Exhibit 99.1
STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the ___ day of May 2007 (the "Agreement") between
China Organic Agriculture, INC., a corporation organized and existing under the
laws of the state of Florida (the "Company"), and each of the investors whose
names are set forth on the signature page hereto (individually, an "Investor,"
collectively, the "Investors").
WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investors, from time
to time as provided herein, and the Investors shall purchase from the Company up
to Twenty-one Million U.S. Dollars ($21,000,000) of the Company's common stock,
par value $.001 per share (the "Common Stock"); and
WHEREAS, such investments will be made in reliance upon the provisions of
Regulation D ("Regulation D") and Regulation S ("Regulation S") of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the "Securities Act"), and or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or
all of the investments to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I.
Certain Definitions
Section 1.1. "Advance" shall mean the portion of the Commitment Amount requested
by the Company in the Advance Notice.
Section 1.2. "Advance Date" shall mean the date the Xxxxx & Xxx Xxxxxx LLP (the
"Escrow Agent") Trust Account is in receipt of the funds from the Investors and
the Escrow Agent is in possession of certificates representing the shares to be
issued to the Investors in consideration of such advance and therefore an
Advance by the Investors to the Company can be made and the Escrow Agent can
release the certificates representing the shares to the Investors. The Advance
Date in respect of each Advance shall be the fifth business day in the State of
New York ("Business Day") after delivery of the Advance Notice to the Investors.
For purposes hereof a Business Day shall mean any day that banks in the State of
New York are not required or permitted to be closed.
Section 1.3. "Advance Notice" shall mean a written notice to the Investors
delivered in accordance with Section ----- setting forth the Advance amount that
the Company requests from the Investors and the Advance Date.
Section 1.4. "Advance Notice Date" shall mean each date the Company delivers to
the Investors an Advance Notice requiring the Investors to advance funds to the
Company, subject to the terms of this Agreement. No Advance Notice Date shall be
less than thirty (30) days after the prior Advance Notice Date.
Section 1.5. "Closing" shall mean one of the closings of a purchase and sale of
Common Stock pursuant to Section 2.3.
Section 1.6. "Commitment Amount" shall mean the aggregate amount of up to
Twenty-one Million U.S. Dollars ($21,000,000) which the Investors have agreed to
provide to the Company in order to purchase the Company's Common Stock pursuant
to the terms and conditions of this Agreement. The Commitment Amount of each
Investor is the amount set forth opposite the name of the Investor on Schedule
---- hereto.
Section 1.7. "Commitment Period" shall mean the period commencing on the earlier
to occur of (i) the Effective Date, or (ii) such earlier date as the Company and
the Investors may mutually agree in writing, and expiring on the earliest to
occur of (x) the date on which the Investors shall have made payment of Advances
pursuant to this Agreement in the aggregate amount of Twenty-one Million U.S.
Dollars ($21,000,000), (y) the date this Agreement is terminated pursuant to
Section 2.4, or (z) the date occurring twenty-four (24) months after the
Effective Date.
Section 1.8. "Common Stock" shall mean the Company's common stock, par value
$.001 per share.
Section 1.9. "Condition Satisfaction Date" shall have the meaning set forth in
Section 7.2.
Section 1.10. "Damages" shall mean any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorney's fees and
disbursements and costs and expenses of expert witnesses and investigation).
Section 1.11. "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).
Section 1.12. "Escrow Agreement" shall mean the escrow agreement among the
Company, the Investors, and the Escrow Agent, dated the date hereof.
Section 1.13. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Section 1.14. "Material Adverse Effect" shall mean any condition, circumstance,
or situation that would prohibit or otherwise materially interfere with the
ability of the Company to enter into and perform any of its obligations under
this Agreement or the Registration Rights Agreement in any material respect.
Section 1.15. "Maximum Advance Amount" shall be Five Million U.S. Dollars
(US$5,000,000) per Advance Notice.
Section 1.16. "NASD" shall mean the National Association of Securities Dealers,
Inc.
Section 1.17. "Person" shall mean an individual, a corporation, a partnership,
an association, a trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
Section 1.18. "Purchase Price" shall be set at $ 1.05 per share of Common Stock.
Section 1.19. "Registrable Securities" shall mean the shares of Common Stock to
be issued hereunder (i) in respect of which a Registration Statement has not
been declared effective by the SEC, (ii) which have not been sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.
Section 1.20. "Registration Rights Agreement" shall mean the Registration Rights
Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.
Section 1.21. "Registration Statement" shall mean a registration statement on
Form S-1 or SB-2 (if use of such form is then available to the Company pursuant
to the rules of the SEC and, if not, on such other form promulgated by the SEC
for which the Company then qualifies and which counsel for the Company shall
deem appropriate, and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement and the Registration Rights Agreement, and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable Securities under
the Securities Act.
Section 1.22. "SEC" shall mean the Securities and Exchange Commission.
Section 1.23. "SEC Documents" shall mean Annual Reports on Form 10-KSB or Form
20-F, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K or 6-K and
Proxy Statements of the Company as supplemented to the date hereof, filed by the
Company for a period of at least twenty-four (24) months immediately preceding
the date hereof or the Advance Date, as the case may be, until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.
Section 1.24. "Trading Day" shall mean any day during which the New York Stock
Exchange shall be open for business
ARTICLE II.
Advances
Section 2.1. Investments.
(a) Advances. Upon the terms and conditions set forth herein (including, without
limitation, the provisions of Article VII hereof), on any Advance Notice Date
the Company may request an Advance by the Investors by the delivery of an
Advance Notice. The number of shares of Common Stock that the Investors shall
receive for each Advance shall be determined by dividing the amount of the
Advance by the Purchase Price. No fractional shares shall be issued. Fractional
shares shall be rounded to the next higher whole number of shares. The aggregate
maximum amount of all Advances that the Investors shall be obligated to make
under this Agreement shall not exceed the Commitment Amount. Each Investor shall
be required to purchase such portion of the number of shares of Common Stock to
be sold in connection with any Advance (the "Advance Amount") as is equal to the
product the Advance Amount multiplied by a fraction, the numerator of which is
the total amount of the Advances committed to by the Investor and the
denominator of which is Twenty-one Million ($21,000,000).
Section 2.2. Mechanics.
(a) Advance Notice. At any time during the Commitment Period, the Company may
deliver an Advance Notice to the Investors, subject to the conditions set forth
in Section 7.2; provided, however, the amount for each Advance as designated by
the Company in the applicable Advance Notice, shall not be more than the Maximum
Advance Amount. The aggregate amount of the Advances pursuant to this Agreement
shall not exceed the Commitment Amount. The Company acknowledges that the
Investors may sell shares of the Company's Common Stock corresponding with a
particular Advance Notice on the day the Advance Notice is received by the
Investors.
(b) Date of Delivery of Advance Notice. An Advance Notice shall be deemed
delivered on (i) the day after it is received by facsimile or otherwise by the
Investors if such notice is received prior to 12:00 noon Eastern United States
Time, or (ii) the immediately succeeding day if it is received by facsimile or
otherwise after 12:00 noon Eastern United States Time on a day or at any time on
a day which is not Business Day. No Advance Notice may be deemed delivered on a
day that is not a Business Day.
(c) Pre-Closing Share Credit. Within three (3) business days after the Advance
Notice Date, the Company shall credit shares of the Company's Common Stock to
the Escrow Agent's balance account with The Depository Trust Company through its
Deposit Withdrawal At Custodian system, in an amount equal to the amount of the
requested Advance divided by the Purchase Price. In no event shall the number of
shares issuable to any Investor pursuant to an Advance exceed nine and 9/10
percent (9.9%) of the then outstanding Common Stock of the Company.
(d) Hardship. In the event any Investor sells the Company's Common Stock to be
delivered pursuant to subsection (c) above and the Company fails to perform its
obligations as mandated in Section 2.5 and 2.2 (c), and specifically fails to
provide the Investor with the shares of Common Stock for the applicable Advance,
the Company acknowledges that the Investor shall suffer financial hardship and
therefore shall be liable for any and all losses, commissions, fees, or
financial hardship caused to the Investor.
Section 2.3. Closings. On each Advance Date, which shall be the fifth Business
Day after the applicable Advance Notice Date (i) the Company shall instruct the
Company's transfer agent to deliver to the Escrow Agent, shares of the Company's
Common Stock, representing the amount of the Advance by each Investor pursuant
to Section 2.1 herein, registered in the names of the Investors which shall be
delivered to the Investors, or otherwise in accordance with the Escrow Agreement
and (ii) each Investor shall deliver to Escrow Agent its proportionate share of
the amount of the Advance specified in the Advance Notice by wire transfer of
immediately available funds which shall be delivered to the Company, or
otherwise in accordance with the Escrow Agreement. In addition, on or prior to
the Advance Date, each of the Company and the Investors shall deliver to the
other through the Escrow Agent counsel, all documents, instruments and writings
required to be delivered by either of them pursuant to this Agreement in order
to implement and effect the transactions contemplated herein. Payment of funds
to the Company and delivery of the Company's Common Stock to the Investors shall
occur in accordance with the conditions set forth above and those contained in
the Escrow Agreement.
Section 2.4. Termination of Investment. The obligation of the Investor to make
an Advance to the Company pursuant to this Agreement shall terminate permanently
(including with respect to an Advance Date that has not yet occurred) in the
event that (i) there shall occur any stop order or suspension of the
effectiveness of the Registration Statement for an aggregate of sixty (60)
Trading Days, other than due to the acts of the Investors, during the Commitment
Period, and (ii) the Company shall at any time fail materially to comply with
the requirements of Article VI and such failure is not cured within thirty (30)
days after receipt of written notice from the Investors, provided, however, that
this termination provision shall not apply to any period commencing upon the
filing of a post-effective amendment to such Registration Statement and ending
upon the date on which such post effective amendment is declared effective by
the SEC.
Section 2.5. Agreement to Advance Funds.
(a) Each Investor agrees to advance its proportionate shares of the amount
specified in the Advance Notice to the Company after the completion of each of
the following conditions and the other conditions set forth in this Agreement:
(i) the execution and delivery by the Company, and the Investors, of this
Agreement and the Exhibits hereto;
(ii) the Escrow Agent shall have received the shares of Common Stock applicable
to the Advance in accordance with Section 2.2(c) hereof;
(iii) the Company's Registration Statement with respect to the resale of the
Registrable Securities in accordance with the terms of the Registration Rights
Agreement shall have been declared effective by the SEC;
(iv) the Company shall have obtained all material permits and qualifications
required by any applicable state for the offer and sale of the Registrable
Securities, or shall have the availability of exemptions therefrom. The sale and
issuance of the Registrable Securities shall be legally permitted by all laws
and regulations to which the Company is subject;
(v) the Company shall have filed with the Commission in a timely manner all
reports, notices and other documents required of a "reporting company" under the
Exchange Act and applicable Commission regulations; and
(vi) the conditions set forth in Section 7.2 shall have been satisfied.
(vii) the Company shall have provided to the Investors an acknowledgement, from
the Company's independent auditors as to its ability to provide all consents
required in order to file a registration statement in connection with this
transaction;
(viii) The Company's transfer agent shall be DWAC eligible.
ARTICLE III.
Representations and Warranties of Investors
Each Investor hereby severally represents and warrants to the Company with
respect to itself, and agrees with the Company that the following are true and
as of the date hereof and as of each Advance Date:
Section 3.1. Organization and Authorization. The Investor is duly incorporated
or organized and validly existing in the jurisdiction of its incorporation or
organization and has all requisite power and authority to purchase and hold the
securities issuable hereunder. The decision to invest and the execution and
delivery of this Agreement by such Investor, the performance by such Investor of
its obligations hereunder and the consummation by such Investor of the
transactions contemplated hereby have been duly authorized and requires no other
proceedings on the part of the Investor. The undersigned has the right, power
and authority to execute and deliver this Agreement and all other instruments
(including, without limitations, the Registration Rights Agreement), on behalf
of the Investor. This Agreement has been duly executed and delivered by the
Investor and, assuming the execution and delivery hereof and acceptance thereof
by the Company, will constitute the legal, valid and binding obligations of the
Investor, enforceable against the Investor in accordance with its terms.
Section 3.2. Evaluation of Risks. The Investor has such knowledge and experience
in financial tax and business matters as to be capable of evaluating the merits
and risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this transaction. It
recognizes that its investment in the Company involves a high degree of risk.
Section 3.3. No Legal Advice From the Company. The Investor acknowledges that it
had the opportunity to review this Agreement and the transactions contemplated
by this Agreement with his or its own legal counsel and investment and tax
advisors. The Investor is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
Section 3.4. Investment Purpose. The securities are being purchased by the
Investor for its own account, for investment and without any view to the
distribution, assignment or resale to others or fractionalization in whole or in
part. The Investor agrees not to assign or in any way transfer the Investor's
rights to the securities or any interest therein and acknowledges that the
Company will not recognize any purported assignment or transfer except in
accordance with applicable Federal and state securities laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor agrees not to sell, hypothecate or otherwise transfer the Investor's
securities unless the securities are registered under Federal and applicable
state securities laws or unless, in the opinion of counsel satisfactory to the
Company, an exemption from such laws is available.
Section 3.5. Accredited Investor. (a) The Investor is an "Accredited Investor"
as that term is defined in Rule 501(a)(3) of Regulation D of the Securities Act.
The Investor is not a "US Person" as that term is defined in Rule 902(k) of
Regulation S promulgated under the Securities Act. The Investor resides outside
of the United States and does not maintain a place of business within the United
States.
(b) Dealer; Distributor. Investor represents that it is not a distributor or
dealer as such term is defined in Section 2(a)(12) of the Securities Act, or a
person receiving a selling concession, fee or other remuneration in connection
with the Securities.
(c) Hedging Transactions. Investor agrees not to engage in hedging transactions
with regard to the securities issuable pursuant hereto prior to the expiration
of one-year after the purchase of any such securities.
Section 3.6. Information. The Investor and its advisors (and its counsel), if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and information it deemed material to making an
informed investment decision. The Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its management.
Neither such inquiries nor any other due diligence investigations conducted by
such Investor or its advisors, if any, or its representatives shall modify,
amend or affect the Investor's right to rely on the Company's representations
and warranties contained in this Agreement. The Investor understands that its
investment involves a high degree of risk. The Investor is in a position
regarding the Company, which, based upon employment, family relationship or
economic bargaining power, enabled and enables such Investor to obtain
information from the Company in order to evaluate the merits and risks of this
investment. The Investor has sought such accounting, legal and tax advice, as it
has considered necessary to make an informed investment decision with respect to
this transaction.
Section 3.7. Receipt of Documents. The Investor and its counsel have received
and read in their entirety: (i) this Agreement and the Exhibits annexed hereto;
(ii) all due diligence and other information necessary to verify the accuracy
and completeness of such representations, warranties and covenants; (iii) the
Company's Form 10-KSB for the year ended December 31, 2007; and (iv) answers to
all questions the Investor submitted to the Company regarding an investment in
the Company; and the Investor has relied on the information contained therein
and has not been furnished any other documents, literature, memorandum or
prospectus.
Section 3.8. Registration Rights Agreement and Escrow Agreement. The parties
have entered into the Registration Rights Agreement and the Escrow Agreement,
each dated the date hereof.
Section 3.9. No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the shares of Common Stock offered hereby.
Section 3.10. Not an Affiliate. The Investor is not an officer, director or a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the Company or any
"Affiliate" of the Company (as that term is defined in Rule 405 of the
Securities Act). Neither the Investor nor its Affiliates has an open short
position in the Common Stock of the Company, and the Investor agrees that it
will not, and that it will cause its Affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor will sell the Shares to be issued to the Investor pursuant to the
Advance Notice, even if the Shares have not been delivered to the Investor.
Section 3.11. Trading Activities. The Investor's trading activities with respect
to the Company's Common Stock shall be in compliance with all applicable federal
and state securities laws, rules and regulations and the rules and regulations
of the Principal Market on which the Company's Common Stock is listed or traded.
Neither the Investor nor its affiliates has an open short position in the Common
Stock of the Company and, except as set forth below, the Investor shall not and
will cause its affiliates not to engage in any short sale as defined in any
applicable SEC or National Association of Securities Dealers rules on any
hedging transactions with respect to the Common Stock. Without limiting the
foregoing, the Investor agrees not to engage in any naked short transactions in
excess of the amount of shares owned (or an offsetting long position) during the
Commitment Period. The Investor shall be entitled to sell Common Stock during
the applicable Pricing Period.
ARTICLE IV.
Representations and Warranties of the Company
Except as stated below, on the disclosure schedules attached hereto or in the
SEC Documents (as defined herein), the Company hereby represents and warrants
to, and covenants with, the Investor that the following are true and correct as
of the date hereof:
Section 4.1. Organization and Qualification. The Company is duly incorporated or
organized and validly existing in the jurisdiction of its incorporation or
organization and has all requisite power and authority corporate power to own
its properties and to carry on its business as now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect on the Company and its subsidiaries taken as a whole.
Section 4.2. Authorization, Enforcement, Compliance with Other Instruments. (i)
The Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement, the Escrow Agreement,
and any related agreements, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Registration Rights
Agreement, the Escrow Agreement and any related agreements by the Company and
the consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by the Company's Board of Directors and no further consent
or authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Registration Rights Agreement, the
Escrow Agreement and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Registration Rights
Agreement, the Escrow Agreement and assuming the execution and delivery thereof
and acceptance by the Investor and any related agreements constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
Section 4.3. Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of 1,000,000,000,000 shares of Common Stock, no par
value of which 51, 548,776 shares of Common Stock and no shares of Preferred
Stock were issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as disclosed in the
SEC Documents, no shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in the SEC Documents, as of the date hereof, (i)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities (iii) there are no outstanding registration
statements other than on Form S-8 and (iv) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement). There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by this Agreement or any related agreement or the consummation of the
transactions described herein or therein. The Company has furnished to the
Investor true and correct copies of the Company's Certificate of Incorporation,
as amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.
Section 4.4. No Conflict. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or By-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is quoted) applicable to the Company
or any of its subsidiaries or by which any material property or asset of the
Company or any of its subsidiaries is bound or affected and which would cause a
Material Adverse Effect. Except as disclosed in the SEC Documents, neither the
Company nor its subsidiaries is in violation of any term of or in default under
its Articles of Incorporation or By-laws or their organizational charter or
by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its subsidiaries. The business
of the Company and its subsidiaries is not being conducted in violation of any
material law, ordinance, regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company and its subsidiaries are unaware of any fact or circumstance which might
give rise to any of the foregoing.
Section 4.5. SEC Documents; Financial Statements. Since January 1, 2007, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under of the Exchange Act. The Company
has delivered to the Investor or its representatives, or made available through
the SEC's website at xxxx://xxx.xxx.xxx, true and complete copies of the SEC
Documents. As of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "Financial Statements") complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, 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 exclude
footnotes or may be condensed or summary statements) and, fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Investor which is not included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
Section 4.6. 10b-5. The SEC Documents do not include any untrue statements of
material fact, nor do they omit to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.
Section 4.7. No Default. Except as disclosed in the SEC Documents, the Company
is not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound and neither the execution, nor the delivery
by the Company, nor the performance by the Company of its obligations under this
Agreement or any of the exhibits or attachments hereto will conflict with or
result in the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under its Certificate of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound, or any statute, or any decree, judgment,
order, rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect on the Company's
business or financial condition.
Section 4.8. Absence of Events of Default. Except for matters described in the
SEC Documents and/or this Agreement, 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 (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect on the Company's business, properties, prospects,
financial condition or results of operations.
Section 4.9. Intellectual Property Rights. The Company and its subsidiaries own
or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service xxxx registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service xxxx registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
Section 4.10. Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.
Section 4.11. Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable material foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.
Section 4.12. Title. Except as set forth in the SEC Documents, the Company has
good and marketable title to its properties and material assets owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest other than such as are not material to the business of the
Company. Any real property and facilities held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
Section 4.13. Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged. Neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
Section 4.14. Regulatory Permits. The Company and its subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
Section 4.15. Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Section 4.16. No Material Adverse Breaches, etc. Except as set forth in the SEC
Documents, neither the Company nor any of its subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's officers has or is
expected in the future to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries. Except as set forth in the SEC Documents,
neither the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.
Section 4.17. Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect on the business, operations,
properties, financial condition or results of operation of the Company and its
subsidiaries taken as a whole.
Section 4.18. Subsidiaries. Except as disclosed in the SEC Documents, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, association or other business entity.
Section 4.19. Tax Status. Except as disclosed in the SEC Documents, the Company
and each of its subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of its subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
Section 4.20. Certain Transactions. Except as set forth in the SEC Documents
none of the officers, directors, or 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
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
Section 4.21. Fees and Rights of First Refusal. The Company is not obligated to
offer the securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to, current or former
shareholders of the Company, underwriters, brokers, agents or other third
parties.
Section 4.22. Further Representation and Warranties of the Company. For so long
as any securities issuable hereunder held by the Investors remain outstanding,
the Company acknowledges, represents, warrants and agrees that it will maintain
the listing of its Common Stock on the Principal Market.
Section 4.23. Dilution. The Company is aware and acknowledges that issuance of
shares of the Company's Common Stock could cause dilution to existing
shareholders and could significantly increase the outstanding number of shares
of Common Stock.
ARTICLE V.
Indemnification
Each Investor and the Company represents to the other the following with respect
to itself:
Section 5.1. Indemnification.
(a) In consideration of the Investor's execution and delivery of this Agreement,
and in addition to all of the Company's other obligations under this Agreement,
the Company shall defend, protect, indemnify and hold harmless the Investor, and
all of its officers, directors, partners, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Investor Indemnitees") from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Investor Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
the Investor Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnitees. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.
(b) In consideration of the Company's execution and delivery of this Agreement,
and in addition to all of the Investor's other obligations under this Agreement,
the Investor shall defend, protect, indemnify and hold harmless the Company and
all of its officers, directors, shareholders, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Company Indemnitees") from
and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b) any
breach of any covenant, agreement or obligation of the Investor(s) contained in
this Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor,
or (c) any cause of action, suit or claim brought or made against such Company
Indemnitee based on misrepresentations or due to a breach by the Investor and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees. To the extent that
the foregoing undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.
(c) The obligations of the parties to indemnify or make contribution under this
Section 5.1 shall survive termination.
ARTICLE VI.
Covenants of the Company
Section 6.1. Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.
Section 6.2. Listing of Common Stock. The Company shall maintain the Common
Stock's authorization for quotation on the National Association of Securities
Dealers Inc.'s Over the Counter Bulletin Board or on such market or electronic
exchange of greater stature for which the Company's securities hereafter
qualify.
Section 6.3. Exchange Act Registration. The Company will cause its Common Stock
to continue to be registered under Section 12(g) of the Exchange Act, will file
in a timely manner all reports and other documents required of it as a reporting
company under the Exchange Act and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act.
Section 6.4. Transfer Agent Instructions. Not later than two (2) business days
after each Advance Notice Date and prior to each Closing and the effectiveness
of the Registration Statement and resale of the Common Stock by the Investor,
the Company will deliver instructions to its transfer agent to issue shares of
Common Stock free of restrictive legends.
Section 6.5. Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
Section 6.6. Notice of Certain Events Affecting Registration; Suspension of
Right to Make an Advance. The Company will immediately notify the Investor upon
its becoming aware of the occurrence of any of the following events in respect
of a registration statement or related prospectus relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the registration statement or related prospectus; (ii) the issuance by the SEC
or any other Federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus of any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events.
Section 6.7. Expectations Regarding Advance Notices. Within ten (10) days after
the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company must notify the Investors, in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise during such calendar quarter, if any, through the issuance of Advance
Notices. Such notification shall constitute only the Company's good faith
estimate and shall in no way obligate the Company to raise such amount, or any
amount, or otherwise limit its ability to deliver Advance Notices. The failure
by the Company to comply with this provision can be cured by the Company's
notifying the Investor, in writing, at any time as to its reasonable
expectations with respect to the current calendar quarter.
Section 6.8. Consolidation; Merger. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all the assets of the Company to another
entity (a "Consolidation Event") unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument the obligation to
deliver to the Investor such shares of stock and/or securities as the Investor
is entitled to receive pursuant to this Agreement.
Section 6.9. Issuance of the Company's Common Stock. The sale of the shares of
Common Stock shall be made in accordance with the provisions and requirements of
Regulation D and any applicable state securities law.
ARTICLE VII.
Conditions for Advance and Conditions to Closing
Section 7.1. Conditions Precedent to the Obligations of the Company. The
obligation hereunder of the Company to issue and sell the shares of Common Stock
to the Investors incident to each Closing is subject to the satisfaction, or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.
(a) Accuracy of the Investor's Representations and Warranties. The
representations and warranties of the Investors shall be true and correct in all
material respects.
(b) Performance by the Investor. The Investors shall have performed, satisfied
and complied in all respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Investor at or prior to such
Closing.
Section 7.2. Conditions Precedent to the Right of the Company to Deliver an
Advance Notice and the Obligation of the Investors to Purchase Shares of Common
Stock. The right of the Company to deliver an Advance Notice and the obligation
of the Investors hereunder to acquire and pay for shares of the Company's Common
Stock incident to a Closing is subject to the fulfillment by the Company, on (i)
the date of delivery of such Advance Notice and (ii) the applicable Advance Date
(each a "Condition Satisfaction Date"), of each of the following conditions:
(a) Registration of the Common Stock with the SEC. The Company shall have filed
with the SEC a Registration Statement with respect to the resale of the
Registrable Securities in accordance with the terms of the Registration Rights
Agreement. As set forth in the Registration Rights Agreement, the Registration
Statement shall have previously become effective and shall remain effective on
each Condition Satisfaction Date and (i) neither the Company nor the Investors
shall have received notice that the SEC has issued or intends to issue a stop
order with respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless the
SEC's concerns have been addressed and the Investors are reasonably satisfied
that the SEC no longer is considering or intends to take such action), and (ii)
no other suspension of the use or withdrawal of the effectiveness of the
Registration Statement or related prospectus shall exist. The Registration
Statement must have been declared effective by the SEC prior to the first
Advance Notice Date.
(b) Authority. The Company shall have obtained all permits and qualifications
required by any applicable state in accordance with the Registration Rights
Agreement for the offer and sale of the shares of Common Stock, or shall have
the availability of exemptions therefrom. The sale and issuance of the shares of
Common Stock shall be legally permitted by all laws and regulations to which the
Company is subject.
(c) Fundamental Changes. There shall not exist any fundamental changes to the
information set forth in the Registration Statement which would require the
Company to file a post-effective amendment to the Registration Statement.
(d) Performance by the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement (including, without limitation, the conditions
specified in Section 2.5 hereof) and the Registration Rights Agreement to be
performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits or
directly and adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced that may have the effect
of prohibiting or adversely affecting any of the transactions contemplated by
this Agreement.
(f) No Suspension of Trading in or Delisting of Common Stock. The trading of the
Common Stock is not suspended by the SEC or the Principal Market (if the Common
Stock is traded on a Principal Market). The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not violate the
shareholder approval requirements of the Principal Market (if the Common Stock
is traded on a Principal Market). The Company shall not have received any notice
threatening the continued listing of the Common Stock on the Principal Market
(if the Common Stock is traded on a Principal Market).
(g) Maximum Advance Amount. The amount of an Advance requested by the Company
shall not exceed the Maximum Advance Amount. In addition, in no event shall the
number of shares issuable to any Investor pursuant to an Advance exceed nine and
9/10 percent (9.9%) of the then outstanding Common Stock of the Company.
(h) No Knowledge. The Company has no knowledge of any event which would be more
likely than not to have the effect of causing such Registration Statement to be
suspended or otherwise ineffective.
(i) Other. On each Condition Satisfaction Date, the Investors shall have
received the certificate executed by an officer of the Company in the form of
Exhibit A attached hereto.
ARTICLE VIII.
Due Diligence Review; Non-Disclosure of Non-Public Information
Section 8.1. Due Diligence Review. Prior to the filing of the Registration
Statement the Company shall make available for inspection and review by each
Investor, its advisors and representatives, and any underwriter participating in
any disposition of the Registrable Securities on behalf of an Investor pursuant
to the Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all financial and
other records, all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by each Investor
or any such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Section 8.2. Non-Disclosure of Non-Public Information.
(a) The Company shall not disclose non-public information to any Investor, its
advisors, or its representatives, unless prior to disclosure of such information
the Company identifies such information as being non-public information and
provides the Investor, such advisors and representatives with the opportunity to
accept or refuse to accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information hereunder, require
an Investor's advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Investor.
(b) Nothing herein shall require the Company to disclose non-public information
to any Investor or its advisors or representatives, and the Company represents
that it does not disseminate non-public information to any investors who
purchase stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding anything herein to
the contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of an Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than an Investor (without the written consent of the
Investors prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading. ARTICLE IX. Choice of Law/Jurisdiction
Section 9.1. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard in New York City, New York, and expressly consent to
the jurisdiction and venue of the State Courts of New York, sitting in New York
City, New York and the United States District Court of the Southern District of
New York, for the adjudication of any civil action asserted pursuant to this
paragraph.
ARTICLE X.
Assignment; Termination
Section 10.1. Assignment. Neither this Agreement nor any rights of the Company
hereunder may be assigned to any other Person.
Section 10.2. Termination. The obligations of the Investors to make Advances
under Article II hereof shall terminate twenty four (24) months after the
Effective Date.
ARTICLE XI.
Notices
Section 11.1. Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy
is mailed by a recognized overnight delivery service; (iii) three (3) after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Company:
China Organic Agriculture, Inc.
Jilin Province Songyuan City ErMaPao Green Rice Limited,
East Ping Feng Xxxxx Xxxxx Fu, Xxxx Xxx District,
Songyuan City, Jilin Province, P.R. China
With a copy to:
Xxxxx & Xxx Xxxxxx LLP
0 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: 000 000 0000
Attn: Xxxxxxx X. XxXxxx
If to the Investors:
000 Xxxxxxx Xxxx Xxxx, Xxxx 000,
Xxxxxxxxx, Xxxxxxxxx, P.R.China
Post Code: 510075
Tel:x0000-00000000
Fax:x0000-00000000
Each party shall provide five (5) days' prior written notice to the other party
of any change in address or facsimile number.
ARTICLE XII.
Miscellaneous
Section 12.1. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof, though failure to deliver such copies shall not affect the
validity of this Agreement.
Section 12.2. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Investor, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
Section 12.3. Brokerage. Each of the parties hereto represents that it has had
no dealings in connection with this transaction with any finder or broker who
will demand payment of any fee or commission from the other party. The Company
on the one hand, and each Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
person claiming brokerage commissions or finder's fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
Section 12.4. Confidentiality. If for any reason the transactions contemplated
by this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party's domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity
Distribution Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
COMPANY:
China Organic Agriculture, INC.
By: /s/ Xxxx Xxx
---------------------------
Name: Xxxx Xxx
Title: Chief Executive Officer
INVESTORS:
NATION CITY INVESTMENTS LIMITED
/s/ Xxx Xxxxx
Xxx Xxxxx, President, Sole Director
INNOVATION GAINING INVESTMENTS LIMITED
/s/ Xxxxxx Xxx
Xxxxxx Xxx, President, Sole Director
ARJUNO INVESTMENTS LTD
/s/ Xx Xxxxx
Xx Xxxxx, President, Sole Director
BILLION HERO INVESTMENTS LIMITED
/s/ Xxxxxx Xx
Xxxxxx Xx, President, Sole Director
EVEN BRIGHT INVESTMENTS LIMITED
/s/ Xxxxxxx Xx
Xxxxxxx Xx, President, Sole Director
CENTRAL GIANT INVESTMENTS LIMITED
/S/ Xxxx Xxxxx
Xxxx Xxxxx, President, Sole Director
SCHEDULE 1
Number of
Shares of China Organic
Agriculture
Common Stock Purchase
Investors Address Acquired Price
---------------------------- ------- ----------------------- -------------
ARJUNO INVESTMENTS LTD 5,000,000 USD 5,250,000
BILLION HERO INVESTMENTS LTD 2,500,000 USD 2,625,000
EVEN BRIGHT INVESTMENTS LTD 2,500,000 USD 2,625,000
NATION CITY INVESTMENTS 2,500,000 USD 2,625,000
LIMITED
INNOVATION GAINING 2,500,000 USD 2,625,000
INVESTMENTS LIMITED
CENTRAL GIANT INVESTMENTS 5,000,000 USD 5,250,000
LIMITED
EXHIBIT A
ADVANCE NOTICE/COMPLIANCE CERTIFICATE
CHINA ORGANIC AGRICULTURE, INC.
The undersigned, _______________________ hereby certifies, with respect to the
sale of shares of Common Stock of CHINA ORGANIC AGRICULTURE, INC. (the
"Company"), issuable in connection with this Advance Notice and Compliance
Certificate dated ___________________ (the "Notice"), delivered pursuant to the
Standby Equity Distribution Agreement (the "Agreement"), as follows:
1. The undersigned is the duly elected ______________ of the Company.
2. There are no fundamental changes to the information set forth in the
Registration Statement which would require the Company to file a post effective
amendment to the Registration Statement.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Advance Date
related to the Notice and has complied in all material respects with all
obligations and conditions contained in the Agreement.
4. The undersigned hereby represents, warrants and covenants that it has made
all filings ("SEC Filings") required to be made by it pursuant to applicable
securities laws (including, without limitation, all filings required under the
Securities Exchange Act of 1934, which include Forms 10-Q, 10-K, 8-K, etc. All
SEC Filings and other public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls, etc. (collectively,
the "Public Disclosures"), have been reviewed and approved for release by the
Company's attorneys and, if containing financial information, the Company's
independent certified public accountants. None of the Company's Public
Disclosures contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
5. The Advance requested is _____________________.
The undersigned has executed this Certificate this ____ day of
_________________.
CHINA ORGANIC AGRICULTURE, INC.
By: /s/ Xxxx Xxx
-------------------------
Name: Xxxx Xxx
Title: Chief Executive Officer
