SECURITIES PURCHASE AGREEMENT
EXHIBIT
99.1
THIS SECURITIES PURCHASE
AGREEMENT, dated as of December 16, 2009, is entered into by
and among China Polypeptide Group, Inc. (fka Hamptons Extreme, Inc.), a Delaware
corporation (“CPGI”)
and each purchaser set forth on Schedule
A hereto (each a “Purchaser,”
and, collectively, the “Purchasers”).
RECITALS
WITNESSETH:
WHEREAS, the Company is
primarily engaged in the research and development and manufacturing and
marketing of polypeptide-based nutritional supplements and health
foods;
WHEREAS, CPGI and the
Purchasers are executing and delivering this Agreement in accordance with and in
reliance upon the exemption from securities registration for offers and sales to
“accredited investors” and non “U.S. Persons” afforded, inter alia, by
Regulation D (“Regulation
D”) and Regulation S (“Regulation
S”), respectively, as promulgated by the United States Securities and
Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “Securities
Act”), and/or Section 4(2) of the Securities Act;
WHEREAS, CPGI has requested
the Purchasers and the Purchasers have agreed to purchase from the Company
666,667 shares (the “Shares”)
of common stock, par value $0.0001 per share (the “Common
Stock”), at a purchase price of $5.40 per Share (the “Per
Share Purchase
Price”), for an aggregate purchase price of $3,600,000 (“Aggregate
Purchase Amount”), in the amounts for each Purchaser set forth in Schedule
A hereto, subject to and upon the terms and conditions of this
Agreement and acceptance of this Agreement by CPGI, on the terms and conditions
referred to herein;
WHEREAS, in connection with
the purchase of the 666,667 Shares, the Company shall grant to the Purchasers
common stock purchase warrants (the “Warrants”),
to purchase an aggregate of 333,333 shares of Common Stock (the “Warrant
Shares”), which equals the quotient of (i) the product of (a) the
Aggregate Purchase Amount, multiplied by (b) fifty (50%) percent, and divided by
(ii) $5.40. The Warrants shall be exercisable for a period of five
(5) years at an exercise price of $6.75 per Warrant Share. The number
of Warrants each Purchaser is entitled to receive is set forth on Schedule
A hereto. The form of Warrant is annexed hereto as Exhibit
A.
NOW THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. AGREEMENT
TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject
to the terms and conditions of this Agreement and the other Transaction
Agreements, (i) the Purchasers hereby agrees to purchase 666, 667 Shares at the
Per Share Purchase Price of $5.40 for the Aggregate Purchase Price of Three
Million Six Hundred Thousand and 00/100 Dollars ($3,600,000), and (ii) the
Company agrees to grant to the Purchasers Warrants to purchase 333,333 Warrant
Shares, in the amounts for each Purchaser as set forth on Schedule
A hereto.
(ii) The
purchase of the Shares and grant of the Warrants and the other transactions
contemplated hereby are sometimes referred to herein and in the other
Transaction Agreements as the purchase and sale of the Securities, and are
referred to collectively as the “Transactions”.
b. Certain
Definitions. As used herein, each of the following terms has
the meaning set forth below, unless the context otherwise requires:
“Accredited
Investor” means any person
who comes within any of the following categories, or who CPGI reasonably
believes comes within any of the following categories, at the time of the sale
of the Securities to that person:
1. Any bank as defined in section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934;
any insurance company as defined in section 2(a)(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;
2. Any private business development company
as defined in section
202(a)(22) of the
Investment Advisers Act of 1940;
3. Any organization described in
section 501(c)(3) of the
Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
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4. Any director, executive officer, or
general partner of the issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a general partner of that
issuer;
5. Any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
6. Any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level in the
current year;
7. Any trust, with total assets in excess
of $5,000,000, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as described in
Rule
506(b)(2)(ii)
and
8. Any entity in which all of the equity
owners are accredited investors.
“Affiliate”
means, with respect to a specific Person referred to in the relevant provision,
another Person who or which controls or is controlled by or is under common
control with such specified Person.
“Certificate(s)”
means the stock certificate(s) representing the Shares to be sold to the
Purchasers pursuant to this Agreement.
“Common
Stock” means the shares of common stock, par value $.0001 per share, of
CPGI.
“Company” means collectively, CPGI
and each of the Subsidiaries.
“Closing
Date” means the date of the closing of the Transactions, as provided
herein.
“Company
Control Person” means each director, executive officer, promoter, and
such other Persons as may be deemed in control of the Company pursuant to Rule
405 under the Securities Actor Section 20 of the Securities Exchange Act of
1934, amended (the “Exchange
Act”).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Holder(s)”
means the Person(s) holding the relevant Shares and Warrants at the relevant
time.
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“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
“Material
Adverse Effect” means an event or combination of events, which
individually or in the aggregate, would reasonably be expected to (w) adversely
affect the legality, validity or enforceability of the Securities or any of the
Transaction Agreements, (x) have or result in a material adverse effect on the
results of operations, assets, or condition (financial or otherwise) of the
Company, taken as a whole, (y) adversely impair the Company’s ability to perform
fully on a timely basis its obligations under any of the Transaction Agreements
or the transactions contemplated thereby, or (z) materially and adversely affect
the value of the rights granted to the Purchaser in the Transaction
Agreements.
“Person”
means any living person or any entity, such as, but not necessarily limited to,
a corporation, partnership or trust.
“Purchaser
Control Person” means each director, executive officer, promoter, and
such other persons as may be deemed in control of any Purchaser pursuant to Rule
405 under the Securities Act or Section 20 of the Exchange Act.
“Securities”
means, collectively, the Shares, the Warrants and the Warrant
Shares.
“Subsidiary”
means each of Cantix, Moneyeasy, Tallyho, Wuhan Anti-Aging and
Hapu. All such terms are defined in Section
1(e) hereof.
“Subsidiaries”
means collectively, Cantix, Moneyeasy, Tallyho, Wuhan Anti-Aging and
Hapu.
“Transaction
Agreements” means this Agreement, the Warrants and all ancillary
documents referred to in this Agreement.
“U.S.
Person” means:
i. Any
natural person resident in the United States;
ii. Any partnership or corporation organized
or incorporated under the laws of the United States;
iii. Any estate of which any executor or
administrator is a U.S. person;
iv. Any trust of which any trustee is a U.S.
person;
v. Any agency or branch of a foreign entity
located in the United States;
vi. Any non-discretionary account or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. person;
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vii. Any discretionary account or similar
account (other than an estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the United States;
and
viii. Any partnership or corporation
if:
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A.
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Organized
or incorporated under the laws of any foreign jurisdiction;
and
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B.
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Formed
by a U.S. person principally for the purpose of investing in securities
not registered under the Securities Act, unless it is organized or
incorporated, and owned, by Accredited Investors who are not natural
persons, estates or trusts
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c.
Form of
Payment; Delivery of Certificates and Warrants.
(i) The
Purchaser shall pay the Purchase Amount by delivering immediately available good
funds in United States Dollars to the Company on the Closing Date.
(ii) On
the Closing Date, CPGI shall deliver the Certificate(s) and the Warrant, duly
executed on behalf of CPGI, to each Purchaser in the amount set forth
on Schedule
A, hereto.
(iii) By
signing this Agreement, each of the Purchasers and CPGI agrees to all of the
terms and conditions of the Transaction Agreements, all of the provisions of
which are incorporated herein by this reference as if set forth in full
herein.
(iv) Neither
CPGI nor any other Person is paying any commissions in connection with the
purchase sale of the Securities.
d. Method of
Payment. Payment of the Aggregate Purchase Amount shall be
made by wire transfer of immediately available funds to an account of the
Company as provided to the Purchasers.
e. Certain
Company Disclosures.
On or
about November 13, 2009, pursuant to a Stock Transfer Agreement dated as of
November 13, 2009, by and among China Polypeptide Group, Ltd., a Nevada
corporation (“CPG”),
Cantix International Limited, a British Virgin Islands corporation (“Cantix”)
and CPGI, CPGI acquired all of the issued and outstanding capital stock of
Cantix from CPG in exchange for CPGI issuing to CPG 8,800,000 shares of Common
Stock (the “Exchange”). Following
and as a result of the Exchange (i) Cantix became a wholly-owned subsidiary of
CPGI, (ii) CPG became a stockholder of the Company, owning 88% (8,800,000
shares), of the issued and outstanding Common Stock, and (iii) all of the then
officers and directors of CPGI resigned and were replaced by persons appointed
by CPG.
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CPGI owns
100% of the issued and outstanding capital stock of Moneyeasy Industries
Limited, a Hong Kong corporation (“Moneyeasy”),
Moneyeasy owns all of the issued and outstanding capital stock of both Wuhan
Tallyho Biological Product Co., Ltd., a PRC limited company (“Tallyho”)
and Wuhan Polypeptide Anti-Aging Research and Development Co., Ltd., a PRC
limited company (“Wuhan
Anti-Aging”) and Tallyho owns all of the issued and outstanding capital
stock of Guangdong Hapu Polypeptide Biological Technology Co., Ltd., a PRC
limited company (“Hapu”).
The
Company is primarily engaged in the research and development, manufacturing and
marketing of polypeptide-based nutritional supplements and health
foods. All of the operations of the Company are conducted in the PRC
through Wuhan Anti-Aging, Tallyho and Hapu.
Effective
December 1, 2009, CPGI (i) effectuated an 8 for 1 forward stock split (the
“Forward
Split”), resulting in CPGI having 10,000,000 shares of Common Stock
issued and outstanding, of which CPG owns 8,800,000 (88%), and (ii) changed its
name (the “Name
Change”) from “Hamptons Extreme, Inc.” to “China Polypeptide Group,
Inc.” On November 19, 2009, the Company filed an “OTC Equity Issuer
Notification Form” (the “Notification
Form”), with the Financial Industry Regulatory Authority (“FINRA”)
to approve the Forward Split and the Name Change. The Company
believes FINRA will approve the Notification Form in the near
future.
FOR
A DETAILED DISCUSSION OF, AMONG OTHER ITEMS, THE EXCHANGE, THE OPERATIONS, THE
FINANCIAL CONDITION (INCLUDING ATTACHED AUDITED AND UNAUDITED FINANCIAL
STATEMENTS), AND OFFICERS AND DIRECTORS OF THE COMPANY AND RISK FACTORS RELATED
TO THE COMPANY, THE COMMON STOCK AND OTHER RELATED MATTERS, SEE CPGI’S CURRENT
REPORT ON FORM 8-K DATED NOVEMBER 13, 2009 (THE “SUPER
8-K”).
2. PURCHASER
REPRESENTATIONS, WARRANTIES, ETC.
The
Purchasers each represent and warrant to, to the best of their knowledge, and
covenant and agree with, the Company as follows:
a. Without
limiting Purchasers’ right to sell the Securities, pursuant to an effective
registration statement or otherwise in compliance with the Securities Act, the
Purchasers are purchasing the Securities for their own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution
thereof.
b. Each
Purchaser is (i) an Accredited Investor, (ii) experienced in making investments
of the kind described in this Agreement and the related documents, (iii) able,
by reason of the business and financial experience of its officers (if an
entity) and professional advisors (who are not affiliated with or compensated in
any way by the Company or any of its Affiliates or selling agents), to protect
its own interests in connection with the transactions described in this
Agreement, and the related documents, and to evaluate the merits and risks of an
investment in the Securities, and (iv) able to afford the entire loss of its
investment in the Securities.
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c. All
subsequent offers and sales of the Securities by the Purchasers shall be made
pursuant to registration of the relevant Securities under the Securities Act or
pursuant to an exemption from registration.
d. The
Purchasers understand that the Securities are being offered and sold to them in
reliance on specific exemptions from the registration requirements of the
Securities Act and state securities laws and that CPGI is relying upon the truth
and accuracy of, and the Purchasers’ compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchasers set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchasers to acquire the Securities.
e. The
Purchasers and their advisors, if any, have been furnished with or have been
given access to all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Purchaser. The Purchasers and their
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management and have received complete and satisfactory answers
to any such inquiries.
f. The
Purchasers understand that their investment in the Securities involves a high
degree of risk and have read and understood fully all of the SEC Reports
including, but not limited to, the Super 8-K including, but not limited to, all
of the Risk Factors set forth in the Super 8-K.
g. The
Purchasers understand that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities and/or the Company.
h. This
Agreement and the other Transaction Agreements to which the Purchasers are a
party, and the transactions contemplated thereby, have been duly and validly
authorized, executed and delivered on behalf of the Purchasers and are valid and
binding agreements of the Purchasers enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors’ rights generally.
i. In
addition to the Securities being sold pursuant to an exemption from the
registration requirements under Regulation D , the Securities are also being
offered and sold to the Purchasers in reliance on an exemption from the
registration requirements of the United States federal and state securities laws
under Regulation S, and that CPGI is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements, and understandings of
each Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of the Purchaser to acquire the
Securities. In this regard, each Purchaser represents and warrants to
the Company that:
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(i) The
Purchaser is not a U.S. Person and is not acquiring the
Securities for the account or benefit of a U.S. Person.
(ii) At
the time that Purchaser received this Agreement and on the date of Purchaser’s
execution and delivery of this Agreement, the Purchase was outside of the United
States.
(iii) The
Purchaser will not, during the period commencing on the date of issuance of the
Securities and ending on the first anniversary of such date, or such shorter
period as may be permitted by Regulation S or other applicable securities law
(the “Restricted
Period”), offer, sell, pledge or otherwise transfer the Shares in the
United States, or to a U.S. Person for the account or the benefit of a U.S.
Person, or otherwise in a manner that is not in compliance with Regulation
S.
(iv) After
expiration of the Restricted Period, the Purchaser will offer, sell, pledge or
otherwise transfer the Securities only pursuant to registration under the
Securities Act or an available exemption therefrom, and, in accordance with all
applicable state foreign securities laws.
(v)
Prior to the expiration of the
Restricted Period, the Purchaser will not engage in, any short selling of or any
hedging transaction with respect to the Securities.
(vi) Neither
the Purchaser nor any person acting on his behalf has engaged, nor will engage,
in any directed selling efforts to a U.S. Person with respect to the Securities,
and the Purchaser and any person acting on his behalf have complied and will
comply with the “offering restrictions” requirements of Regulation
S.
(vii) The
transactions contemplated by this Agreement have not been pre-arranged with a
buyer located in the United States or with a U.S. Person, and are not part of a
plan or scheme to evade the registration requirements of the Securities
Act.
(viii) Neither
the Purchaser nor any person acting on his behalf has undertaken or carried out
any activity for the purpose of, or that could reasonably be expected to have
the effect of, conditioning the market in the United States, its territories or
possessions, for any of the Securities. The Purchaser agrees not to
cause any advertisement of the Securities to be published in any newspaper or
periodical or posted in any public place and not to issue any circular relating
to the Securities.
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(ix) Any
resale of the Securities during the “distribution compliance period” as defined
in Rule 902(f) to Regulation S shall be made only in compliance with exemptions
from registration afforded by Regulation S. Further, any such sale of
the Securities in any jurisdiction outside of the United States will be made in
compliance with the securities laws of such jurisdiction. The
Purchaser will not offer to sell or sell the Securities in any jurisdiction
unless the Purchaser obtains all required consents, if any.
j.
Purchaser understands that CPGI is a public
company and Purchaser may receive certain non-public information regarding the
Company including, but not limited to financial information regarding the
Company’s 2009 fiscal year (collectively “Non-Public
Information”). Purchaser understands and expressly agrees to
(i) maintain in confidence such Non-Public Material and (ii) not to, trade, or
advise others to trade in the Common Stock until all such Non-Public Information
has been disseminated to the public and is publicly available through press
releases and or through SEC reports made by CPGI.
3. COMPANY REPRESENTATIONS,
ETC. CPGI represents and warrants, to the best of its
knowledge, to the Purchasers as of the date hereof and as of the Closing Date
that:
a. Status. CPGI and
each of its Subsidiaries are duly organized, validly existing and in good
standing under the laws of their respective jurisdictions, and each has the
power to own its respective properties and to carry on its business as now being
conducted. Each of such entities is duly qualified as a foreign
entity to do business and is in good standing in each jurisdiction where the
nature of the business conducted or property owned by each makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect.
b. Transaction
Agreements. This Purchase Agreement and each of the other
Transaction Agreements, and the transactions contemplated thereby, have been
duly and validly authorized by CPGI. This Agreement and the other
Transaction Agreements have been duly executed and delivered by CPGI and are
valid and binding agreements of CPGI enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors’ rights generally.
c. Non-contravention. The
execution and delivery of the Transaction Agreements by CPGI, the issuance of
the Shares and Warrants (and the Warrant Shares when issued in
accordance with the terms of the Warrant), and the consummation by CPGI of the
other transactions contemplated by the Transaction Agreements, do not and will
not conflict with or result in a breach by CPGI of any of the terms or
provisions of, or constitute a default under (i) the Certificate of
Incorporation and /or By-laws of CPGI, each as currently in effect (the “Internal
Documents”), (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which CPGI is a party or by which it or any
of its properties or assets are bound, except as herein set forth, or (iii) to
its knowledge, any existing applicable law, rule, or regulation or any
applicable decree, judgment, or order of any court, United States federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over CPGI or any of its properties or assets, except such conflict,
breach or default which would not have or result in a Material Adverse
Effect.
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d. Approvals. No
authorization, approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market or the
shareholders of CPGI is required to be obtained by CPGI for the issuance and
sale of the Shares and Warrants (and the Warrant Shares when issued in
accordance with the Warrants)to the Purchasers as contemplated by this Agreement
and the Warrants, except such authorizations, approvals and consents that have
been obtained.
e. Capitalization. As
of November 30, 2009, the authorized capital stock of CPGI
consists solely of (i) 120,000,000 shares of Common Stock of which 10,000,000
shares are and will be issued and outstanding as of the Closing Date (excluding
all Shares being sold hereunder), and (ii) 1,000,000 shares of preferred stock
(the “Preferred
Stock”), of which no shares of Preferred Stock are or will be outstanding
on the Closing Date. Other than up to the 333,333 for the Warrant
Shares issuable upon exercise of the Warrants to be issued pursuant hereto, the
Company has not reserved for issuance
any shares of Common Stock issuable upon exercise exchange and/or conversion of
issued and outstanding warrants, options, and other securities and/or any shares
of Preferred Stock. CPGI has no other securities and/or obligations
to issue other securities CPGI is not a party to, and it has no knowledge of,
any agreement restricting the voting of any shares of the capital stock of CPGI,
or restricting the transfer of the Securities.
f. Issuance of
Securities. The Warrants and the Shares (and the Warrant
Shares when issued in accordance with the Warrants), to be issued to the Purchasers at the
Closing have been duly and
validly authorized by all
necessary corporate action of CPGI and when paid for by the Purchasers in
accordance herewith and the Warrants as to the Warrant Shares will be
fully paid and
nonassessable.
g. SEC
Reports. CPGI has delivered to the Purchasers or made
available through the SEC’s XXXXX filing system true and complete copies of the
reports (the “SEC
Reports”), filed by the
Company under the Securities Act and/or the Exchange Act, including, but not
limited to, the Super 8-K, which includes the audited financial
statements of the
Company for the fiscal
years ended September
30, 2008 and
2007 (the “Audited
Financial Statements Date”)
and unaudited financial statements for the Company for the quarter ended
June 30, 2009 (the “Quarterly
Financial Statements Date”). Such audited and unaudited financial statements, are referred to
collectively as the “Financial
Statements.” The
Financial Statements complied in all material respects with the requirements of
the Exchange Act, and the rules and regulations of the SEC promulgated thereunder. Such Financial
Statements have been prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements), and fairly present in all material respects the financial
position of the Company and its Subsidiaries as of 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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h. No Material Adverse
Change. Since the Quarterly Financial Statements
Date, the Company has not experienced or suffered any Material Adverse Effect or
any event that is reasonably likely, through the passage of time or otherwise,
to result in a Material Adverse Effect. For the purposes of this
Agreement, “Material
Adverse Effect” means any
material adverse effect on the business, properties, assets, operations, results
of operations or condition (financial or otherwise) of the Company or
on the transactions
contemplated hereby.
i. No Undisclosed Events
or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its business, properties,
prospects, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.
j. Title to
Assets. Except
as disclosed in the SEC
Reports, the Company has good and marketable title to all of its
respective owned real and personal property
(collectively, the “Assets”), free and clear of any liens. All leases of the Company are valid and subsisting and in full
force and effect and neither this Agreement nor the transactions contemplated
hereby will give any party to such leases any right to terminate or modify the
leases.
k. Taxes. The Company has accurately prepared and filed all
material foreign, federal, state income and all other tax returns, reports and
declarations required by law to be paid or filed by it has paid or made provisions for the
payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the Financial Statements for all current taxes and
other charges to which the
Company is subject and
which are not currently due and payable. None of the federal income
tax returns of have been audited by the Internal Revenue Service. The
Company has no knowledge of any additional assessments, adjustments or
contingent tax liability (whether federal or state) of any nature whatsoever,
whether pending or threatened against the Company for any period, nor of any basis for any
such assessment, adjustment or contingency. The Company has complied in all material respects with
all applicable legal requirements relating to the payment and withholding of
taxes and, within the time and in the manner prescribed by law, has withheld
from wages, fees and other payments, and paid over to the proper governments or
regulatory authorities, all amounts required.
l. No Integrated
Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the offering of
the Securities pursuant to the Transaction Agreements to be integrated with prior offerings by
CPGI for purposes of the Securities Act which
would prevent CPGI
from selling the
Shares and Warrants
pursuant to Rule 506
and/or Regulation S
under the Securities Act,
or any applicable exchange-related stockholder approval provisions, nor will the
Company or any of its affiliates take any action or steps that would cause the
offering of the Shares and
Warrants to be integrated
with other offerings.
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m. No Commission or
FINRA Inquiries. To the best of the
Company’s knowledge, CPGI
is not, and has never been,
the subject of any formal or informal inquiry or investigation by the SEC or
Financial Industry
Regulatory Authority, Inc.
n. Anti-takeover
Device. CPGI does not have any outstanding
shareholder rights plan or “poison pill” or any similar
arrangement. There are no provisions of any anti-takeover or business
combination statute applicable to CPGI or its Internal Documents which would
preclude the issuance and sale of the Securities , and the consummation of the other
transactions contemplated by the Transaction Agreements.
o. Absence of Certain
Changes. Since the Quarterly Financial Statement Date,
the Company has not: (i) incurred or become subject to any
material liabilities (absolute or contingent) except liabilities incurred in the
ordinary course of business consistent with past practices; (ii) discharged or
satisfied any material lien or encumbrance or paid any material obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business consistent with past practices; (iii) declared or
made any payment or distribution of cash or other property to shareholders with
respect to its capital stock, or purchased or redeemed, or made any agreements
to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts owed to the Company
by any third party or claims of the Company against any third party,
except in the ordinary course of business consistent with past practices; (v)
suffered the loss of any material amount of existing business; (vi) made any
increases in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of their
employment.
p. Absence of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company before or
by any governmental authority or nongovernmental department, commission, board,
bureau, agency or instrumentality or any other person, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of CPGI to perform its obligations under, any of the Transaction
Agreements. The Company is not aware of any valid basis for any such
claim that (either individually or in the aggregate with all other such events
and circumstances) could reasonably be expected to have a Material Adverse
Effect. There are no outstanding or unsatisfied judgments, orders, decrees,
writs, injunctions or stipulations to which the Company is a party or by which
it or any of its properties is bound, that involve the transaction contemplated
herein or that, alone or in the aggregate, could reasonably be expect to have a
Material Adverse Effect.
q. Absence of Events of
Default. (i) The Company is not in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any material indenture, mortgage, deed of trust or other material
agreement to which it is a party or by which its property is bound, and (ii) no
event of default as defined in the respective agreement to which the Company is
a party, and no event which, with the giving of notice or the passage of time or
both, would become an event of default including any agreement, mortgage or loan
document has occurred and is continuing, which would have a Material Adverse
Effect.
12
r. Absence of Certain Company Control
Person Actions or Events. To the Company’s knowledge, none of
the following has occurred during the past three (3) years with respect to a
Company Control Person:
(1) A
petition under the federal bankruptcy laws or any state insolvency law was filed
by or against, or a receiver, fiscal agent or similar officer was appointed by a
court for the business or property of such Company Control Person, or any
partnership in which he was a general partner at or within two (2) years before
the time of such filing, or any corporation or business association of which he
was an executive officer at or within two years before the time of such
filing;
(2) Such
Company Control Person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic violations and other
minor offenses);
(3) Such
Company Control Person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise
limiting, the following activities:
(i)
acting, as an investment advisor, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”)
or engaging in or continuing any conduct or practice in connection with such
activity;
(ii) engaging
in any type of business practice; or
(iii)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;
(4) Such
Company Control Person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any federal or state authority
barring, suspending or otherwise limiting for more than sixty (60) days the
right of such Company Control Person to engage in any activity described in
paragraph (3) of this item, or to be associated with Persons engaged in any such
activity; or
13
(5) Such
Company Control Person was found by a court of competent jurisdiction in a civil
action or by the CFTC or SEC to have violated any federal or state securities
law, and the judgment in such civil action or finding by the CFTC or SEC has not
been subsequently reversed, suspended, or vacated.
s. No Undisclosed Liabilities or
Events. Except as provided in the SEC Reports, the Company has
no liabilities or obligations. No event or circumstances has occurred or exists
with respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or
disclosed.
t. Dilution. Any
equity interests issued in connection with the Transaction Agreements may have a
dilutive effect on the ownership interests of the other shareholders (and
Persons having the right to become shareholders) of CPGI. CPGI’s
executive officers and directors have studied and fully understand the nature of
the Securities being sold hereby and recognize that they have such a potential
dilutive effect.
u. Fees to Brokers, Finders and
Others. The Company has taken no action which would give rise
to any claim by any Person for brokerage commission, finder’s fees or similar
payments by Purchasers relating to the Transaction Agreements and/or the
transactions contemplated thereby. Purchasers shall have no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this paragraph that
may be due in connection with the transactions contemplated.
v. 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 businesses, except where the failure to
possess such permits could not have or reasonably be expected to result in a
Material Adverse Effect (“Material
Permits”), and the Company has not received any notice of proceedings
relating to the revocation or modification of any Material
Permit.
w. 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 necessary or material for use in
connection with its
businesses and which the
failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”). The Company has received a written notice that the
Intellectual Property Rights used by it violates or infringes upon the rights of
any Person. To the best
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 of
others.
x. Transactions with
Affiliates and Employees. Except as disclosed
in the SEC
Reports, 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, in each case in excess
of $50,000 in the aggregate.
14
y. Full Disclosure. No
statement in writing furnished by the Company to the Purchasers in connection
with the transactions contemplated herein contains any untrue statement of
material fact or omits to state a material fact necessary to make the statement
made not misleading in any material respects.
4. CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.
Each of
the Company and the Purchasers (as applicable), hereby covenants and
acknowledges as follows, which covenants and acknowledgements by the Company and
the Purchasers shall survive for a period of six (6) months following the
Closing Date:
a. Transfer
Restrictions. The Purchasers acknowledge that: (1) the
Securities have not been and are not being registered under the provisions of
the Securities Act or otherwise included in an effective registration statement,
the Securities have not been and are not being registered under
the Securities Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Purchasers shall have delivered to
CPGI an opinion of counsel, reasonably satisfactory in form, scope and substance
to CPGI, to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration; (2) any sale of
the Securities made in reliance on Rule 144 promulgated under the Act
(“Rule
144") may be made only in accordance with the terms of said Rule 144 and
further, if said Rule 144 is not applicable, any resale of such Securities under
circumstances in which the seller, or the Person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in
the Securities Act, may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC
thereunder; and (3) other than as disclosed elsewhere herein, neither CPGI nor
any other Person is under any obligation to register any of the Securities under
the Securities Act or to comply with the terms and conditions of any
exemption thereunder.
b. Restrictive
Legend. The Purchasers acknowledge and agree that, until such
time as the relevant Securities have been registered under the Securities Act
and sold in accordance with an effective registration statement or otherwise in
accordance with another effective registration statement, the certificates
representing any of the Securities shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
15
c. Filings. CPGI
undertakes and agrees to make all necessary filings if necessary in connection
with the sale of the Securities to the Purchasers under any United States laws
and regulations applicable to CPGI, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Purchasers promptly after
such filing.
d.
Publicity, Filings,
Releases, Etc. Each of the parties agrees that it will not
disseminate any information relating to the Transaction Agreements or the
transactions contemplated thereby, including issuing any press releases, holding
any press conferences or other forums, or filing any reports (collectively,
“Publicity”),
without giving the other party reasonable advance notice and an opportunity to
comment on the contents thereof. Neither party will include in any
such Publicity any statement or statements or other material to which the other
party reasonably objects, unless in the reasonable opinion of counsel to the
party proposing such statement, such statement is legally required to be
included.
e. Financial Statements and Other
Reports. The Company shall maintain a system of accounting and
keep such books, records and accounts (which shall be true and complete in all
material respects), as may be required or as may be necessary to permit the
performance of an annual audit and the preparation of financial statements in
accordance with GAAP, consistently applied.
5. CLOSING
DATE.
a. The
Closing Date shall occur on the date which is the first Business Day after each
of the conditions contemplated by Section
6 and Section
7 hereof shall have either been satisfied or been waived by the party in
whose favor such conditions run.
b. The
closing of the Transactions shall occur on the Closing Date at the offices of
the Purchaser or by electronic means and shall take place no later than 3:00
P.M., New York time, on such day or such other time as is mutually agreed upon
by the Company and the Purchaser.
6. CONDITIONS
TO CPGI’S OBLIGATION TO SELL.
The
Purchasers understand that CPGI’s obligation to sell and issue the Shares and
Warrants to the Purchasers in connection with the Transaction Agreements, to the
Purchasers on the Closing Date is conditioned upon:
a. The
execution and delivery of this Agreement by the Purchasers;
b. Delivery
by the Purchasers to CPGI of immediately available funds as payment in full of
an amount equal to the Aggregate Purchase Amount in accordance with this
Agreement;
16
c. The
accuracy on the Closing Date of the representations and warranties of the
Purchasers contained in this Agreement, each as if made on such date, and the
performance by the Purchasers on or before such date of all covenants and
agreements of the Purchasers required to be performed on or before such
date;
d. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the transactions contemplated hereby, or requiring any consent or approval which
shall not have been obtained; and
7. CONDITIONS
TO THE PURCHASERS’ OBLIGATION TO PURCHASE.
The
Company understands that the Purchasers’ obligation to purchase the Shares and
Warrants pursuant to this Agreement on the Closing Date is conditioned
upon:
a. The
execution and delivery of this Agreement and the other Transaction Agreements by
CPGI;
b. Delivery
by CPGI to the Purchasers of the Certificates and Warrants in accordance with
this Agreement or any other agreements between the parties;
c. All
matters relating to this Agreement and the other Transaction Agreements have
been approved by the Board of Directors of CPGI.
d. The
accuracy in all material respects on the Closing Date of the representations and
warranties of the Company contained in this Agreement, each as if made on such
date, and the performance by the Company on or before such date of all covenants
and agreements of the Company required to be performed on or before such
date;
e. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the transactions contemplated hereby, or in the other Transaction Agreements, or
requiring any consent or approval which shall not have been obtained;
and
f. The
delivery of such other documents as reasonably requested by the Purchasers
and/or its legal counsel.
8. INDEMNIFICATION
AND REIMBURSEMENT.
a. The
Company agrees to indemnify and hold harmless each Purchaser and each of their
respective officers, directors, employees, and agents, and each Purchaser
Control Person from and against any losses, claims, damages, liabilities or
expenses incurred (collectively, “Damages”),
joint or several, and any action in respect thereof to which the Purchaser, its
partners, Affiliates, officers, directors, employees, and duly authorized
agents, and any such Purchaser Control Person becomes subject to, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement, except to the extent such Damages result
primarily and/or arise out of any Purchaser’s failure to perform any covenant or
agreement contained in this Agreement or any Purchaser’s or its officer’s,
director’s, employee’s, agent’s or Purchaser Control Person’s gross negligence,
or bad faith .
17
b. The
Company hereby agrees that, if any Purchaser, other than by reason of a
Purchaser’s gross negligence, bad faith and/or illegal or willful misconduct (in
each case, as determined by a non-appealable judgment to such effect), (x)
becomes involved in any capacity in any action, proceeding or investigation
brought by any shareholder of the Company, in connection with or as a result of
the consummation of the transactions contemplated by this Agreement or the other
Transaction Agreements, or if any Purchaser is impleaded in any such action,
proceeding or investigation by any Person, or (y) becomes involved in any
capacity in any action, proceeding or investigation brought by the SEC, any
self-regulatory organization or other body having jurisdiction, against or
involving the Company or in connection with or as a result of the consummation
of the transactions contemplated by this Agreement or the other Transaction
Agreements, or (z) is impleaded in any such action, proceeding or investigation
by any Person, then in any such case, the Company shall indemnify, defend and
hold harmless any Purchaser from and against and in respect of all losses,
claims, liabilities, damages or expenses resulting from, imposed upon or
incurred by any Purchaser, directly or indirectly, and reimburse such Purchaser
for its reasonable legal fees incurred in connection therewith.
9. JURY TRIAL
WAIVER. The Company and the Purchaser hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.
10.
GOVERNING LAW: MISCELLANEOUS.
a. (i) This
Agreement shall be governed by and construed solely and exclusively in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby expressly and
irrevocably agree that any suit or proceeding arising directly and/or indirectly
pursuant to or under this Agreement shall be brought solely in a federal or
state court located in the City, County and State of New York. By its execution
hereof, the parties hereby covenant and irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect as
if personally served upon them in New York City. The parties hereto expressly
and irrevocably waive any claim that any such jurisdiction is not a convenient
forum for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other party hereto of all of its reasonable counsel fees and
disbursements.
18
(ii) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Agreements were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement and the other Transaction Agreements and to
enforce specifically the terms and provisions hereof and thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.
b. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
c. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
d. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
e. A
facsimile or pdf transmission of this signed Agreement shall be legal and
binding on all parties hereto.
f. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original.
g. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
h. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement thereof.
j. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
11. USE OF PROCEEDS. The net
proceeds from the sale of the Securities shall be used for general working
capital purposes of the Company, as determined by the Company.
12. NOTICES. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified;
(b) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (c) the next business day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All
communications shall be sent to the Company or the Holder at the address below
or at such address as either party hereto may designate by ten (10) days’
advance written notice to the other party hereto.
19
If to the
Company:
China
Polypeptide Group, Inc.
Xx. 00
Xxxxxxx Xxxx
Xxxxxxxx
Economic Development Xxxx
000000
Xxxxx, X.X. Xxxxx
Attention: Xxxxxxxxx
Xxxx
With a
copy, which will not constitute notice to:
Gusrae
Xxxxxx Xxxxx & Xxxxxxx PLLC
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxx X. Xxxxxxx, Esq.
If to the
Purchasers:
13. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. The Company’s and the Purchaser’s representations and
warranties herein shall survive the execution and delivery of this Agreement and
the delivery of the Certificates and shall inure to the benefit of the Purchaser
and the Company and their respective successors and assigns for a period of six
(6) months following the Closing Date.
14. PIGGYBACK
REGISTRATION RIGHTS. If CPGI shall determine to prepare and file with
the SEC a registration statement (a “Registration
Statement”), relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or there then equivalents, then CPGI shall send to each Purchaser a written notice of such determination
at least twenty (20) days prior to the filing with the SEC of any such Registration Statement and
shall include for resale
in such Registration
Statement all of
the Shares and Warrant Shares issuable upon
exercise of the Warrants then held by the Purchasers. The inclusion of such Shares
and Warrant Shares, however, is subject to any future underwriter and/or
placement agent cutbacks as well as any limitations imposed by the SEC pursuant
to Rule 415.
[SIGNATURE
PAGE TO FOLLOW]
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[SECURITIES
PURCHASE SIGNATURE PAGE]
IN
WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser and the
Company as of the date set first above written.
CHINA
POLYPEPTIDE GROUP, INC.
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