreement, at the Closing GRC
and
the Selling Stockholders shall sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company and the Selling
Stockholders, the Shares, Selling Stockholder Shares and the Warrants
representing such Investor’s Investment Amount. The Closing shall take place at
the offices of Xxxxx Xxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000
on the Closing Date or at such other location or time as the parties may
agree.
(b) GRC
and
the Selling Stockholders will cooperate with one another, and will cause the
Selling Stockholder Shares to be transferred to the Investors at Closing as
part
of a single stock certificate registered in the name of the relevant Investor
that will include all Shares and Selling Stockholder Shares being acquired
by
such Investor under this Agreement. In furtherance thereof, each Selling
Stockholder will (i) deliver to GRC any certificates representing the Selling
Stockholder Shares it will be selling at the Closing, together with such other
documents (including legal opinions) as GRC may require to effect the transfer
of such shares to the name of the Investors at the Closing, including executed
stock powers and directions for GRC to effect the transfer of such shares on
its
books as of the Closing and (ii) instruct GRC to hold any certificates
representing the Selling Stockholder Shares it has received and deliver the
Selling Stockholder Shares at Closing in accordance with Section
2.2.
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2.2. Closing
Deliveries.
i)
At the
Closing, GRC and the Selling Shareholders shall deliver or cause to be delivered
to each Investor the following (the “Seller
Deliverables”):
(i) a
single
certificate evidencing the aggregate number of Shares and Selling Stockholder
Shares equal to such Investor’s Investment Amount divided by the Per Unit
Purchase Price, registered in the name of such Investor;
(ii) a
Warrant, registered in the name of such Investor, pursuant to which such
Investor shall have the right to acquire the number of shares of Common Stock
equal to 25% of the number of Shares purchased by such Investor pursuant to
Section 2.2(a)(i);
(iii) the
legal
opinions of Loeb & Loeb LLP and Xxxxx, Xxxxx & Xxxxxxx, P.C., in the
forms attached as Exhibit
C
and
Exhibit
D,
respectively, addressed to the Investors;
(iv) the
Registration Rights Agreement, duly executed by GRC; and
(v) the
Share
Escrow Agreement, duly executed by GRC, the Selling Stockholders, the Escrow
Agent and the Investor Representative.
(b) At
the
Closing, each Investor shall deliver or cause to be delivered to or upon the
instruction of GRC and the Selling Stockholders the following (the “Investor
Deliverables”):
(i) its
Investment Amount, in United States dollars and in immediately available funds,
by wire transfer to an account designated in writing by GRC and the Selling
Stockholders for such purpose; and
(ii) the
Registration Rights Agreement, duly executed by such Investor.
ARTICLE
3.
REPRESENTATIONS
AND WARRANTIES
3.1. Representations
and Warranties of the Company.
The
Company hereby makes the following representations and warranties to each
Investor:
(a) Subsidiaries.
Logic
Express has no subsidiaries other than the Company, which is its 82.76% owned
subsidiary. The Company has no direct or indirect subsidiaries. Except as
disclosed in Schedule
3.1(a),
Logic
Express owns, directly or indirectly, all of the subsidiary and joint venture
interests of the Company free and clear of any and all Liens, and all the issued
and outstanding subsidiary and joint venture interests of the Company are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights.
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(b) Organization
and Qualification.
Logic
Express and the Company are duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Other than as disclosed in the Closing 8-K, neither
Logic Express nor the Company 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 is duly qualified to conduct
its 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.
(c) Authorization;
Enforcement.
The
Company and GRC each have the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by each of the Transaction
Documents to which they are a party, and otherwise to carry out their
obligations thereunder. The execution and delivery of each of the Transaction
Documents to which they are a party by the Company and GRC and the consummation
by them of the transactions contemplated thereby have been duly authorized
by
all necessary action on the part of the Company and GRC and no further action
is
required by the Company and GRC in connection therewith. Each Transaction
Document to which they are a party has been (or upon delivery will have been)
duly executed by the Company and GRC and, when delivered in accordance with
the
terms hereof, will constitute the valid and binding obligation of the Company
and GRC enforceable against the Company and GRC 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.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby and the sale of the
Selling Stockholder Shares hereunder do not and will not (i) conflict with
or
violate any provision of Logic Express’ or the Company certificate or articles
of incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse
of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding
to
which the Company is a party or by which any property or asset of the Company
is
bound or affected, or (iii) 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 is subject (including federal and
state securities laws and regulations), or by which any property or asset of
the
Company is bound or affected.
(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 or by reason of the sale of the Selling Stockholder Shares
hereunder, other than (i) the filing with the Commission of one or more
Registration Statements in accordance with the requirements of the Registration
Rights Agreement, (ii) filings required by state securities laws, (iii) the
filing of a Notice of Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act, (iv) the filings required in accordance
with
Section 4.5 and (v) those that have been made or obtained prior to the date
of
this Agreement. To the knowledge of the Company, no Selling Stockholder is
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 any other Person in connection
with the execution, delivery and performance by them of the Transaction
Documents or by reason of the sale of the Selling Stockholder Shares
hereunder.
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(f) Issuance
of the Securities.
The
Securities have been duly authorized and, when issued and paid for in accordance
with the Transaction Documents, will be duly and validly issued, fully paid
and
nonassessable, free and clear of all Liens. GRC has reserved from its duly
authorized capital stock the shares of Common Stock issuable pursuant to this
Agreement and the Warrants in order to issue the Shares and the Warrant Shares.
When issued, the Selling Stockholder Shares were duly authorized and were
validly issued, fully paid and nonassessable. The Selling Stockholders are
the
sole record owner of the Selling Stockholder Shares to be sold
hereunder.
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance
under
the Company’s various option and incentive plans, is specified in Schedule
3.1(g).
Except
as specified in Schedule
3.1(g),
no
securities of the Company are entitled to preemptive or similar rights, and
no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as specified in Schedule
3.1(g),
there
are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exchangeable for, or giving any Person any
right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which Logic Express or the
Company is or may become bound to issue additional shares of Common Stock,
or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Securities will not, immediately or with the passage
of time, obligate Logic Express or the Company to issue shares of Common Stock
or other securities to any Person (other than the Investors) and will not result
in a right of any holder of Logic Express or Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities.
(h) Financial
Statements.
The
financial statements of the Company included in the Closing 8-K comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time
of
filing. Such financial statements have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
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.
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(i) Press
Releases.
The
press releases disseminated by the Company during the twelve months preceding
the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not
misleading.
(j) Material
Changes.
Since
the date of the audited financial statements for the year ended December 31,
2005, (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables, accrued expenses and other liabilities incurred in
the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP, (iii) the Company has not altered its method of accounting or the identity
of its auditors, (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, and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information.
(k) Litigation.
There
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Securities or (ii)
if
there were an unfavorable decision, individually or in the aggregate, have
or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company, nor any director or officer thereof (in his or her capacity as such),
is or has been the subject of any Action involving a claim of violation of
or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending any investigation by the Commission involving the Company or
any
current or former director or officer of the Company (in his or her capacity
as
such).
(l) Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company.
(m) Compliance.
Neither
the Company (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 under), nor has the Company received
notice of a claim that it is in default under or that it is in violation of,
any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has been
in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters. The Company is in
compliance with all applicable effective requirements of the Xxxxxxxx-Xxxxx
Act
of 2002, as amended, and the rules and regulations thereunder that are
applicable to it.
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(n) Regulatory
Permits.
The
Company possesses all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary
to
conduct its business as currently conducted, and the Company has not received
any notice of proceedings relating to the revocation or modification of any
such
permits.
(o) Title
to Assets.
The
Company has good and marketable title in fee simple to all real property owned
by it that is material to its business and good and marketable title in all
personal property owned by it that is material to its business, in each case
free and clear of all Liens, except for Liens as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company. Any real property and
facilities held under lease by the Company are held by it under valid,
subsisting and enforceable leases of which the Company is in
compliance.
(p) Patents
and Trademarks.
The
Company has, or has rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the Closing 8-K and which the
failure to so have could, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”).
The
Company has not received a written notice that the Intellectual Property Rights
used by the Company violates or infringes upon the rights of any Person. To
the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.
(q) Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company is engaged. The Company has no 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 on terms consistent with market for the
Company’s respective lines of business.
(r) Transactions
With Affiliates and Employees.
None of
the officers or directors of the Company and, to the knowledge of the Company,
none of the 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 entity in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner.
(s) Internal
Accounting Controls.
The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets
at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company is made known to the certifying officers
by
others within those entities, particularly during the period in which the
Company’s Form 10-K or 10-Q, as the case may be, is being prepared.
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(t) Solvency.
Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all
of its assets, after taking into account all anticipated uses of the cash,
would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond
its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(u) Certain
Fees.
Except
as described in Schedule
3.1(u),
no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(v) Certain
Registration Matters.
Assuming the accuracy of the Investors’ representations and warranties set forth
in Section 3.2(b)-(e), no registration under the Securities Act is required
for
the offer and sale of the Shares and Selling Stockholder Shares and Warrant
Shares by GRC and the Selling Stockholders (as applicable) to the Investors
under the Transaction Documents. Neither
the Company nor GRC nor any their respective Affiliates has directly or through
any agent (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any “security” (as defined in the Securities Act) that
is or could be integrated with the sale of the Shares or the Selling Stockholder
Shares in a manner that would require registration under the Securities Act
or
(ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) in connection
with the offering of the Shares and the Selling Stockholder Shares or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act. GRC
is
eligible to register its Common Stock for resale by the Investors under Form
S-1
promulgated under the Securities Act. Except as specified in Schedule
3.1(v),
the
Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have
not
been satisfied.
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(w) Investment
Company.
The
Company is not, and immediately following the Closing will not have become,
an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
(x) Application
of Takeover Protections.
The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable
to
the Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company’s issuance of the Securities and the
Investors’ ownership of the Securities.
(y) No
Additional Agreements.
The
Company does not have any agreement or understanding with any Investor with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
(z) No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, or its business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the Commission relating to an issuance and
sale
by the Company of its Common Stock and which has not been described in the
Closing 8-K.
(aa) Foreign
Corrupt Practices.
Neither
the Company, nor any director, officer, agent, employee or other Person acting
on behalf of the Company has, in the course of its actions for, or on behalf
of,
the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is
in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(bb) Tax
Status.
The
Company (i) has made or filed 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
and (iii) 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.
-11-
(cc) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that would be required to
be
disclosed by the Company in Exchange Act filings.
(dd) Environmental
Laws.
The
Company (i) is in compliance with any and all Environmental Laws (as hereinafter
defined), (ii) has received all permits, licenses or other approvals required
of
them under applicable Environmental Laws to conduct its business and (iii)
is in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to
so
comply could be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect. The term "Environmental
Laws"
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous
Materials") into
the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
(ee) Indebtedness
and Other Contracts.
Except
as disclosed in the Closing 8-K, the Company (i) has no outstanding Indebtedness
(as defined below), (ii) is not a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would result in a Material
Adverse Effect, (iii) is not in violation of any term of or in default under
any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, and (iv) is not a party to any contract, agreement
or instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. The Closing 8-K provides a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement:
(x)
"Indebtedness"
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising
under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under
any
leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease,
(G)
all indebtedness referred to in clauses (A) through (F) above secured by (or
for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.
-12-
(ff) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Investors or their agents or counsel with any information
that constitutes or could reasonably be expected to constitute material,
nonpublic information other than as set forth in the following sentence. The
Company understands and confirms that each of the Investors will rely on the
foregoing representations in effecting transactions in securities of the
Company. To the knowledge of the Company, the representations and warranties
of
the Selling Stockholders are true and correct in all material respects. All
disclosure provided to the Investors regarding the Company, its business and
the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading.
3.2. Representations
and Warranties of the Investors.
Each
Investor hereby, for itself and for no other Investor, represents and warrants
to the Company as follows:
(a) Organization;
Authority.
Such
Investor is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out its obligations thereunder. The execution, delivery and performance
by such Investor of the transactions contemplated by this Agreement has been
duly authorized by all necessary corporate or, if such Investor is not a
corporation, such partnership, limited liability company or other applicable
like action, on the part of such Investor. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Investor, and
when
delivered by such Investor in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Investor, enforceable against
it in accordance with its terms, except as such enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(b) Investment
Intent.
Such
Investor is acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or reselling
such Securities or any part thereof, without prejudice, however, to such
Investor’s right at all times to sell or otherwise dispose of all or any part of
such Securities in compliance with applicable federal and state securities
laws.
Subject to the immediately preceding sentence, nothing contained herein shall
be
deemed a representation or warranty by such Investor to hold the Securities
for
any period of time. Such Investor is acquiring the Securities hereunder in
the
ordinary course of its business. Such Investor does not have any agreement
or
understanding, directly or indirectly, with any Person to distribute any of
the
Securities.
-13-
(c) Investor
Status.
At the
time such Investor was offered the Securities, it was, and at the date hereof
it
is, and on each date on which it exercises Warrants it will be, an “accredited
investor” as defined in Rule 501(a) under the Securities Act. Such Investor is
not a registered broker-dealer under Section 15 of the Exchange
Act.
(d) General
Solicitation.
Such
Investor is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(e) Access
to Information.
Such
Investor acknowledges that it has reviewed the Closing 8-K 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 Securities; (ii) access to information about the Company and its
financial condition, results of operations, business, properties, management
and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses
or
can acquire without unreasonable effort or expense that is necessary to make
an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such Investor
or its representatives or counsel shall modify, amend or affect such Investor’s
right to rely on the truth, accuracy and completeness of the Closing 8-K and
the
Company’s representations and warranties contained in the Transaction
Documents.
(f) Certain
Trading Activities.
Such
Investor has not directly or indirectly, nor has any Person acting on behalf
of
or pursuant to any understanding with such Investor, engaged in any transactions
in the securities of GRC (including, without limitations, any Short Sales
involving GRC’s securities) since the time that such Investor was first
contacted by or on behalf of GRC or the Company regarding an investment in
the
Company. Such Investor covenants that neither it nor any Person acting on its
behalf or pursuant to any understanding with it will engage in any transactions
in the securities of GRC (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed.
(g) Independent
Investment Decision.
Such
Investor has independently evaluated the merits of its decision to purchase
Securities pursuant to the Transaction Documents, and such Investor confirms
that it has not relied on the advice of any other Investor’s business and/or
legal counsel in making such decision.
The
Company acknowledges and agrees that no Investor has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
-14-
3.3. Representations
and Warranties of the Selling Stockholders. Each Selling Stockholder for itself
and no other Selling Stockholder hereby makes the following representations
and
warranties to each Investor:
(a) Enforcement.
This
Agreement has been duly executed and delivered by each Selling Stockholder
and
constitutes the valid and binding obligation of each Selling Stockholder,
enforceable against him in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
(b) No
Consents.
No
consent, approval, authorization or order of, or any filing or declaration
with,
any court or governmental agency or body or other Person is required in
connection with the consummation by each Selling Stockholder of the transactions
on its part contemplated by the Transaction Documents, except (i) filings
as may be required under Sections 13(d) and 16(a) of the Exchange Act, and
(ii) those that have been made or obtained prior to the date of this
Agreement.
(c) No
Conflicts.
The
execution, delivery and performance by each Selling Stockholder of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby do not and will not result in a breach or
violation of, or constitute a default under (with or without notice or lapse
of
time), any stockholders agreement, voting trust agreement, pledge registration
rights agreement or other agreement or instrument to which such Selling
Stockholder or any of its properties are bound or affected, and will not violate
or conflict with any judgment, decree or order of any court or other
governmental agency or any law, rule or regulation applicable to such Selling
Stockholder, in each case such as could not have or result in a Material Adverse
Effect.
(d) Certain
Registration Matters.
Assuming the accuracy of the Investors’ representations and warranties set forth
in Sections 3.2(b)-(d), no registration under the Securities Act is required
for
the purchase and sale of the Selling Stockholder Shares to the Investors
hereunder.
(e) Good
and Marketable Title.
Each
Selling Stockholder is the sole lawful record and sole beneficial owner of
all
of the Selling Stockholder Shares to be sold by it hereunder. Such Selling
Stockholder has good and marketable title to the Selling Stockholder Shares
to
be sold by it hereunder, free and clear of any Liens, except for restrictions
on
subsequent transfer imposed by the securities laws. Upon consummation of the
Closing, the Investors will have good and marketable title to the Selling
Stockholder Shares purchased by them, free and clear of all Liens created by
or
through such Selling Stockholder.
(f) Certain
Fees.
Except
as described in Schedule
3.3(f),
no
brokerage or finder's fees or commissions are or will be payable by the Selling
Stockholders to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
-15-
(g) No
Additional Agreements.
The
Selling Stockholders do not have any agreement or understanding with any
Investor or with the Company or GRC with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
ARTICLE
4.
OTHER
AGREEMENTS OF THE PARTIES
4.1.
(a) Securities
may only be disposed of in compliance with state and federal securities laws.
In
connection with any transfer of the Securities other than pursuant to an
effective registration statement, to GRC, to an Affiliate of an Investor or
in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to GRC an opinion of counsel selected
by the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities
Act.
(b) Certificates
evidencing the Securities will contain the following legend, until such time
as
they are not required under Section 4.1(c):
[NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
-16-
GRC
acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities pursuant to a bona
fide margin agreement in connection with a bona fide margin account and, if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Securities to the pledgees or secured parties.
Such
a pledge or transfer would not be subject to approval or consent of GRC and
no
legal opinion of legal counsel to the pledgee, secured party or pledgor shall
be
required in connection with the pledge, but such legal opinion may be required
in connection with a subsequent transfer following default by the Investor
and
the transferee of the pledge. No notice shall be required of such pledge. At
the
appropriate Investor’s expense, GRC will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities 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.
(c) Certificates
evidencing Shares and Warrant Shares shall not contain any legend (including
the
legend set forth in Section 4.1(b)): (i) if such
Shares or Warrant Shares are registered for resale under the Securities
Act,
or (ii)
following a sale or transfer of such Shares or Warrant Shares pursuant to Rule
144 (assuming the transferee is not an Affiliate of GRC), or (iii) such Shares
or Warrant Shares are eligible for sale under Rule 144(k) or (iv) in
connection with a sale, assignment or other transfer, such Investor provides
GRC
with an opinion of counsel, in a form reasonably acceptable to GRC, to the
effect that such sale or transfer of the Shares or Warrant Shares may be made
without registration under the applicable requirements of the Securities
Act.
If an
Investor shall make a sale or transfer of Shares or Warrant Shares either (x)
pursuant to Rule 144 or (y) pursuant to a registration statement and in each
case shall have delivered to GRC or GRC’s transfer agent the certificate
representing Shares or Warrant Shares containing a restrictive legend which
are
the subject of such sale or transfer
and a representation letter in customary form (the
date of
such sale or transfer and Share or Warrant Share, as the case may be, delivery
being the “Share
Delivery Date”)
and (1)
GRC shall fail to deliver or cause to be delivered to such Investor a
certificate representing such Shares or Warrant Shares that is free from all
restrictive or other legends by the third Trading Day following the Share
Delivery Date and (2) following such third Trading Day after the Share Delivery
Date and prior to the time such Shares or Warrant Shares are received free
from
restrictive legends, the Investor, or any third party on behalf of such
Investor, purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Investor of such Shares
or Warrant Shares (a "Buy-In"),
then
GRC shall pay in cash to the Investor (for costs incurred either directly by
such Investor or on behalf of a third party) the amount by which the total
purchase price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceed the proceeds received by such Investor
as
a result of the sale to which such Buy-In relates. The Investor shall provide
GRC written notice indicating the amounts payable to the Investor in respect
of
the Buy-In.
4.2. Furnishing
of Information.
As long
as any Investor owns the Securities, GRC covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by GRC after the date hereof pursuant to the
Exchange Act. As long as any Investor owns Securities, if GRC is not required
to
file reports pursuant to such laws, it will prepare and furnish to the Investors
and make publicly available in accordance with Rule 144(c) such information
as
is required for the Investors to sell the Shares and Warrant Shares under Rule
144. GRC further covenants that it will take such further action as any holder
of Securities may reasonably request, all to the extent required from time
to
time to enable such Person to sell the Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
-17-
4.3. Integration.
GRC
shall not, and shall use its best efforts to ensure that no Affiliate of GRC
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate
in
respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the
Securities to the Investors, or that would be integrated with the offer or
sale
of the Securities for purposes of the rules and regulations of any Trading
Market in a manner that would require stockholder approval of the sale of the
securities to the Investors.
4.4. Subsequent
Registrations.
Other
than pursuant to the Registration Statement, prior to the Effective Date, GRC
may not file any registration statement (other than on Form S-8) with the
Commission with respect to any securities of GRC.
4.5. Securities
Laws Disclosure; Publicity.
By 9:00
a.m. (New York time) on the Trading Day following the Closing Date, the Company
shall issue a press release disclosing the transactions contemplated hereby
and
the Closing. On the second Business Day following the Closing Date GRC will
file
a Current Report on Form 8-K disclosing the material terms of the Transaction
Documents (and attach as exhibits thereto the Transaction Documents) and the
Closing. In addition, GRC will make such other filings and notices in the manner
and time required by the Commission and the Trading Market on which the Common
Stock is listed. Notwithstanding the foregoing, GRC shall not publicly disclose
the name of any Investor, or include the name of any Investor in any filing
with
the Commission (other than the Registration Statement and any exhibits to
filings made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or Trading Market,
without the prior written consent of such Investor, except to the extent such
disclosure is required by law or Trading Market regulations.
4.6. Limitation
on Issuance of Future Priced Securities.
During
the six months following the Closing Date, GRC shall not issue any “Future
Priced Securities” as such term is described by NASD IM-4350-1.
4.7. Indemnification
of Investors. In addition to the indemnity provided in the Registration Rights
Agreement, the Company and each Selling Stockholder hereby agree to the
following indemnification of the Investors:
(a) The
Company will indemnify and hold the Investors and their respective directors,
officers, shareholders, partners, employees and agents (each, an "Investor
Party")
harmless from any and all losses that any such Investor Party may suffer or
incur as a result of or relating to any misrepresentation, breach or inaccuracy
of any representation, warranty, covenant or agreement made by the Company
in
any Transaction Document. In addition to the indemnity contained herein, the
Company will reimburse each Investor Party for its reasonable legal and other
expenses (including the cost of any investigation, preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred.
-18-
(b) Each
Selling Stockholder will severally and not jointly indemnify and hold each
of
the Company and each Investor Party harmless from any and all losses that the
Company or any such Investor Party may suffer or incur as a result of or
relating to any misrepresentation, breach or inaccuracy of any representation,
warranty, covenant or agreement made by such Selling Stockholder in any
Transaction Document. In addition, such Selling Stockholder will reimburse
each
of the Company and each Investor Party for its reasonable legal and other
expenses (including the cost of any investigation, preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred.
Except
as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 4.7 shall be the same as those set
forth in Section 5 of the Registration Rights Agreement.
4.8. Non-Public
Information.
GRC,
the Company and the Selling Stockholders covenant and agree that neither they
nor any other Person acting on their behalf will provide any Investor or its
agents or counsel with any information that GRC or the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use
of
such information. GRC, the Company and the Selling Stockholders understand
and
confirm that each Investor shall be relying on the foregoing representations
in
effecting transactions in securities of GRC.
4.9. Listing
of Securities.
GRC
agrees, (i) if GRC applies to have the Common Stock traded on any other Trading
Market, it will include in such application the Shares and Warrant Shares,
and
will take such other action as is necessary or desirable to cause the Shares
and
Warrant Shares to be listed on such other Trading Market as promptly as
possible, and (ii) it will take all action reasonably necessary to continue
the
listing and trading of its Common Stock on a Trading Market and will comply
in
all material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.
4.10. Use
of
Proceeds.
GRC
will use the net proceeds from the sale of the Shares hereunder for working
capital purposes and in accordance with Section 4.14 herein, and not for the
satisfaction of any portion of its debt (other than payment of trade payables
and accrued expenses in the ordinary course of its business and consistent
with
prior practices), or to redeem any Common Stock or Common Stock
Equivalents.
4.11. Make
Good
Escrow Arrangement. Xx. XX Xxx Xxxx and Xx. XXXX Xxx Xxxx shall escrow 4,280,000
shares (the “Make
Good Shares”)
of
GRC's common stock so that (a) if the audited consolidated financial statements
of GRC, prepared in accordance with GAAP, do not reflect at least $4,819,500
of
after-tax net income or $5,823,465 of after-tax net income before the minority
interest for the fiscal year ending December 31, 2006, one-half of the Escrow
Shares will be distributed on a pro rata basis to the Investors and (b) if
the
audited consolidated financial statements of GRC, prepared in accordance with
GAAP, do not reflect at least $8,302,000 of after-tax net income or $10,031,416
of after-tax net income before the minority interest for the fiscal year ending
December 31, 2007, the second-half of the Escrow Shares will be distributed
on a
pro rata basis to the Investors.
If
required, the appropriate number of Escrow Shares will be delivered to the
Investors within ten (10) Business Days of the date the audit report for the
applicable period is delivered to the Investor Representative (such delivery
of
the financial statements referenced in (a) and (b) above to the Investor
Representative shall be no later than March 31, 2007 and March 31, 2008,
respectively), otherwise, if GRC has met the applicable threshold, the
appropriate number of Escrow Shares shall be returned to Xx. XX Xxx Xxxx and
Xx.
XXXX Xxx Xxxx within such ten (10) Business Day period. The Investors hereby
appoint Lane Capital Markets, LLC to act as the Investors Representative in
connection with the Share Escrow Agreement entered into for the purpose of
effectuating this provision. The Investors Representative’s sole responsibility
shall be to review the audited financial statements of GRC to determine whether
any Escrow Shares should be distributed.
-19-
4.12. Investor
Relations. GRC covenants that prior to October 31, 2006 it will hire an investor
relations firm acceptable to Pinnacle China Fund, L.P.
4.13. Additional
Issuances of Securities.
For
purposes of this Section 4.13, the following definitions shall
apply.
"Convertible
Securities"
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for shares of Common
Stock.
"Options"
means
any rights, warrants or options to subscribe for or purchase shares of
Common
Stock or
Convertible Securities.
"Common
Stock Equivalents"
means,
collectively, Options and Convertible Securities.
(a) From
the
date hereof until the date that is 30 Trading Days following the Effective
Date
(plus one additional day for each Trading Day following the Effective Date
during which either (1) the Registration Statement is not effective or
(2) the prospectus forming a portion of the Registration Statement is not
available for the resale of all Registrable Securities (as defined in the
Registration Rights Agreement) required to be covered thereby) (the
"Trigger
Date"),
GRC
will not, directly or indirectly, offer, sell, grant any option to purchase,
or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life
and
under any circumstances, convertible into or exchangeable or exercisable for
shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "Subsequent
Placement").
(b) From
the
Trigger Date until the second anniversary of the Effective Date (plus
one
additional day for each Trading Day following the Effective Date during which
either (1) the Registration Statement is not effective or (2) the
prospectus forming a portion of the Registration Statement is not available
for
the resale of all Registrable Securities (as defined in the Registration Rights
Agreement) required to be covered thereby),
GRC
will not, directly or indirectly, effect any Subsequent Placement unless GRC
shall have first complied with this Section 4.13.
-20-
(c) GRC
shall
deliver to each Investor who purchased at least $1,000,000 of Securities
hereunder (each, an "Eligible
Buyer")
with a
written notice (the "Offer
Notice")
of any
proposed or intended issuance or sale or exchange (the "Offer")
of the
securities being offered (the "Offered
Securities")
in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they
are to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with such Eligible Buyers at least 50% of the Offered Securities,
allocated among such Eligible Buyers (a) based on such Eligible Buyer's pro
rata
portion of the total Investment Amount hereunder by Eligible Buyers (the
"Basic
Amount"),
and
(b) with respect to each Eligible Buyer that elects to purchase its Basic
Amount, any additional portion of the Offered Securities attributable to the
Basic Amounts of other Eligible Buyers as such Eligible Buyer shall indicate
it
will purchase or acquire should the other Eligible Buyers subscribe for less
than their Basic Amounts (the "Undersubscription
Amount"),
which
process shall be repeated until the Investors shall have an opportunity to
subscribe for any remaining Undersubscription Amount.
(d) To
accept
an Offer, in whole or in part, such Eligible Buyer must deliver a written notice
to GRC prior to the end of the fifth (5th)
Business Day after such Eligible Buyer's receipt of the Offer Notice (the
"Offer
Period"),
setting forth the portion of such Eligible Buyer's Basic Amount that such
Eligible Buyer elects to purchase and, if such Eligible Buyer shall elect to
purchase all of its Basic Amount, the Undersubscription Amount, if any, that
such Eligible Buyer elects to purchase (in either case, the "Notice
of Acceptance").
If
the Basic Amounts subscribed for by all Eligible Buyers are less than the total
of all of the Basic Amounts, then each Eligible Buyer who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided,
however,
that if
the Undersubscription Amounts subscribed for exceed the difference between
the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available
Undersubscription Amount"),
each
Eligible Buyer who has subscribed for any Undersubscription Amount shall be
entitled to purchase only that portion of the Available Undersubscription Amount
as the Basic Amount of such Eligible Buyer bears to the total Basic Amounts
of
all Eligible Buyers that have subscribed for Undersubscription Amounts, subject
to rounding by GRC to the extent its deems reasonably necessary.
(e) GRC
shall
have ten (10) Business Days from the expiration of the Offer Period above to
(i)
offer, issue, sell or exchange all or any part of such Offered Securities as
to
which a Notice of Acceptance has not been given by the Eligible Buyers (the
"Refused
Securities"),
but
only to the offerees described in the Offer Notice (if so described therein)
and
only upon terms and conditions (including, without limitation, unit prices
and
interest rates) that are not more favorable to the acquiring person or persons
or less favorable to GRC than those set forth in the Offer Notice and (ii)
to
publicly announce (a) the execution of such Subsequent Placement Agreement
(as
defined below), and (b) either (x) the consummation of the transactions
contemplated by such Subsequent Placement Agreement or (y) the termination
of
such Subsequent Placement Agreement, which shall be filed with the Commission
on
a Current Report on Form 8-K with such Subsequent Placement Agreement and any
documents contemplated therein filed as exhibits thereto.
-21-
(f) In
the
event GRC shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in this Section 4.13),
then
each Eligible Buyer may, at its sole option and in its sole discretion, reduce
the number or amount of the Offered Securities specified in its Notice of
Acceptance to an amount that shall be not less than the number or amount of
the
Offered Securities that such Eligible Buyer elected to purchase pursuant to
Section 4.13(d) above multiplied by a fraction, (i) the numerator of which
shall
be the number or amount of Offered Securities GRC actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to Eligible
Buyers pursuant to Section 4.13(d) above prior to such reduction) and (ii)
the
denominator of which shall be the original amount of the Offered Securities. In
the event that any Eligible Buyer so elects to reduce the number or amount
of
Offered Securities specified in its Notice of Acceptance, GRC may not issue,
sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Eligible Buyers in accordance with Section 4.13(c) above.
(g) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Eligible Buyers shall acquire from GRC, and GRC shall issue
to
the Eligible Buyers, the number or amount of Offered Securities specified in
the
Notices of Acceptance, as reduced pursuant to Section 4.13(f) above if the
Eligible Buyers have so elected, upon the terms and conditions specified in
the
Offer. The purchase by the Eligible Buyers of any Offered Securities is subject
in all cases to the preparation, execution and delivery by GRC and the Eligible
Buyers of a purchase agreement relating to such Offered Securities reasonably
satisfactory in form and substance to the Eligible Buyers and their respective
counsel.
(h) Any
Offered Securities not acquired by the Eligible Buyers or other persons in
accordance with Section 4.13(g) above may not be issued, sold or exchanged
until
they are again offered to the Eligible Buyers under the procedures specified
in
this Agreement.
(i) In
exchange for GRC’s willingness to agree to these procedures, each Eligible Buyer
hereby irrevocably agrees that it will hold in strict confidence any and all
Offer Notices, the information contained therein, and the fact that GRC is
contemplating a Subsequent Placement, unless it notifies GRC in writing that
it
no longer desires to receive Offer Notices.
4.14. Capital
Deficit. Within 3 Trading Days of the Closing Date, the Company shall have
been
paid the remaining registered capital deficit of RMB 26,400,000. Logic Express
shall provide the Investors with evidence that such registered deficit has
been
paid by providing a Capital Verification Report and a new Business License
on or
before July 31, 2006.
4.15. Obligations
of the Company. GRC shall cause the Company to satisfy its obligations under
the
Transaction Documents.
4.16. No
Non-US
Reincorporation. For so long as the Investors own at least 10% of the Securities
purchased by them hereunder, GRC shall not change its jurisdiction of
incorporation to any jurisdiction other than one of the fifty United States
without the approval of Investors representing at least 75% of the aggregate
Investment Amount.
-22-
ARTICLE
5.
CONDITIONS
PRECEDENT TO CLOSING
5.1. Conditions
Precedent to the Obligations of the Investors to Purchase Securities.
The
obligation of each Investor to acquire Securities at the Closing is subject
to
the satisfaction or waiver by such Investor, at or before the Closing, of each
of the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of GRC, Logic Express and the Company contained
herein shall be true and correct in all material respects as of the date when
made and as of the Closing as though made on and as of such date;
(b) Performance.
Each of
GRC, the Company and the Selling Stockholders 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) Exchange
Transaction.
The
Exchange Transaction shall have been completed.
(d) 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;
(e) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably could have or result in a Material Adverse
Effect;
(f) No
Suspensions of Trading in Common Stock; Listing.
Trading
in the Common Stock shall not have been suspended by the Commission or any
Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding
the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for trading
on
a Trading Market; and
(g) Deliverables.
GRC and
the Selling Stockholders shall have delivered the Seller Deliverables in
accordance with Section 2.2(a).
5.2. Conditions
Precedent to the Obligations of GRC and the Selling Stockholders to sell
Securities.
The
obligation of GRC and the Selling Stockholders to sell Securities at the Closing
is subject to the satisfaction or waiver by GRC and the Selling Stockholders,
at
or before the Closing, of each of the following conditions:
-23-
(a) Representations
and Warranties.
The
representations and warranties of each Investor contained herein shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made on and as of such date;
(b) Performance.
Each
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or
prior to the Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents; and
(d) Investors
Deliverables.
Each
Investor shall have delivered its Investors Deliverables in accordance with
Section 2.2(b).
ARTICLE
6.
MISCELLANEOUS
6.1. Fees
and
Expenses.
Each
party shall pay the fees and expenses of its advisers, counsel, accountants
and
other experts, if any, and all other expenses incurred by such party incident
to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents. GRC shall pay all stamp and other taxes and duties levied
in connection with the sale of the Shares.
6.2. Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.
6.3. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 6:30 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, 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
GRC, the Company,
or
Logic
Express:
Xx.
00
Xxxx Xxxxxx Xxxx
Xx’ian
City, Xxxxxxxx Xxxxxxxx
X.X.
000000, Xxxxx
Attention:
Xxxxxxx Xx
-24-
With
a
copy to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxxx X. Xxxxxxxx, Esq.
If
to a
Selling
Stockholder:
To
the
address set forth under such Selling Stockholder’s name
on
the signature pages hereof;
If
to an
Investor: To
the
address set forth under such Investor’s name on the signature pages
hereof;
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
6.4. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by GRC and the Investors holding a majority of the Shares.
In
addition, Sections 3.3, 4.7(b) and Article VI may not be waived or amended
except in a written instrument signed by the Investors holding a majority of
the
Shares, the Company and the Selling Stockholder. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall
be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor
shall any delay or omission of either party to exercise any right hereunder
in
any manner impair the exercise of any such right. No consideration shall be
offered or paid to any Investor to amend or consent to a waiver or modification
of any provision of any Transaction Document unless the same consideration
is
also offered to all Investors who then hold Shares.
6.5. Termination.
This
Agreement may be terminated prior to Closing:
(a) by
written agreement of the Investors and GRC;
and
(b) by
GRC,
the Selling Stockholder (as to itself but no other Selling Stockholder), or
an
Investor (as to itself but no other Investor) upon written notice to the other,
if the Closing shall not have taken place by 6:30 p.m. Eastern time on the
Outside Date; provided,
that
the right to terminate this Agreement under this Section 6.5(b) shall not
be available to any Person whose failure to comply with its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such time.
In
the
event of a termination pursuant to this Section, GRC shall promptly notify
all
non-terminating Investors. Upon a termination in accordance with this Section
6.5, GRC, terminating Selling Stockholder(s) or terminating Investor(s), as
applicable, shall not have any further obligation or liability (including as
arising from such termination) to any other party and no Investor will have
any
liability to any other Investor under the Transaction Documents as a result
therefrom.
-25-
6.6. Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
6.7. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. Neither GRC nor the Selling Stockholders
may assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investors. Any Investor may assign any or all
of
its rights under this Agreement to any Person to whom such Investor assigns
or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof
that
apply to the “Investors.”
6.8. No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Section 4.7 (as to each Investor Party).
6.9. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each of GRC, the Investors and the
Selling Stockholders 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 of GRC, the Investors and the Selling Stockholders
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each of GRC, the Investors and the Selling Stockholders 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 of GRC, the Investors and the Selling
Stockholders hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If any party shall commence a Proceeding to enforce any provisions
of a
Transaction Document, then the prevailing party in such Proceeding shall be
jointly and severally reimbursed by the adverse party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.
-26-
6.10. Survival.
The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.
6.11. Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
6.12. Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.13. Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Investor
exercises a right, election, demand or option under a Transaction Document
and
GRC does not timely perform its related obligations within the periods therein
provided, then such Investor may rescind or withdraw, in its sole discretion
from time to time upon written notice to GRC, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and
rights.
6.14. Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, GRC 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 GRC of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities. If a
replacement certificate or instrument evidencing any Securities is requested
due
to a mutilation thereof, GRC may require delivery of such mutilated certificate
or instrument as a condition precedent to any issuance of a
replacement.
6.15. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Investors, GRC and the Selling
Stockholders will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action
for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
-27-
6.16. Payment
Set Aside.
To the
extent that GRC or any Selling Stockholder makes a payment or payments to any
Investor pursuant to any Transaction Document or an Investor enforces or
exercises its rights thereunder, and such payment or payments or the proceeds
of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to GRC or such
Selling Stockholder, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
6.17. Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under any Transaction Document are several and
not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by
such
Investor independently of any other Investor. Nothing contained herein or in
any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. Each of the Company and each Selling Stockholder
acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple
Investors and not because it was required or requested to do so by any
Investor.
6.18. Limitation
of Liability.
Notwithstanding anything herein to the contrary, each of GRC and each Selling
Stockholder acknowledges and agrees that the liability of an Investor arising
directly or indirectly, under any Transaction Document of any and every nature
whatsoever shall be satisfied solely out of the assets of such Investor, and
that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities
of
such Investor.
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-28-
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.
GRC
HOLDINGS, INC.
By:
/s/ Xxxxxxx Xx
Name:
Xxxxxxx Xx
Title:
CEO
LOGIC EXPRESS
LIMITED
By:
/s/ Xxx Xxxx Li
Name:
Xxx Xxxx Li
Title:
Legal Representative
SHANDONG
MISSILE BIOLOGIC PRODUCTS CO., LTD.
By:_____________________________________
Name:
Title:
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-29-
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.
SELLING
STOCKHOLDER
/s/ Chan,
Xxx Xxxx
Name: Chan,
Xxx
Xxxx
Tax
ID
No.: N/A
NUMBER
OF SELLING STOCKHOLDER SHARES
_________1,040,000_______________________
ADDRESS
FOR NOTICE
Street:
Xxxx
00X, Xxxxx 00, Xxxxxxx Xxxxxxxxx
Xxxx/Xxxxx/Xxx:
Xxxxx
Xxxxx, Xxxx Xxxx
Tel:_____________________________________
Fax:_____________________________________
SELLING
STOCKHOLDER
/s/
Xxx Xxxx Li
Name: Li,
Xxx
Xxxx
Tax
ID
No.: N/A
NUMBER
OF SELLING STOCKHOLDER SHARES
_______1,040,000_________________________
ADDRESS
FOR NOTICE
Street:
Xxxx
00X, Xxxxxxx Xxxxxxxx, 00 Xxxxxx Xxxxxx
Xxxx/Xxxxx/Xxx:
Xxxxxx
Xxx, Xxxx Xxxx
Tel:_____________________________________
Fax:_____________________________________
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SIGNATURE
PAGES FOR INVESTORS FOLLOW]
-30-
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.
Pinnacle
China Fund LP
By:
/s/ Xxxxx
Xxxx
Name: Xxxxx
Xxxx
Title: Principle
Investment
Amount: $4,000,000
Tax
ID
No.:
ADDRESS
FOR NOTICE
Street:
0000
Xxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxx/Xxxxx/Xxx:
Xxxxx, Xxxxx 00000-0000
Attention:
Xxxxx
Xxxx
Tel:
000-000-0000
Fax: 000-000-0000
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:
Banc of America Securities
Street:
000 Xxxx Xx., Xxx 0000
Xxxx/Xxxxx/Xxx:
Xxxxxx ,XX 75202
Attention:
Xxxxx Xxxxx
Tel:
000-000-0000
-31-
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.
JayHawk
China Fund “Cayman LTD”
By:
/s/ Xxxxxxx
Xxxxxxx
Name: Xxxxxxx
Xxxxxxx
Title: Chief
Financial Officer
Investment
Amount: $3,000,000
Tax
ID
No.: 00-0000000
ADDRESS
FOR NOTICE
Street:8201
Xxxxxxx Xxxx, Xxxxx 000
Xxxx/Xxxxx/Xxx:Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx
Xxxxxxx
Tel:_____________________________________
Fax:_____________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_____________________________________
Street:___________________________________
City/State/Zip:_____________________________
Attention:________________________________
Tel:_____________________________________
-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.
Xxxxxx
Bay Fund LP
By:
/s/ Xxxx
Xxxx
Name: Xxxx
Xxxx
Title: Principle
& Portfolio Manager
Investment
Amount: $500,000
Tax
ID
No.:
ADDRESS
FOR NOTICE
Street:120
Xxxxxxxx, 00xx
xxxxx
Xxxx/Xxxxx/Xxx:Xxx
Xxxx, XX 00000
Attention:Xxxx
Xxxx
Tel:
000-000-0000
Fax: 000-000-0000
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_____________________________________
Street:___________________________________
City/State/Zip:_____________________________
Attention:________________________________
Tel:_____________________________________
-33-
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.
Capital
Ventures International, by
Heights
Capital Management, Inc.
By:
/s/ Xxxxxx
Xxxxxxxx
Name: Xxxxxx
Xxxxxxxx
Title: Investment
Manager
Investment
Amount: $610,600
Tax
ID
No.:
ADDRESS
FOR NOTICE
Street:101
California Street, Suite 3250
City/State/Zip:
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxxxx Hoe
Tel:
000-000-0000
Fax: 000-000-0000
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_____________________________________
Street:___________________________________
City/State/Zip:_____________________________
Attention:________________________________
Tel:_____________________________________
-34-
Schedule
3.1(a) - Subsidiaries of the Company
None
Schedule
3.1(g) - Capitalization of the Company
Registered
capital: RMB 87,000,000, the contributed capital is RMB 60,600,000.
Shareholders:
Logic Express Ltd.(“LOGIC”), holding 82.76% equity interest; Shandong Province
Biological Product Research Institute (“Research Institute”), holding 17.24%
equity interest.
Schedule
3.1(u) - Fees
Lane
Capital Markets, LLC: US$416,900
Schedule
3.1(v) - Registration Rights
None
Schedule
3.3(f) - Fees
Lane
Capital Markets, LLC: US$394,160
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