SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT
(this
“Agreement”), dated as of May __, 2008, by and between SOGUA (BVI) LIMITED (the
“Company”) and PRIVATE CAPITAL GROUP (BVI) LIMITED (the “Lender”).
WHEREAS,
the
Lender desires to purchase and the Company desires to issue and sell, upon
the
terms and conditions set forth in this Agreement a $300,000.00 US aggregate
principal amount note (the “Note”), in the form attached hereto as Exhibit “A”
for an aggregate purchase price of US$300,000.00, and the Lender wishes to
purchase the Note upon the terms and conditions stated in this Agreement;
and
WHEREAS,
contemporaneous
with the execution and delivery of this Agreement, the Company is issuing the
Lender warrants (the “Warrants”) to purchase approximately four percent (4%) of
the Company’s outstanding capital stock equal to approximately 208,333 shares as
of the date hereof.
WHEREAS,
the
Note
and the Warrants are collectively sometimes referred to herein as the
“Transaction Documents”.
NOW
THEREFORE,
for
good and valuable consideration, the sufficiency and receipt of which have
likely acknowledged the Company and the Lender hereby agree as
follows:
a. Purchase
of the Note. Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined below), the Company shall issue and sell to the Lender
and the Lender agrees to purchase from the Company, the Note.
b. Form
of
Payment. On the Closing Date, (i)
the
Lender shall pay to the Company Three Hundred Thousand Dollar ($300,000.00
US)
(the “Purchase Price”) for the Note to be issued and sold to it at the Closing
(as defined below), and (ii)
the
Company shall deliver such Note to the Lender, against delivery of such Purchase
Price.
a. Corporate
Existence. The Company is duly incorporated, validly existing and in good
standing under the laws of the British Virgin Islands and has unconditional
power and authority to conduct its business and own its properties as now,
and
proposed to be, conducted and owned. The Company is qualified to do business
in
all jurisdictions in which the nature of its properties and business requires
qualification and in which noncompliance would materially affect the Company’s
business.
(i) The
execution, delivery and performance of this Agreement and the Transaction
Documents to which it is a party by the Company and the consummation by the
Company of the transactions contemplated hereby will not (i) conflict with
or
result in a violation of any provision of the Certificate or the Bylaws, or
(ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement or instrument to
which
the Company is a party or is otherwise bound or is a beneficiary, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal, state and foreign securities laws and regulations to which
the Company is subject) applicable to the Company or by which the real Property
or any property or asset of the Company is bound or affected.
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(ii) The
Company is not in violation of the Certificate, the Bylaws or other
organizational documents and the Company has not taken any action or failed
to
take any action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which
the Company is a party or by which any property or assets of the Company is
bound or affected.
f. Absence
of Litigation. There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending threatened against or affecting
the
Company that could have a material adverse effect on the rights of the Lender
under this Agreement or the transactions contemplated hereby.
i. Notice
of
Default or Event of Default. Promptly, and in any event within three (3)
business days after the Company becomes aware of the existence of any Default
or
Event of Default or that any Person has given any notice or taken any action
with respect to a claimed Default hereunder or that any Person has given notice
or taken any action with respect to a claimed Default of the type referred
to in
Section 5(f), the Company shall deliver to each holder of the Notes a written
notice specifying the nature and period of existence thereof and what action
the
Company is taking or proposes to take with respect thereto.
4. Affirmative
Covenants. The
Company covenants that so long as the Note is outstanding:
a. Security
Interest. As
an inducement for the Lender to purchase the Note and to secure the complete
and
timely payment, performance and discharge in full, as the case may be, of all
of
the obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Lender, a continuing security interest in, a
continuing first lien upon, an unqualified right to possession and disposition
of and a right of set-off against, in each case to the fullest extent permitted
by law, all of the Company’s right, title and interest of whatsoever kind and
nature in and to the any and all of the assets, property, leaseholds or
interests of any kind, wherever located (the “Collateral”). The
Company shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, to (i) vest in the Lender
a
first priority security interest in the Collateral and (ii) as the Lender may
reasonably request, carry out the intent and accomplish the purposes of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby.
b. Board
Representation. The Lender shall nominate one additional member to the Company’s
Board of Directors. The number of which may not exceed six
(6)
members.
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a. the
Company defaults in the payment of any principal on the Note when the same
becomes due and payable, whether at maturity or otherwise; or
b. the
Company defaults in the payment of any interest on the Note when the same
becomes due and payable; or
c. the
Company defaults in the performance of or compliance with any term contained
in
Section 5 and such default has not been cured for ten (10) business days after
the Holder delivers written notice to the Company of such default;
or
d. the
Company defaults in the performance of or compliance with any term, agreement
or
covenant contained herein (other than those referred to in paragraphs (a),
(b)
and (c) of this Section 8) and such default is not remedied within ten (10)
business days after the Holder delivers written notice to the Company of such
default; or
e. any
representation or warranty made by or on behalf of the Company in this
Agreement, any Transaction Document or in any writing furnished in connection
with the transactions contemplated hereby or thereby proves to have been false
or incorrect in any material respect on the date as of which made, and such
condition has not been cured for ten (10) business days after the Holder
delivers written notice to the Company of such default; or
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f. (i)
the
Company is in default in the payment of any principal of or premium or
make-whole amount or interest on any indebtedness that is outstanding beyond
any
period of grace provided with respect thereto, or (ii) the Company is in default
in the performance of or compliance with any term of any evidence of any
indebtedness that is outstanding or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such indebtedness has become, or has been declared
(or one or more Persons are entitled to declare such indebtedness to be), due
and payable before its stated maturity or before its regularly scheduled dates
of payment, or (iii) as a consequence of the occurrence or continuation of
any
event or condition, (A) the Company has become obligated to purchase or repay
indebtedness before its regular maturity or before its regularly scheduled
dates
of payment, or (B) one or more Persons has the right to require the Company
purchase or repay such indebtedness; or
g. the
Company (i) files, or consents by answer or otherwise to the filing against
it
or him of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any jurisdiction,
(ii) makes an assignment for the benefit of its or his creditors, (iii) consents
to the appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or him or with respect to any substantial
part
of its or his property, (iv) is adjudicated as insolvent or to be liquidated,
or
(v) takes corporate action for the purpose of any of the foregoing;
or
h. a
court
or governmental authority of competent jurisdiction enters an order appointing
a
custodian, receiver, trustee or other officer with similar powers with respect
to it or him or with respect to any substantial part of any of the Company’s
property, or constituting an order for relief or approving a petition for relief
or reorganization for any of them or any other petition in bankruptcy or to
take
advantage of any bankruptcy or insolvency law of any jurisdiction by the
Company, or ordering the dissolution, winding-up or liquidation of the Company,
or any such petition shall be filed against the Company and such petition shall
not be dismissed within sixty (60) days; or
i. a
final
judgment or judgments for the payment of money are rendered against the Company
which judgments are not, within ten (10) days after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within ten (10)
days
after the expiration of such stay; or
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9. Expenses.
a. Governing
Law. The validity and interpretation of this Agreement shall be governed by,
and
construed and enforced in accordance with, the laws of the State of New York.
Each of the parties hereto and their assigns hereby consents to the exclusive
jurisdiction and venue of the Courts of the State of New York, located in New
York County and the United States District Court for the Southern District
of
New York with respect to any matter relating to this Agreement and performance
of the parties’ obligations hereunder, the documents and instruments executed
and delivered concurrently herewith or pursuant hereto and performance of the
parties’ obligations thereunder and each of the parties hereto hereby consents
to the personal jurisdiction of such courts and shall subject itself to such
personal jurisdiction. Any action, suit or proceeding relating to such matters
shall be commenced, pursued, defended and resolved only in such courts and
any
appropriate appellate court having jurisdiction to hear an appeal from any
judgment entered in such courts. The parties irrevocably waive the defense
of an
inconvenient forum to the maintenance of such suit or proceeding. Service of
process in any action, suit or proceeding relating to such matters may be made
and served within or outside the State of New York by registered or certified
mail to the parties and their representatives at their respective addresses
specified herein, provided that a reasonable time, not less than thirty (30)
days, is allowed for response. Service of process may also be made in such
other
manner as may be permissible under the applicable court rules.
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11. Miscellaneous.
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If
to the Company
Sogua
(BVI) Limited
Xxxx
0000, Xxxxxxx Xxxxxxxx
Xx.
0000
Xxxxxxx Rd., Futian District
Shenzhen,
People’s Republic of China
Telephone:
x(00) 000 0000 0000
Facsimile:
x(00) 000 0000 0000
If
to the Lender:
Private
Capital Group (BVI) Limited
0000
Xxxxxxxx. Xxxxx 0000
Xxx
Xxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Each
party shall provide notice to all of the other parties of any change in
address.
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k. Waiver
of
Stay, Extension or Usury Laws. The Company covenants (to the extent that it
may
lawfully do so) that it shall not at any time insist upon, or plead, or in
any
manner whatsoever claim, and shall resist any and all efforts to be compelled
to
take the benefit or advantage of, any stay or extension law or any usury law
or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein
and
therein, wherever enacted, now or at any time hereafter in force, or which
may
effect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit
or
advantage of any such law and covenants that it shall not hinder, delay or
impede the execution of power herein granted to the holders of the Notes, but
shall suffer and permit the execution of every such power as though no such
law
had been enacted. All agreements between the Company and holders of the Notes,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason or demand or
acceleration of the final maturity date of the Notes or prepayment or otherwise,
shall the interest contracted for (or any original issue discount that would
be
determined to be interest), charged, received, paid or agreed to be paid to
holders exceed the maximum amount permissible under the laws of the State of
New
York (hereinafter the “Applicable Law”). If, from any circumstances whatsoever,
interest (or any original issue discount that would be determined to be
interest) would otherwise be payable to any holder of the Notes in excess of
the
maximum amount permissible under Applicable Law, the interest payable to such
holder shall be reduced to the maximum amount permissible under Applicable
Law,
and if from any circumstances such holder shall ever receive anything deemed
interest by the Applicable Law in excess of the maximum amount permissible
under
the Applicable Law, an amount equal to the excessive interest shall be applied
to the reduction of the principal hereof and not to the payment of interest,
or
if such excessive amount of interest exceeds the unpaid principal balance of
principal hereof, such excess shall be refunded to the Company as applicable.
All interest paid or agreed to be paid to the holders of the Notes shall, to
the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout full period (including any renewal or extension) until payment in
full of the principal so that the interest hereon for such full period shall
not
exceed the maximum amount permissible under the Applicable Law.
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IN
WITNESS WHEREOF,
the
undersigned, the Company and the Lender, have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
SOGUA
(BVI) LIMITIED
By:
______________________________________
Xxx
Xx,
Chief
Executive Officer
LENDER:
PRIVATE
CAPITAL GROUP (BVI) LIMITED
By:
______________________________________
Xxxxxxx
Xxxxxxxxx, President
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