Long-e International Group Co., Ltd. NOTE AND WARRANT PURCHASE AGREEMENT September 22, 2006
Long-e
International Group Co., Ltd.
September
22, 2006
TABLE
OF CONTENTS
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Page
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1.
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Definitions
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1
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2.
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Terms
of the Secured Notes
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3
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2.1
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Issuance
of Secured Notes
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3
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2.2
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Right
to Convert Notes
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3
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3.
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Warrants
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4
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4.
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Closing
Mechanics
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4
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5.
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Representations
and Warranties of the Company
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5
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5.1
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Organization,
Good Standing and Qualification
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5
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5.2
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Authorization
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5
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5.3
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Compliance
with Other Instruments
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5
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5.4
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Valid
Issuance of Stock
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5
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6.
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Representations
and Warranties of the Lenders
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6
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6.1
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Authorization
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6
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6.2
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Purchase
Entirely for Own Account
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6
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6.3
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Disclosure
of Information
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6
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6.4
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Investment
Experience
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6
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6.5
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Accredited
Investor
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6
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6.6
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Restricted
Securities
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6
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6.7
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Further
Limitations on Disposition
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7
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6.8
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Legends
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7
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7.
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State
Commissioners of Corporations
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7
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8.
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Defaults
and Remedies
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7
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8.1
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Events
of Default
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7
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8.2
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Remedies
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8
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9.
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Miscellaneous
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9
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9.1
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Successors
and Assigns
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9
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9.2
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Governing
Law
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9
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9.3
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Counterparts
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9
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9.4
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Titles
and Subtitles
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9
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9.5
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Notices
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9
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9.6
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Finder’s
Fee
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9
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9.7
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Expenses
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10
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9.8
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Entire
Agreement; Amendments and Waivers
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10
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9.9
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Effect
of Amendment or Waiver
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10
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9.10
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Severability
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10
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9.11
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Stock
Purchase Agreement
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10
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9.12
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Exculpation
Among Lenders
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10
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9.13
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Acknowledgement
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11
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9.14
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Indemnity;
Costs, Expenses and Attorneys’ Fees
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11
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9.15
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Further
Assurance
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11
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EXHIBIT
A
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CONVERTIBLE
PROMISSORY NOTE
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EXHIBIT
B
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WARRANT
TO PURCHASE SHARES OF EQUITY SECURITIES
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i
THIS
NOTE AND WARRANT PURCHASE AGREEMENT
(“Agreement”) is made as of September 22,
2006,
by and among Long-e International Group Co., Ltd., a British Virgin Islands
corporation (the “Company”), and the lenders (each individually a “Lender,” and
collectively the “Lenders”) named on the Schedule of Lenders attached hereto
(the “Schedule of Lenders”). Capitalized terms not otherwise defined in this
Agreement shall have the meanings ascribed to them in Section 1
below.
WHEREAS,
each of
the Lenders intends to provide certain Consideration to the Company as described
for each Lender on the Schedule of Lenders;
WHEREAS,
the
parties wish to provide for the sale and issuance of such Notes and Warrants
in
return for the provision by the Lenders of the Consideration to the Company;
and
WHEREAS,
the
parties intend for the Company to issue in return for the Consideration one
or
more Notes and Warrants to purchase shares of the Company’s Equity
Securities.
NOW,
THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Definitions.
(a) “Consideration”
shall
mean the amount of money paid by each Lender pursuant to this Agreement as
shown
on the Schedule of Lenders.
(b) “Conversion
Shares”
shall,
for purposes of determining the type of Equity Securities issuable upon
conversion of the Notes or exercise of the Warrants, mean:
(i) if
the
Notes are converted to equity pursuant to Section 2.2(a) below, the Equity
Securities issued in the Next Equity Financing; and
(ii) if
the
Notes are converted to equity pursuant to Section 2.2(b) or 2.2(c) below, shares
of Common Stock.
(c) “Conversion
Price”
shall
mean:
(i) with
respect to a conversion pursuant to Section 2.2(a) below, 70% of the price
paid
per share for Equity Securities by the investors in the Next Equity
Financing;
(ii) with
respect to a conversion pursuant to Section 2.2(b) or 2.2(c) below, (x) 70%
of
the price to be paid per share for Equity Securities by the investors in the
Next Equity Financing if pricing terms have been agreed upon and documented
in a
term sheet or definitive agreement, or (y) if pricing terms have not yet been
documented for the Next Equity Financing, the price stated in a pricing notice
to be provided by the Company, or its representatives, to the Lender no later
than December 31, 2006, or (z) if such pricing notice has not been provided
by
December 31, 2006, $0.33 per share (as adjusted for any stock splits, stock
dividends, combinations, subdivisions, recapitalizations or the
like).
(d) “Corporate
Transaction”
shall
mean (A) the closing of the sale, transfer or other disposition of all or
substantially all of this Company’s assets, (B) the consummation of the
merger or consolidation of this Company with or into another entity (except
a
merger or consolidation in which the holders of capital stock of this Company
immediately prior to such merger or consolidation continue to hold at least
50%
of the voting power of the capital stock of this Company or the surviving or
acquiring entity), (C) the closing of the transfer (whether by merger,
consolidation or otherwise), in one transaction or a series of related
transactions, to a person or group of affiliated persons (other than an
underwriter of this Company’s securities), of this Company’s securities if,
after such closing, such person or group of affiliated persons would hold 50%
or
more of the outstanding voting stock of this Company (or the surviving or
acquiring entity) or (D) a liquidation, dissolution or winding up of this
Company; provided, however, that a transaction shall not constitute a
Liquidation Event if its sole purpose is to change the state of this Company’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held this Company’s securities
immediately prior to such transaction; provided, however a Corporate Transaction
shall not include the issuance of Equity Securities in the Next Equity
Financing.
(e) “Equity
Securities”
shall
mean the Company’s Common Stock or Preferred Stock or any securities conferring
the right to purchase the Company’s Common Stock or Preferred Stock or
securities convertible into, or exchangeable for (with or without additional
consideration), the Company’s Common Stock or Preferred Stock, except any
security granted, issued and/or sold by the Company to any director, officer,
employee or consultant of the Company in such capacity for the primary purpose
of soliciting or retaining their services.
(f) “Majority
Note Holders”
shall
mean the holders of a majority in interest of the aggregate principal amount
of
Notes.
(g) “Maturity
Date”
shall
mean September 22,
2009.
(h) “Next
Equity Financing”
shall
mean the next sale (or series of related sales) by the Company of its Equity
Securities following the date of this Agreement from which the Company receives
gross proceeds of not less than US$1,000,000 excluding the aggregate amount
of
debt securities converted into Equity Securities upon conversion of the Notes
pursuant to Section 2.2 below) and
further
to which the Company completes a Reverse Merger;
(i) “Notes”
shall
mean the one or more promissory notes issued to each Lender pursuant to Section
2.1 below, the form of which is attached hereto as Exhibit
A.
(j) “Period”
shall
mean 30 consecutive days, without regard to actual calendar months.
2
(k) “Purchase
Price of the Warrants” shall
mean the price paid by the Lenders to receive each Warrant, which amount shall
be .01% percent
of the principal amount of each Note.
(l) “Reverse
Merger”
shall
mean either a (i) merger of the Company into a Shell, (ii) merger of the Company
with a subsidiary of a Shell whereby the Company is the surviving entity and
the
shell Exchanges newly issued shares for the outstanding shares of the Company
or
(iii) share exchange where shareholders of the Company exchange their shares
for
shares of the Shell.
(m) “Reverse
Merger Withdrawal”
shall
mean notice by the Company to the Lender or the Lender having a reasonable
basis
to believe that the Company does not intend to effect the Reverse Merger which
shall include, but not be limited to, the Company entering into or agreeing
to
enter into an alternative financing transaction or Corporate Transaction other
than the Reverse Merger.
(n) “Shell”
shall
mean a company reporting under Section 13 or 15 of the Securities Exchange
Act
of 1934, as amended, or that has a class of securities registered under Section
12 of the Securities Act of 1933, as amended, and that has no or nominal
operations or has identified itself as a shell in its periodic reports as filed
with the Securities and Exchange Commission.
(o) “Warrants”
shall
mean one or more warrants issued pursuant to Section 3 below.
(p) “Warrant
Coverage Amount”
shall
mean, with respect to any particular Warrant issued to a Lender, fifty percent
(50%) of the principal amount of the Note issued to such Lender in conjunction
with such Warrant multiplied by (Y) the number of whole Periods such Note
remains outstanding after the date hereof; provided, that any partial period
shall be rounded up to the next whole Period.
2. Terms
of
the Secured Notes.
2.1 Issuance
of Secured Notes.
In return for the Consideration paid by each Lender, the Company shall sell
and
issue to such Lender one or more secured Notes. Each Note shall have a principal
balance equal to that portion of the Consideration, less the Purchase Price
of
the Warrant, paid by such Lender for the Note, as set forth in the Schedule
of
Lenders. Each Note shall be convertible into Conversion Shares pursuant to
Section 2.2 below and shall be secured by the assets of the Company as described
in such Notes and any related security agreement.
2.2 Right
to Convert Notes.
(a) Next
Equity Financing.
The
principal and unpaid accrued interest of each Note may be converted, at the
option of the holder thereof, in whole or in part, into Conversion Shares upon
the closing of the Next Equity Financing. Notwithstanding the foregoing, accrued
interest on this Note may be paid in cash at the option of the Company. The
number of Conversion Shares to be issued upon such conversion shall be equal
to
the quotient obtained by dividing the outstanding principal and unpaid accrued
interest on a Note to be converted, or portion thereof, on the date of
conversion, by the Conversion Price. At least five (5) days prior to the
closing of the Next Equity Financing, the Company shall notify the holder of
each Note in writing of the terms under which the Equity Securities of the
Company will be sold in such financing. The issuance of Conversion Shares
pursuant to the conversion of each Note shall be upon and subject to the same
terms and conditions applicable to the Equity Securities sold in the Next Equity
Financing.
3
(b) Maturity
Conversion.
If the
Next Equity Financing has not occurred on or before the Maturity Date, the
principal and unpaid accrued interest of each Note may be converted, at the
option of the holder thereof, in whole or in part, into Conversion Shares.
The
number of Conversion Shares to be issued upon conversion shall be equal to
the
quotient obtained by dividing the outstanding principal and unpaid accrued
interest due on a Note to be converted, or portion thereof, on the date of
conversion by the Conversion Price.
(c) Corporate
Transaction or Reverse Merger Withdrawal.
In the
event of a Corporate Transaction or Reverse Merger withdrawal prior to full
payment of a Note or prior to the time when a Note may be converted (as provided
herein), all outstanding principal and unpaid accrued interest due on such
Note
shall, at Lender’s election, be (i) due and payable in full prior to the closing
of the Corporate Transaction or Reverse Merger Withdrawal or (ii) be converted
into Conversion Shares.
(d) No
Fractional Shares.
Upon
the conversion of a Note into Conversion Shares, in lieu of any fractional
shares to which the holder of the Note would otherwise be entitled, the Company
shall pay the Note holder cash equal to such fraction multiplied by the
Conversion Price.
(e) Mechanics
of Conversion.
Before
any Note holder shall be entitled to convert the same into Conversion Shares,
such holder shall give notice to the Company of the election to convert such
Notes into Conversion Shares. The Company shall not be required to issue or
deliver the Conversion Shares until the Note holder has surrendered the Note
to
the Company. Such conversion may be made contingent upon the closing of the
Next
Equity Financing, Initial Public Offering or Corporate Transaction.
3. Warrants.
Upon the Closing (as defined in Section 4.1 below), and in return for the
Company’s receipt of the Purchase Price of Warrant and the principal of the
Notes, each Lender shall receive a warrant to purchase Conversion Shares in
the
form attached hereto as Exhibit B
(the
“Warrant”). Each Warrant shall be exercisable for that number of Conversion
Shares determined
by dividing the Warrant Coverage Amount by the Conversion Price. The exercise
price for the Conversion Shares purchasable upon exercise of the Warrants shall
be the Conversion Price applicable to such shares.
4. Closing
Mechanics.
The
closing (the “Closing”) of the purchase of the Notes and issuance of the
Warrants in return for the Consideration paid by each Lender shall take place
at
the offices of the Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP, at 00000
Xxxxx Xxxxxx Xxxx., Xxxxxxx Xxxxx, Xxx Xxxxxxx, XX 00000 p.m., on
______________,
or at
such other time and place as the Company and Lenders purchasing a majority
in
interest of the aggregate principal amount of the Notes to be sold at the
Closing agree upon orally or in writing. At the Closing, each Lender shall
deliver the Consideration to the Company and the Company shall deliver to each
Lender one or more executed Notes and Warrants in return for the respective
Consideration provided to the Company.
4
5. Representations
and Warranties of the Company.
In connection with the transactions provided for herein, the Company hereby
represents and warrants to the Lenders that:
5.1 Organization,
Good Standing and Qualification.
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California and has all requisite
corporate power and authority to carry on its business as now conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties.
5.2 Authorization.
Except for the authorization and issuance of the shares issuable in connection
with the Next Equity Financing, all corporate action has been taken on the
part
of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Notes and the
Warrants. Except as may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws relating to or affecting the enforcement of
creditors’ rights, the Company has taken all corporate action required to make
all of the obligations of the Company reflected in the provisions of this
Agreement, the Notes and the Warrants, the valid and enforceable obligations
they purport to be. The issuance of the Notes, or their subsequent conversion
into Conversion Shares, will not be subject to the preemptive rights of any
stockholder of the Company. The
Company has authorized sufficient shares of its capital stock to
allow
for conversion of the Notes and exercise of the Warrant as described in Section
2.2 and Section 3.
5.3 Compliance
with Other Instruments.
Neither the authorization, execution and delivery of this Agreement, nor the
issuance and delivery of the Notes and the Warrants, will constitute or result
in a material default or violation of any law or regulation applicable to the
Company or any material term or provision of the Company’s current Certificate
of Incorporation or bylaws or any material agreement or instrument by which
it
is bound or to which its properties or assets are subject.
5.4 Valid
Issuance of Stock.
The Conversion Shares to be issued, sold and delivered in accordance with the
terms of the Warrants will be duly authorized and validly issued, fully paid
and
nonassessable and, based in part upon the representations and warranties of
the
Lenders in this Agreement, will be issued in compliance with all applicable
federal and state securities laws. The Conversion Shares to be issued, sold
and
delivered upon conversion of the Notes will be duly and validly issued, fully
paid and nonassessable and, based in part upon the representations and
warranties of the Lenders in this Agreement, will be issued in compliance with
all applicable federal and state securities laws.
5
6. Representations
and Warranties of the Lenders.
In connection with the transactions provided for herein, each Lender hereby
represents and warrants to the Company that:
6.1 Authorization.
This Agreement constitutes such Lender’s valid and legally binding obligation,
enforceable in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors’ rights and (ii) laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies. Each Lender represents that it has full power and authority
to enter into this Agreement.
6.2 Purchase
Entirely for Own Account.
Each Lender acknowledges that this Agreement is made with Lender in reliance
upon such Lender’s representation to the Company that the Notes, the Warrants,
the Conversion Shares, and any Common Stock issuable upon conversion of the
Conversion Shares (collectively, the “Securities”) will be acquired for
investment for Lender’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that such Lender
has
no present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, each Lender further
represents that such Lender does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to
such
person or to any third person, with respect to the Securities.
6.3 Disclosure
of Information.
Each Lender acknowledges that it has received all the information it considers
necessary or appropriate for deciding whether to acquire the Notes and the
Warrants. Each Lender further represents that it has had an opportunity to
ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Notes and the Warrants.
6.4 Investment
Experience.
Each Lender is an investor in securities of companies in the development stage
and acknowledges that it is able to fend for itself, can bear the economic
risk
of its investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities. If other than an individual, each Lender also represents
it
has not been organized solely for the purpose of acquiring the
Securities.
6.5 Accredited
Investor.
Each
Lender is an “accredited investor” within the meaning of Rule 501 of Regulation
D of the Securities and Exchange Commission (the “SEC”), as presently in
effect.
6.6 Restricted
Securities.
Each Lender understands that the Notes and the Warrants are characterized as
“restricted securities” under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Act only in certain limited circumstances.
Each Lender represents that it is familiar with SEC Rule 144, as presently
in
effect, and understands the resale limitations imposed thereby and by the
Act.
6
6.7 Further
Limitations on Disposition.
Without in any way limiting the representations and warranties set forth above,
each Lender further agrees not to make any disposition of all or any portion
of
the Notes and Warrants unless and until the transferee has agreed in writing
for
the benefit of the Company to be bound by this Section 6 and:
(a) There
is
then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or
(b) (i)
Lender has notified the Company of the proposed disposition and has furnished
the Company with a detailed statement of the circumstances surrounding the
proposed disposition and (ii) if
reasonably requested by the Company, Lender shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Act. It
is
agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in extraordinary circumstances.
6.8 Legends.
It is understood that the Securities may bear the following legend:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”
7. State
Commissioners of Corporations.
THE
SALE
OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES
TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
8. Defaults
and Remedies.
8.1 Events
of Default.
The following events shall be considered Events of Default with respect to
each
Note:
(a) The
Company shall default in the payment of any part of the principal or unpaid
accrued interest on the Note for more than thirty (30) days after the
Maturity Date or at a date fixed by acceleration or otherwise;
7
(b) The
Company shall make an assignment for the benefit of creditors, or shall admit
in
writing its inability to pay its debts as they become due, or shall file a
voluntary petition for bankruptcy, or shall file any petition or answer seeking
for itself any reorganization, arrangement, composition, readjustment,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting the material allegations of
a
petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company, or of all or any substantial part of the properties
of the Company, or the Company or its respective directors or majority
stockholders shall take any action looking to the dissolution or liquidation
of
the Company;
(c) Within
thirty (30) days after the commencement of any proceeding against the
Company seeking any bankruptcy reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or
future statute, law or regulation, such proceeding shall not have been
dismissed, or within thirty (30) days after the appointment without the
consent or acquiescence of the Company of any trustee, receiver or liquidator
of
the Company or of all or any substantial part of the properties of the Company,
such appointment shall not have been vacated;
(d) Within
thirty (30) days after the Company becomes involved in litigation that threatens
to materially and adversely affect the Company’s business, operations, assets,
results of operations or prospects if the Company’s involvement has not
terminated by such date in a manner that does not and could not reasonably
be
expected to materially and adversely affect the Company’s business, operations,
assets, results of operations or prospects;
(e) Any
default or defined event of default that has not otherwise been cured or
forgiven shall occur under any agreement to which the Company or any of its
subsidiaries is a party that evidences Indebtedness of $25,000 or more;
(f) Reverse
Merger Withdrawal; or
(g) The
Company shall fail to observe or perform any other obligation to be observed
or
performed by it under this Agreement, the Notes, the Warrants or the Security
Agreement within 30 days after written notice from the Majority Noteholders
to
perform or observe the obligation.
8.2 Remedies.
Upon the occurrence of an Event of Default under Section 8.1 hereof, at the
option and upon the declaration of the holder of a Note, the entire unpaid
principal and accrued and unpaid interest on such Note shall, without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived, be forthwith due and payable, and such holder may, immediately
and without expiration of any period of grace, enforce payment of all amounts
due and owing under such Note and exercise any and all other remedies granted
to
it at law, in equity or otherwise.
8
9. Miscellaneous.
9.1 Successors
and Assigns.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors
and
assigns of the parties, provided, however, that the Company may not assign
its
obligations under this Agreement without the written consent of the Majority
Note Holders. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under
or
by reason of this Agreement, except as expressly provided in this
Agreement.
9.2 Governing
Law.
This Agreement, the Notes and
the
Warrants shall be governed by and construed under the laws of the State of
California as applied to agreements among California residents, made and to
be
performed entirely within the State of California.
9.3 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
9.4 Titles
and Subtitles.
The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement.
9.5 Notices.
All notices and other communications given or made pursuant hereto shall be
in
writing and shall be deemed effectively given: (i) upon personal delivery to
the
party to be notified, (ii) when sent by confirmed electronic mail or facsimile
if sent during normal business hours of the recipient, if not so confirmed,
then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid or
(iv)
one (1) 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 respective parties at the following
addresses (or at such other addresses as shall be specified by notice given
in
accordance with this Section 9.5):
If
to the
Company:
Long-e
International Group Co., Ltd.
Akara
Xxxx. 00 Xx Xxxxxx Xxxxxx Wickhams Cay 1
Road
Town
Tortola, British Virgin Islands
Attention:
Chief Executive Officer
If
to
Lenders:
At
the
respective addresses shown on the signature pages hereto.
9.6 Finder’s
Fee.
Each party represents that it neither is nor will be obligated for any finder’s
fee or commission in connection with this transaction. Lender agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finder’s fee (and the costs and expenses of
defending against such liability or asserted liability) for which Lender or
any
of its officers, partners, employees or representatives is responsible. The
Company agrees to indemnify and hold harmless Lender from any liability for
any
commission or compensation in the nature of a finder’s fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is
responsible.
9
9.7 Expenses.
If any action at law or in equity is necessary to enforce or interpret the
terms
of this Agreement, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled. The Company shall pay all costs
and
expenses that it incurs with respect to the negotiation, execution, delivery
and
performance of this Agreement. At the Closing, the Company shall reimburse
the
reasonable fees and expenses of
___________________________________________________________ special
counsel for the Lenders, not to exceed $5,000.
9.8 Entire
Agreement; Amendments and Waivers.
This Agreement, the Notes and the Warrants and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. The
Company’s agreements with each of the Lenders are separate agreements, and the
sales of the Notes and Warrants to each of the Lenders are separate sales.
Nonetheless, any term of this Agreement, the Notes or the Warrants may be
amended and the observance of any term of this Agreement, the Notes or the
Warrants may be waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the Company and
the
Majority Note Holders. Any waiver or amendment effected in accordance with
this
Section shall be binding upon each party to this Agreement and any holder of
any
Note or Warrant purchased under this Agreement at the time outstanding and
each
future holder of all such Notes or Warrants.
9.9 Effect
of Amendment or Waiver.
Each Lender acknowledges that by the operation of Section 9.8 hereof, the
Majority Note Holders will have the right and power to diminish or eliminate
all
rights of such Lender under this Agreement and each Note and Warrant issued
to
such Lender.
9.10 Severability.
If one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
9.11 Stock
Purchase Agreement.
Each Lender understands and agrees that the conversion of the Notes into and
exercise of the Warrants for Conversion Shares may require such Lender’s
execution of certain agreements in the form agreed to by investors in the Next
Equity Financing (in form reasonably agreeable to the Lender) relating to the
purchase and sale of such securities as well as registration, co-sale, rights
of
first refusal, rights of first offer and voting rights, if any, relating to
such
securities.
9.12 Exculpation
Among Lenders.
Each Lender acknowledges that it is not relying upon any person, firm,
corporation or stockholder, other than the Company and its officers and
directors in their capacities as such, in making its investment or decision
to
invest in the Company. Each Lender agrees that no other Lender nor the
respective controlling persons, officers, directors, partners, agents,
stockholders or employees of any other Lender shall be liable for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the purchase and sale of the Securities.
10
9.13 Acknowledgement.
In order to avoid doubt, it is acknowledged that each Lender shall be entitled
to the benefit of all adjustments in the number of shares of Common Stock of
the
Company issuable upon conversion of the Preferred Stock of the Company or as
a
result of any splits, recapitalizations, combinations or other similar
transaction affecting the Common Stock or Preferred Stock underlying the
Conversion Shares that occur prior to the conversion of the Notes or exercise
of
the Warrants.
9.14 Indemnity;
Costs, Expenses and Attorneys’ Fees.
The Company shall indemnify and hold each Lender harmless from any loss, cost,
liability and legal or other expense, including attorneys’ fees of such Lender’s
counsel, which a Lender may directly or indirectly suffer or incur by reason
of
the failure of the Company to perform any of its obligations under this
Agreement, any Note, any Warrant, any agreement executed in connection herewith
or therewith, any grant of or exercise of remedies with respect to any
collateral at any time securing any obligations evidenced by this Agreement
or
the Notes, or any Lender’s execution or performance of this Agreement or any
agreement executed in connection herewith, or acceptance or exercise of any
Warrant.
9.15 Further
Assurance.
From time to time, the Company shall execute and deliver to the Lenders such
additional documents and shall provide such additional information to the
Lenders as any Lender may reasonably require to carry out the terms of this
Agreement and the Notes and any agreements executed in connection herewith
or
therewith, or to be informed of the financial and business conditions and
prospects of the Company.
11
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
Long-e
International Group Co., Ltd.
|
||
| |
|
|
| By: | /s/ Bu Shengfu | |
|
Chief
Executive Officer
|
||
|
LENDERS:
|
||
| |
MidSouth
Investor Fund, LP
|
|
| By: | /s/ Xxxxx X. Xxxxxxx | |
|
Xxxxx
X. Xxxxxxx, General Partner
|
||
| |
|
|
| By: | ||
|
|
||
SCHEDULE
OF LENDERS
|
Lender
|
Total
Consideration
|
Principal
Balance of
Promissory Note
|
Purchase
Price
of
Warrant
|
|||||||
|
MidSouth
Investor Fund, LP
|
$
|
500,000.00 | ||||||||
|
|
||||||||||
|
|
||||||||||
|
TOTAL
|
$
|
$
|
$
|
|
||||||
