Supplemental Agreement
Amendment No. 2 to Securities Purchase Agreement
Supplemental Agreement dated and effective as of October 04, 2001, among China
Development Industrial Bank Inc. (the "Seller"), the investors signatory hereto
(individually, a "Purchaser" and, collectively, the "Purchasers"), and ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ (the Seller, Purchasers and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ are, collectively, the
"Parties").
Whereas pursuant to the Securities Purchase Agreement among the Parties dated
September 7, 2001 (the "Purchase Agreement"), and Supplemental Agreement,
Amendment No. 1 to Securities Purchase Agreement, dated September 27, 2001
("Amendment No. 1"), the Seller agreed to sell to the Purchasers and the
Purchasers severally agreed to purchase from the Seller the Shares (as defined
in the Agreement), subject to the terms of the Agreement. The Purchase
Agreement, as amended by Amendment No. 1 is hereinafter, the "Agreement".
Whereas the Parties now desire to amend certain provisions of the Agreement.
Now, Therefore, in consideration of mutual covenants and agreements set forth
below, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Capitalized terms not defined herein shall have their meanings set forth
in the Agreement.
2. Unless otherwise expressly amended herein, terms, conditions and
provisions of the Agreement shall remain in full force and effect.
3. The definition of "First Tranche Per Share Purchase Price" in Section 1.1
of the Purchase Agreement shall be deleted in its entirety and replaced
with the following:
"First Tranche Per Share Purchase Price" means 91% of the average Closing
Prices during the fifteen Trading Days following September 15, 2001."
4. The definition of "Second Tranche Closing Date " in Section 1.1 of the
Purchase Agreement shall be deleted in its entirety and replaced with the
following:
"Second Tranche Closing Date" means October 10, 2001."
5. Section 2.2(b)(1) of the Purchase Agreement shall be deleted in its
entirety and replaced with the following:
"(b) On the 16th Trading Day after the First Tranche Closing Date
(such date, the "First Tranche Settlement Date"), subject to the
provisions of Section 2.6 and this Section 2.2:
(1)(A) If the Seller shall have obtained and delivered to the
Purchasers the Waiver by the First Tranche Settlement Date, then if the
Seller shall have received either (x) notice from the Money Escrow Agent
of the Money Escrow Agent's receipt of the funds required to have been
delivered by the Purchasers pursuant to Section 2.2(a) and, if applicable
2.2(b)(2), or (y) other reasonably acceptable evidence of the delivery of
such funds to the Money Escrow Agent, the Seller shall deliver to each
Purchaser's DTC Account through the Depository Trust Company DWAC system a
number of Shares equal to the sum of (x) the product of (1) 800,000
multiplied by (2) such Purchaser's First Tranche Percentage. The aggregate
800,000 Shares to be so delivered, the "First Tranche Shares".
(B) If the Seller shall not have obtained and delivered to the
Purchasers the Waiver by the First Tranche Settlement Date, then the
Seller shall deliver to the Share Escrow Agent for delivery in accordance
with Section 2.5 and in form acceptable to each of the Seller, the
Purchasers and the Share Escrow Agent, the First Tranche Shares. ___ Each
Purchaser shall be entitled to a number of First Tranche Shares at such
settlement equal to the product of (1) 800,000 multiplied by (2) such
Purchaser's First Tranche Percentage. If (x) a mutually acceptable form of
share delivery is not determined by the second Trading Day immediately
preceding First Tranche Settlement Date or (y) a Share Escrow Agent is not
named by such date, then at the request of the Purchasers, the Seller
shall deliver First Tranche Shares to the Share Escrow Agent or, if no
Share Escrow Agent has been appointed by the Purchasers by such date or
the appointed Share Escrow Agent will not accept certificated securities
for such purpose, the Seller shall deliver to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ for the
benefit of each Purchaser certificates, issued by the Company and
registered in the name of each Purchaser, representing the First Tranche
Shares to be issued and sold to such Purchaser on such Settlement Date."
6. Section 2.2(c) of the Purchase Agreement shall be deleted in its entirety
and replaced with the following:
"(c) In addition to the First Tranche Shares that each Purchaser is
obligated or permitted to purchase from the Seller under this Section 2.2,
each Purchaser shall have the right (but not the obligation) to purchase
up to a number of additional Shares equal to the product of (1) 350,000
multiplied by (2) such Purchaser's First Tranche Percentage, at a purchase
price per Share equal to the First Tranche Per Share Purchase Price. To
exercise this right, a Purchaser will deliver to the Seller, via facsimile
no later than 5:30 p.m. (New York time) on October 5, 2001, a notice
specifying the number of such additional Shares to be purchased by such
Purchaser under this Section 2.2(c). The aggregate 350,000 additional
Shares that the Purchasers may purchase under this Section 2.2(c) are
collectively referred to in this Agreement as the "First Tranche Call
Shares". The Purchasers' right to purchase First Tranche Call Shares under
this Section 2.2(c) is in addition to the Shares and Subsequent Shares
referenced elsewhere in this Agreement. The settlement of the sale of
First Tranche Call Shares shall occur on the First Tranche Settlement
Date. On the First Tranche Settlement Date, each Purchaser who delivered a
notice under this Section 2.2(c) will deliver to the Money Escrow Agent an
amount in United States dollars equal to the product of (x) the number of
First Tranche Call Shares that such Purchaser has elected to purchase
under such notice multiplied by (y) the First Tranche Per Share Purchase
Price. The Money Escrow Agent shall promptly notify the Seller and each
Purchaser of its receipt of the amounts required to have been delivered by
the Purchasers in accordance with the immediately preceding sentence. If
the Money Escrow Agent shall have received the funds required to have been
delivered by the Purchasers who delivered one or more notices under this
Section 2.2(c) or if the Money Escrow Agent shall have received reasonably
acceptable evidence of the delivery of such funds, then the Seller shall
deliver to each such Purchaser the number of First Tranche Call Shares
specified in such Purchaser's notice under this Section 2.2(c), to such
Purchaser's DTC Account through the Depository Trust Company DWAC System.
Upon its receipt of written notice from the Purchaser of its receipt of
the First Tranche Call Shares required to have been delivered to it by the
Seller in accordance with the immediately preceding sentence, the Money
Escrow Agent shall deliver to the Seller all of the funds delivered by
such Purchaser for such First Tranche Call Shares, less an amount equal to
3% of all such amounts delivered by such Purchaser, if such Purhcaser is
not S.R. West Corp., which shall be disbursed to or as directed by S.R.
West Corp."
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7. Section 2.2(e) of the Purchase Agreement shall be deleted in its entirety
and replaced with the following:
"(e) If the Seller shall fail to comply with its delivery
requirements under Section 2.2(b)(1) or 2.2(c) by the Trading Day
immediately following the First Tranche Settlement Date, then each
Purchaser shall have the right, by delivery of written notice to the Money
Escrow Agent and Seller, to require the immediate return of all amounts
deposited by such Purchaser under this Section 2.2, together with all
interest earned thereon."
8. Section 2.3(a) and (b) of the Purchase Agreement shall be deleted in their
entirety and replaced with the following:
"(a) On the Second Tranche Closing Date, each Purchaser shall
deposit with the Money Escrow Agent for future return or disbursement in
accordance with this Section 2.3 and/or Section 2.5 (if applicable), an
aggregate amount in United States dollars equal to the product of 50% of
(x) the product of (1) 650,000 multiplied by (2) such Purchaser's First
Tranche Percentage multiplied by (y) the Closing Price on the Trading Day
immediately preceding the Second Tranche Closing Date.
(b) Not later than 5:30 p.m. (New York time) on the fifteenth
Trading Day following the Second Tranche Closing Date, each Purchaser
shall deliver a written notice ("Second Tranche Purchase Notice") via
facsimile to the Seller specifying the number of Shares to be purchased by
such Purchaser on the Second Tranche Settlement Date (as defined below),
which notice (1) will specify a minimum number of Shares equal to the
product of (x) 650,000 multiplied by (y) such Purchaser's First Tranche
Percentage and (2) may not specify a number of Shares greater than the
product of (x) 1,000,000 multiplied by (y) such Purchaser's First Tranche
Percentage. The Shares indicated on all Second Tranche Purchase Notices or
the notices delivered by the Purchasers under Section 2.3(d), as
applicable, are collectively referred to as the "Second Tranche Shares".
9. The introductory paragraph of Section 2.3(d) of the Purchase Agreement
shall be deleted in its entirety and replaced with the following:
"(d) If the average of the Closing Prices during the seventeen
Trading Days immediately following (but not including) the Second Tranche
Closing Date (the "Second Tranche Pricing Period") is greater than the
Ceiling Price or less than the Floor Price, then each Purchaser shall have
the right (but not the obligation) to purchase up to a number of Second
Tranche Shares equal to the product of (1) 1,000,000 multiplied by (2)
such Purchaser's First Tranche Percentage at a purchase price per Share
equal to the Second Tranche Per Share Purchase Price. To exercise this
right, a Purchaser will deliver to the Seller, via facsimile no later than
the first Trading Day after the Second Tranche Pricing Period, a notice
specifying the number of Second Tranche Shares to be purchased by such
Purchaser under this Section 2.3(d)."
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10. Section 2.5(a) and Section 2.5(b) of the Purchase Agreement shall each be
deleted in its entirety and replaced with the following:
"(a) Following its receipt of written confirmation from the
Purchasers of their receipt of all First Tranche Shares and Second Tranche
Shares required to have been delivered to them on the Waiver Settlement
Date, the Money Escrow Agent shall disburse to the Seller the aggregate
amounts deposited by the Purchasers in accordance with Sections 2.2 and
2.3 (the "Required Payments"), less (1) those amounts returned to the
Purchasers and those amounts required to have been returned to the
Purchasers and not so returned (together with all interest earned thereon)
in each case under Sections 2.2(b)(3), 2.2(c), 2.2(d), 2.2(e), 2.3(c)(3),
2.3(d)(3), 2.3(e), and 2.3(f), (all amounts required to have been returned
to the Purchasers under such Sections are, collectively, the "Required
Returned Payments"), and (2) an amount equal to 3% of the aggregate
Required Payments received and not required to have been returned to the
Purchasers under Sections 2.2, 2.3, or this 2.5, which amount shall be
delivered to or as directed by S.R. West Corp. in accordance with wire
instructions delivered by S.R. West Corp. for such purpose. On the Waiver
Settlement Date, any as of yet unreturned Required Returned Payments shall
be returned by the Money Escrow Agent to the Purchasers, together with all
interest earned thereon.
(b) The Share Escrow Agent shall deliver to each Purchaser's DTC
Account through the Depository Trust Company DWAC system, the First
Tranche Shares and Second Tranche Shares required to be delivered to such
Purchaser in accordance with Sections 2.2(b)(1)(B), 2.2(c), 2.3(c)(1)(B),
and 2.3(d)(1)(B), including any Shares previously delivered by Seller in
certificated form. If any such Shares cannot or are not for any reason be
delivered to the Purchasers' DTC Accounts by the Waiver Settlement Date,
then each Purchaser may accept, but is not required to accept, delivery of
such Shares in certificated form, registered in the name of such
Purchaser; if any Purchaser does not accept such certificated Shares, then
such Purchaser may require the Money Escrow Agent to return to it all
Required Payments (together with all interest earned thereon) made by such
Purchaser and not previously returned to such Purchaser."
11. Section 4.2(a) of the Purchase Agreement shall be deleted in its entirety
and replaced with the following:
"4.2 Certain Call Rights.
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(a) In addition to the Shares, Subsequent Shares and First Tranche Call
Shares that the Purchasers may or are obligated to purchase elsewhere
under this Agreement, each Purchaser shall have the right, but not the
obligation, to require the Seller to sell to it a number of Shares equal
to the product of (1) 600,000 multiplied by (2) such Purchaser's First
Tranche Percentage at a price per Share equal to the Call Shares Per Share
Purchase Price. A Purchaser may exercise its rights under this Section
4.2(a), in whole or in part, from time to time and at any time from the
date of this Agreement through and including December 15, 2001 by
delivering to the Seller one or more written notices (each, a "Call Option
Notice"), specifying the number of such shares of Common Stock to which
such notice relates."
* * * *
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IN WITNESS WHEREOF, the Parties hereto have caused this Supplemental Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
CHINA DEVELOPMENT INDUSTRIAL BANK INC.
By: /s/ ▇▇▇▇ ▇▇▇
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▇▇▇▇ ▇▇▇
Senior Executive Vice President
PINE RIDGE FINANCIAL, INC. First Settlement Shars 760,000
Option Shares 332,500
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Total Shares 1,092,500
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Attorney-in-Fact
VERTICAL VENTURES LLC First Settlement Shars 40,000
Option Shares 17,500
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By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Total Shares 57,500
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Manager
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Associate Partner
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