STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1
This Amendment (this "Amendment") is entered into as of December 14, 2005,
by and among Parallel Technologies, Inc., a Nevada corporation (the "Company"),
Dalian Fushi Bimetallic Manufacturing Company, Ltd., a company organized under
the laws of the People's Republic of China ("Dalian Fushi"), the persons listed
on the signature pages hereto as management of Dalian Fushi ("Management"),
Chinamerica Fund, LP, a Texas limited partnership ("CA"), and the other
investors listed on the signature pages hereto (CA and the other investors shall
be referred to individually as an "Investor" and collectively as the
"Investors"). The Investors, Dalian Fushi, Management and the Company are also
referred to individually herein as a "Party" and collectively herein as the
"Parties."
PRELIMINARY STATEMENTS
A. On December 14, 2005, the Company, Dalian Fushi, Management and the
other parties thereto entered into a Stock Purchase Agreement (the "Agreement")
pursuant to which the Company will issue and sell to the Investors, and the
Investors will subscribe for and acquire from the Company, a substantial equity
interest in the Company upon the terms and conditions set forth therein.
B. In entering into the Agreement, it was contemplated that Enable Growth
Partners, L.P. and Enable Opportunity Partners, L.P. (together "Enable") would
participate as investors. Enable has not signed the Agreement and will not be an
Investor.
C. Certain other Investors desire to change the amount of equity interests
to be received from the Company.
D. The Investors wish to proceed with an investment in the Company and
accept any new Investors. The Investors hereby agree to amend the Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
Unless otherwise set forth herein, the capitalized terms used herein shall
have the same meanings as set forth in the Agreement.
2. AMENDMENTS.
(a) Amendment to Section 2(a). Section 2(a) and Section 2(a)(i) of the
Agreement shall be deleted and the following shall be substituted therefor:
(a) Purchase and Sale of Shares. On the basis of the
representations, warranties, covenants and agreements contained
herein, and subject to the terms and conditions hereof, the Company
agrees to issue and sell to the Investors, and the Investors,
severally and not jointly, agree to purchase from the Company for an
aggregate purchase price of $11,225,000 (the "Purchase Price")
(subject to escrow pursuant to Section 2(d)):
(i) at the Closing an aggregate of 201,511.98 shares of Series
B Convertible Preferred Stock of the Company, par value $.001 per
share ("Series B"), having the rights, preferences and other terms
set forth on Exhibit A, which Series B is convertible into 3,975,521
shares of common stock of the Company, par value $.006 per share
("Common Stock") upon the occurrence of a contemplated reverse split
(or such other amount reflecting no less than 20.15% of the
outstanding voting capital stock at the time of conversion);
(b) Addition of Section 2(e). A new Section 2(e) shall hereby be added to
the Agreement to read in its entirety as follows:
(e) Additional Investors. From time to time not later than 10
days following the Closing, the Company may sell additional Shares
and/or Warrants to other investors ("Additional Investors"), at the
same price per share as the Investors, at one or more additional
closings and at such time and place as the Company and the
Additional Investors shall agree, with the prior consent of CA but
without obtaining the signature, consent or permission of any of the
other Investors, Dalian Fushi or Management. Additional Investors
may include persons or entities that are already Investors under the
Agreement or this Amendment. Additional Investors shall execute an
agreement to be bound with the Company, Dalian Fushi and Management
in a form acceptable to CA. In the event of any such sale, the
Company and CA shall revise Exhibit C accordingly.
(c) Amendment to Section 3(d). The reference to 785,858.51 shares of
Series A outstanding in Section 3(d) shall be changed to 784,575.16 shares.
(d) Addition of Section 6(o). A new Section 6(o) shall hereby be added to
the Agreement to read in its entirety as follows:
(o) Series B Certificate of Designations, Preferences and
Rights. The Company shall file an amended Series B Certificate of
Designations, Preferences and Rights which changes the "Required
Percentage" as defined in Section 4(a) of the Series B Certificate
of Designations, Preferences and Rights filed with the Nevada
Secretary of State of December 7, 2005 from 21.25% to 20.15%. The
Investors hereby consent to such amendment and hereby agree that
they shall not take any action, or seek any remedy, under the terms
of the Series B Certificate of Designations, Preferences and Rights
based on the Required Percentage, as defined therein, being less
than 21.25%, but greater than or equal to 20.15%.
(e) Substitution of Exhibit C. Exhibit C ("Investors") of the Agreement
shall be deleted and Exhibit C attached hereto shall be substituted therefor.
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(f) Substitution of Exhibit J. Exhibit J ("Use of Proceeds") of the
Agreement shall be deleted and Exhibit J attached hereto shall be substituted
therefor.
(g) Substitution of Exhibit K. Exhibit K ("Funds Flow Statement") of the
Agreement shall be deleted and Exhibit K attached hereto shall be substituted
therefor.
(h) Substitution of Schedule 3(r)(iv) to Company Disclosure Schedule.
Schedule 3(r)(iv) to Company Disclosure Schedule ("Capitalization and Reverse
Split") shall be deleted and Schedule 3(r)(iv) attached hereto shall be
substituted therefor.
3. MISCELLANEOUS.
(a) Amendments. The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions set forth in the
Agreement, but the Agreement is not otherwise modified or amended except as
expressly set forth herein. The parties agree that the Agreement, as amended
hereby, shall continue to be legal, valid, binding and enforceable in accordance
with its terms.
(b) Survival of Representations and Warranties. All representations and
warranties made in the Agreement shall survive the execution and delivery of
this Amendment for the term set forth in the Agreement.
(c) Headings. The section headings contained in this Amendment are for
purposes of convenience only, and shall in no way bear upon the construction or
interpretation of this Amendment.
(d) Entire Agreement. This Amendment, along with the Agreement and any
Ancillary Agreements, constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that any Investor may (i) assign
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Investor shall no longer
remain responsible for the performance of all of its obligations hereunder).
(f) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Amendment are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Amendment.
(h) Controlling Law; Venue. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
choice of law provisions, statutes, regulations or principles of this or any
other jurisdiction. Each Party hereby irrevocably submits to the exclusive
jurisdiction (including personal jurisdiction) of the state and federal courts
of the State of Texas for any action, suit or proceeding arising in connection
with this Amendment, and agrees that any such action suit or proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other jurisdiction to venue therein). Process in any
Proceeding under this Amendment may be served on any Party anywhere in the
world. Notwithstanding the foregoing, nothing in this Amendment shall preclude
the Investors the right to commence Proceedings relating to this Amendment in
any foreign jurisdiction, including the People's Republic of China.
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(i) Amendments and Waivers. No amendment of any provision of this
Amendment shall be valid unless the same shall be in writing and signed by the
Company, CA and Investors representing a majority of the outstanding Shares then
held by the Investors. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Amendment that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. Furthermore, in lieu of such invalid or
unenforceable provision, there shall be added automatically as part of this
Amendment a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
(k) Construction. The Parties have participated jointly in the negotiation
and drafting of this Amendment. In the event an ambiguity or question of intent
or interpretation arises, 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 of the
provisions of this Amendment. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(l) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Amendment are incorporated herein by reference and made a
part hereof.
(m) Specific Performance. Each of the Parties acknowledges and agrees that
the Investors would be damaged irreparably in the event any of the provisions of
this Amendment are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the
Investors shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Amendment and to enforce specifically this Amendment
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled, at law or
in equity.
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(n) Ratification of Agreement. Each of the Parties hereby acknowledges and
ratifies the Agreements, each of its rights and obligations thereunder and its
entry into the Agreement. Each of the Parties agrees that it is bound by and
shall comply with all of the provisions of the Agreement, as amended hereby.
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(Signatures continue on following page)
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The Parties have executed and delivered this Amendment as of the date
indicated in the first sentence of this Amendment.
PARALLEL TECHNOLOGIES, INC.
By:
------------------------------------
Name: Li Fu
Title: President
DALIAN FUSHI BIMETALLIC MANUFACTURING
COMPANY, LTD.
By:
------------------------------------
Name: Li Fu
Title: President
MANAGEMENT OF DALIAN FUSHI BIMETALLIC
MANUFACTURING COMPANY, LTD.
----------------------------------------
Xx Xx
----------------------------------------
Xxxx Xxx
----------------------------------------
Yang Xishan
----------------------------------------
Xxxxxxx Xx
----------------------------------------
Wenbing Xxxxx Xxxx
(Signatures continue on following page)
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THE INVESTORS
CHINAMERICA FUND, LP
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CHINAMERICA DALIAN FUSHI
ACQUISITION, LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signatures continue on following page)
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XXXXXX PARTNERS LP
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signatures continue on following page)
8
RENAISSANCE US GROWTH INVESTMENT TRUST
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BFS US SPECIAL OPPORTUNITIES TRUST PLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(Signatures continue on following page)
0
XXXX XXXXXX FUND LP
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
XXXX X. XXXXXX
WEDBUSH SEC. INC. CUST.
XXX ROLLOVER 10/13/92
----------------------------------------
Xxxx X. Xxxxxx
(Signatures continue on following page)
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Xxxx Xxxxx Xxxxx
MIDSOUTH INVESTOR FUND LP
By:
-------------------------------------
Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
(Signatures continue on following page)
11
XXXX ASSET MANAGEMENT LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT C
Investors
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Percentage
of
Shares of Outstanding Number of
Series B Voting Shares
Convertible Common Stock Capital Issuable
Percentage Preferred Issuable upon Stock Post upon
Purchase Among Stock Conversion Post Reverse Exercise of
Names of Investors Price Group Purchased Reverse Split Split Warrant
------------------------------------------------------------------------------------------------------------------------------------
Chinamerica Fund, $1,700,000 15.14% 30,518.52 602,083.36 3.05% 301,041.67
LP
------------------------------------------------------------------------------------------------------------------------------------
Chinamerica $1,000,000 8.91% 17,952.07 354,166.68 1.79% 177,083.33
Dalian Fushi
Acquisition, LLC
------------------------------------------------------------------------------------------------------------------------------------
Xxxx Asset $3,500,000 31.18% 62,832.25 1,239,583.39 6.28% 619,791.67
Management LLC
------------------------------------------------------------------------------------------------------------------------------------
Renaissance US $1,000,000 8.91% 17,952.07 354,166.68 1.79% 177,083.33
Growth Investment
Trust
------------------------------------------------------------------------------------------------------------------------------------
BFS US Special
Opportunities
Trust PLC $1,000,000 8.91% 17,952.07 354,166.68 1.79% 177,083.33
------------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx Xxxxx $100,000 0.89% 1,795.20 35,416.53 0.179% 17,708.33
------------------------------------------------------------------------------------------------------------------------------------
MidSouth Investor
Fund LP $500,000 4.45% 8,976.04 177,083.34 0.897% 88,541.67
------------------------------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxx $125,000 1.11% 2,244.01 44,270.86 0.224% 22,135.42
------------------------------------------------------------------------------------------------------------------------------------
Lake Street Fund
LP $700,000.00 6.24% 12,566.45 247,916.68 1.26% 123,958.33
------------------------------------------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxx
Wedbush Sec Inc.
Cust XXX Rollover
10/13/92 $350,000.00 3.12% 6,283.22 123,958.34 0.63% 61,979.17
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Partners LP $1,250,000 11.14% 22,440.09 442,708.40 2.24% 221,354.17
------------------------------------------------------------------------------------------------------------------------------------
Total $11,225,000 100.00% 201,511.99 3,975,520.83 20.15% 1,987,760
----- ------------ ------- ---------- ------------ ------ ---------
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C-1
EXHIBIT J
Use of Proceeds
The following schedule sets forth the use of proceeds of the Purchase
Price paid by the Investors. It does not take into account the flow of funds
between WOFE and Dalian Fushi necessary to accomplish the restructuring
contemplated by the Restructuring Agreements.
Purpose Amount
------- ------
Investor Relations $500,000
Executive Search Fees $100,000
Working Capital for Existing Operations $4,700,000
to be used for raw material purchases
and to meet expenditures necessary to
fulfill customer orders.
Purchases of New Machinery and $3,000,000
Equipment
Marketing for expansion into new $1,000,000
markets and obtaining new customers
Investment Banking Fees $975,000
Professional fees incurred by Dalian Approx.
Fushi and by Investors in connection $400,000
with the Agreement, Restructuring
Agreements and Ancillary Agreements
Shell purchase price $550,000
Total $11,225,000
J-1
EXHIBIT K
Funds Flow Statement
(See attached)
SCHEDULE 3(r)(iv) TO COMPANY DISCLOSURE SCHEDULE
(See attached)
