Re: Purchase Agreement
Date:
October 17, 2008
No.
9
Yanyu Middle Road
Qianzhou
Village, Huishan District, Wuxi City
Jiangsu
Province, People’s Republic of China
Ladies
and Gentlemen:
The
undersigned (the “Purchaser”) hereby agrees to purchase from China Wind Systems,
Inc. (the “Company”), and the Company agrees to sell to Purchaser the Company’s
17.4% promissory note (the “Note”) in the principal amount of $575,000 for a
purchase price (the “Purchase Price”) of $575,000.
1. The
payment of the Purchase Price for the Note shall be made by wire transfer to
the
Company in accordance with the wire transfer instructions (the “Wire Transfer
Instructions” set forth in Exhibit A-1 to this Agreement, and the Company will
deliver the Note to Purchaser on the date that such wire transfer is made
(“Closing Date”). The Note shall be in substantially the form of Exhibit B to
this Agreement.
2. It
shall
be a condition to the sale by the Company of the Note that Purchaser shall
cause
to be exercised certain common stock purchase warrants held by Eos Holdings
having a total exercise price of not less than $175,000. Payment of the exercise
price shall be made by wire transfer of the exercise price of the warrants
in
accordance with the Wire Transfer Instructions set forth in Exhibit A-2 to
this
Agreement.
3. Payment
of the Company’s obligations under the Note shall be secured by a pledge of and
conversion right with respect to 959,000 shares (the “Pledged Shares”) of the
Company’s common stock, par value $.001 per share (“Common Stock”) owned by
Xxxxxxx Xx, the Company’s chief executive officer and principal stockholder. As
set forth in greater detail in the Pledge and Conversion Right Agreement, in
the
form of Exhibit C to this Agreement, in the event that the Company fails to
pay
principal and interest on the Note by the maturity date set forth in the Note,
the Purchaser shall have the right to convert the principal amount of the Note
and any accrued and unpaid interest into Pledged Shares. Upon such conversion,
the Note, to the extent converted, shall be cancelled and the Company shall
have
no further obligations with respect to such principal amount.
4. The
Company represents and warrants to the Purchaser that:
(a) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to issue and sell the Note
pursuant to this Agreement. The execution, delivery and performance of this
Agreement and the issuance of the Note have been duly authorized by the
Company’s board of directors. This Agreement has been duly executed and
delivered by the Company and constitutes, the valid and binding obligation
of
the Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
liquidation, reorganization, moratorium, usury or other laws of general
application affecting the rights of creditors generally and subject to the
exercise of judicial discretion as to the application of principles of equity,
regardless of whether such principles are applied by a court of law or
equity.
(b) The
Pledged Shares have been duly authorized, validly issued, fully paid an
non-assessable.
5. The
Purchaser hereby represents, warrants, covenants and agrees as
follows:
(a) The
Purchaser understands that the offer and sale of the Note is being made only
by
means of this Agreement. The Purchaser understands that the Company has not
authorized the use of, and the Purchaser confirms that he is not relying upon,
any other information, written or oral, other than material contained in this
Agreement and in material that has been publicly filed with the Securities
and
Exchange Commission (the “Commission”). The
Purchaser is aware that the purchase of the Note involves a high degree of
risk
and that the Purchaser may sustain, and has the financial ability to sustain,
the loss of her entire investment, understands that no assurance can be given
that the Company will be profitable in the future, that the Company may need
additional financing and that the failure of the Company to raise additional
funds when required may have a material adverse effect upon its business.
Furthermore,
in subscribing for the Note, the Purchaser acknowledges that it is not relying
upon any projections or any statements of any kind relating to future revenue,
earnings, operations or cash flow in purchasing the
Note.
(b) The
Purchaser represents to the Company that the Purchaser is an accredited investor
within the meaning of Rule 501 of the Commission under the Securities Act and
she understands the meaning of the term “accredited investor.” The Purchaser
further represents that the Purchaser has such knowledge and experience in
financial and business matters as to enable the Purchaser to understand the
nature and extent of the risks involved in purchasing the Note. The Purchaser
is
fully aware that such investments can and sometimes do result in the loss of
the
entire investment. The Purchaser has engaged her own counsel and accountants
to
the extent that she deems it necessary.
(c) All
of
the information provided by the Purchaser in its Confidential Investor
Questionnaire is true and correct in all material respects.
(d) The
Purchaser is acquiring the Note pursuant to this Agreement for investment and
not with a view to the sale or distribution thereof, for the Purchaser’s own
account and not on behalf of others; has not granted any other person any
interest or participation in or right or option to purchase all or any portion
of the Note; is aware that the Note is a restricted security within the meaning
of Rule 144 of the Commission under the Securities Act, and may not be sold
or
otherwise transferred other than pursuant to an effective registration statement
or an exemption from registration; and understands and agrees that the Note
and
the certificates for the Pledged Shares shall bear the Company’s standard
investment legend. The Purchaser understands the meaning of these
restrictions.
(e) The
Purchaser will not transfer the Note or any Pledged Shares except in compliance
with all applicable federal and state securities laws and regulations, and,
in
such connection, the Company may request an opinion of counsel reasonably
acceptable to the Company as to the availability of any exemption.
(f) The
Purchaser understands that the Company may prepay, in whole or in part, the
Note
at any time prior to the Maturity Date, as defined in the Note, upon five (5)
days’ oral or written notice to the Purchaser.
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(g) The
Purchaser represents and warrants that no broker or finder was involved directly
or indirectly in connection with the Purchaser’s purchase of the Note pursuant
to this Agreement. The Purchaser shall indemnify the Company and hold it
harmless from and against any manner of loss, liability, damage or expense,
including fees and expenses of counsel, resulting from a breach of the
Purchaser’s warranty contained in this Section 6(g).
(h) The
Purchaser understands that it has no registration rights with respect to the
Note or the Pledged Shares.
(i) The
Purchaser represents and warrants that the address set forth on the signature
page is its true and correct address, and understands that the Company will
rely
on this representation in making filings under state securities or blue sky
laws.
6. (a)
This
Agreement constitutes the entire agreement between the parties relating to
the
subject matter hereof, superseding any and all prior or contemporaneous oral
and
prior written agreements, understandings and letters of intent. This Agreement
may not be modified or amended nor may any right be waived except by a writing
which expressly refers to this Agreement, states that it is a modification,
amendment or waiver and is signed by all parties with respect to a modification
or amendment or the party granting the waiver with respect to a waiver. No
course of conduct or dealing and no trade custom or usage shall modify any
provisions of this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within such State.
(b) All
notices provided for in this Agreement shall be in writing signed by the party
giving such notice, and delivered personally or sent by overnight courier,
mail
or messenger against receipt thereof or sent by registered or certified mail,
return receipt requested, or by facsimile transmission or similar means of
communication if receipt is confirmed. Notices shall be deemed to have been
received on the date of delivery or attempted personal delivery if sent by
registered or certified mail, by messenger or by an overnight courier services
which provides evidence of delivery or attempted delivery, of if sent by
telecopier, upon the date of receipt provided that receipt is acknowledge by
the
recipient. Notices shall be sent to the parties at their respective addresses
set forth on the signature page of this Agreement. A copy of any notice to
the
Company shall be sent to Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, 00 Xxxxxxxx,
00xx
xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention Xxxxx X. Xxxxxxxx P.C., telecopier: (000)
000-0000, e-mail: xxxxxxxxx@xxxx.xxx.
Any
party may, by like notice, change the address, person or telecopier number
to
which notice shall be sent.
(c) This
Agreement shall be governed and construed in accordance with the laws of the
State of New York applicable to agreements executed and to be performed wholly
within such State, without regard to any principles of conflicts of law. Each
of
the parties hereby (i) irrevocably consents and agrees that any legal or
equitable action or proceeding arising under or in connection with this
Agreement may be brought in the federal or state courts located in the County
of
New York in the State of New York, (ii) by execution and delivery of this
Agreement, irrevocably submits to and accepts the jurisdiction of said courts,
(iii) waives any defense that such court is not a convenient forum, and (iv)
consent that any service of process may be made (x) in the manner set forth
in
Section 6(b) of this Agreement (other than by telecopier or e-mail), or (y)
by
any other method of service permitted by law.
(d) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and permitted assigns.
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(e) 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
document.
(f) The
representations, warranties and covenants set forth in this Agreement or in
any
other writing delivered in connection therewith shall survive the issuance
of
the Note.
Please
confirm your agreement with the foregoing by signing this Agreement where
indicated.
|
Very
truly yours,
|
|
|
EOS
HOLDINGS LLC
|
|
|
By:
|
/s/ Xxx Xxxxxx |
|
Name:
Xxx Xxxxxx
|
|
|
Title:
Managing Member
|
|
The
undersigned is an accredited investor pursuant to Item (i)
of
Exhibit D.
Address:
0000 Xxxxxxxx Xxxxx, Xxx Xxxxx, XX 00000
Telecopier
Number: (000) 000-0000
e-mail:xxxxxxx@xxxxxxxx.xxx
Social
Security or Taxpayer ID No.:_______________________________
Accepted
this day of October, 2008
|
By:
|
/s/
Xxxxxxx Xx
|
|
Xxxxxxx
Xx
|
|
|
Chief
Executive Officer
|
The
undersigned agrees to execute the Pledge and Conversion Right Agreement and
to
pledge the Pledged Shares pursuant thereto.
|
/s/
Xxxxxxx Xx
|
|
Xxxxxxx
Xx
|
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4-
Exhibit
A-1
Wire
Transfer Instructions
For
$500,000 of the Purchase Price of the Note
|
BANK
NAME
|
Transportation
Bank, Qianzhou Branch
|
|
NAME
OF ACCOUNT:
|
WUXI
FULAODE WIND EQUIPMENT CO., LTD.
|
|
BRANCH
#
|
3220-0065-6018-0100-11019
|
|
ACCOUNT
#
|
0000-0000-0000-0000
|
Exhibit
A-2
Wire
Transfer Instructions
For
Warrant Exercise and $75,000 of the Purchase Price of the Note
|
BANK
CUSTOMER SERVICE PHONE
|
(000)
000-0000 (Domestic)
|
|
|
(000)
000-0000
(International)
|
|
NAME
OF ACCOUNT:
|
|
|
ABA
#
|
063
000 021
|
|
ACCOUNT
#
|
2000035488527
|
FOR
INTERNATIONAL WIRES ONLY
SWIFT
CODE: XXXXXX00
A-1
Exhibit
E
A
Purchaser who meets any one of the following tests is an accredited
investor:
(a) The
Purchaser is an individual who has a net worth, or joint net worth with the
Purchaser’s spouse, of at least $1,000,000.
(b) The
Purchaser is an individual who had individual income of more than $200,000
(or
$300,000 jointly with the Purchaser’s spouse) for the past two years, and the
Purchaser has a reasonable expectation of having income of at least $200,000
(or
$300,000 jointly with the Purchaser’s spouse) for the current year.
(c) The
Purchaser is an officer or director of the Company.
(d) The
Purchaser is a bank as defined in section 3(a)(2) of the Securities Act or
any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity.
(e) The
Purchaser is a broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934.
(f) The
Purchaser is an insurance company as defined in section 2(13) of the Securities
Act.
(g) The
Purchaser is an investment company registered under the Investment Company
Act
of 1940 or a business development company as defined in section 2(a)(48) of
that
Act.
(h) The
Purchaser is a small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small Business
Investment Act of 1958.
(i) The
Purchaser is an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the investment decision
is
made by a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors.
(j) The
Purchaser is a private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940.
(k) The
Purchaser is an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
(l) The
Purchaser is a trust, with total assets in excess of $5,000,000, not formed
for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the
Commission under the Securities Act.
E-1
(m) The
Purchaser is an entity in which all of the equity owners are accredited
investors (i.e., all of the equity owners meet one of the tests for an
accredited investor).
If
an
individual investor qualifies as an accredited investor, such individual may
purchase the Shares
in
the name of his or her individual retirement account (“XXX”).
E-2
