SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of August 22, 2008, between China BAK Battery, Inc., a Nevada
corporation (the “Company”),
and
each purchaser identified on the signature pages hereto (each, a “Purchaser”
and
collectively, the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
an effective registration statement under the Securities Act of 1933, as amended
(the “Securities
Act”),
the
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, securities
of
the Company as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms have the meanings set forth in this Section
1.1:
“Action”
shall
have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person as such
terms are used in and construed under Rule 405 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
“Board
of Directors”
means
the board of directors of the Company.
“Business
Day”
means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
“Closing”
means
the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
(i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or
waived.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any other
class
of securities into which such securities may hereafter be reclassified or
changed into.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without limitation,
any
debt, preferred stock, rights, options, warrants or other instrument that is
at
any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Company
Counsel”
means
Xxxxxx Xxxx Xxxxx Raysman & Xxxxxxx LLP.
“Disclosure
Schedules”
means
the Disclosure Schedules of the Company delivered concurrently herewith.
“Evaluation
Date”
shall
have the meaning ascribed to such term in Section 3.1(r).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Exchange
Rate”
shall
have the meaning ascribed to such term in Section 5.19.
“GAAP”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Governmental
Body”
shall
mean any: (a) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any governmental or
administrative division, department, agency, commission, instrumentality,
official, organization, unit, body or entity) and any court or other
tribunal.
“Incorporated
Documents”
means
the documents, if any, which may be incorporated by reference in the
Registration Statement, the Prospectus and any Prospectus
Supplement.
“Indebtedness”
shall
have the meaning ascribed to such term in Section 3.1(y).
“Indemnified
Liabilities”
shall
have the meaning ascribed to such term in Section 4.6.
“Insolvent”
shall
have the meaning ascribed to such term in Section 3.1(y).
“Intellectual
Property Rights”
shall
have the meaning ascribed to such term in Section 3.1(o).
“Judgment
Conversion Date”
shall
have the meaning ascribed to such term in Section 5.20(a)(ii).
“Judgment
Currency”
shall
have the meaning ascribed to such term in Section 5.20(a).
“Legal
Requirement” shall
mean any federal state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Body (or under the authority of any national securities
exchange upon which the Common Stock is then listed or traded). Reference to
any
Legal Requirement means such Legal Requirement as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
and
reference to any section or other provision of any Legal Requirement means
that
provision of such Legal Requirement from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision.
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material
Adverse Effect”
shall
have the meaning assigned to such term in Section 3.1(b).
“Material
Permits”
shall
have the meaning ascribed to such term in Section 3.1(m).
“PRC”
means,
for the purpose of this Agreement, the People’s Republic of China, not including
Taiwan, Hong Kong and Macau.
“Per
Unit Purchase Price”
equals
$3.90, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common
Stock
that occur after the date of this Agreement.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
“Prospectus”
means
the base prospectus contained in the Registration Statement.
“Prospectus
Supplement”
means
the supplement to the Prospectus complying with Rule 424(b) of the Securities
Act that is filed with the Commission and delivered by the Company to each
Purchaser at the Closing.
“Purchaser
Party”
shall
have the meaning ascribed to such term in Section 4.6.
“Registration
Statement”
means
the effective registration statement with Commission file No. 333-151985 which
registers the sale of the Shares, the Warrants and the Warrant Shares to the
Purchasers.
“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(e).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means
the Shares, the Warrants and the Warrant Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares”
means
the shares of Common Stock issued or issuable to each Purchaser pursuant to
this
Agreement.
“Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated
brokers.
“Subscription
Amount”
means,
as to each Purchaser, the aggregate amount to be paid for Shares and Warrants
purchased hereunder as specified below such Purchaser’s name on the signature
page of this Agreement next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“Subsidiary”
means
any entity
in
which
the Company directly
or indirectly, owns capital stock or holds an equity or similar interest and
shall, where applicable, include any subsidiary of the Company formed or
acquired after the date hereof.
“Trading
Day”
means
a
day on which the principal Trading Market for the Common Stock is open for
trading.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or
the
New York Stock Exchange.
“Transaction
Documents”
means
this Agreement, the Warrants and any other documents or agreements executed
in
connection with the transactions contemplated hereunder.
“Transfer
Agent”
means
Securities Transfer Corporation, the current transfer agent of the Company,
with
a mailing address of 0000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 and
a
facsimile number of (000) 000-0000, and any successor transfer agent of the
Company.
“Warrants”
means,
collectively, the Common Stock purchase warrants delivered to the Purchasers
at
the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
be
exercisable after the date hereof and have a term of sixty days, in the form
of
Exhibit
A
attached
hereto.
“Warrant
Shares”
means
the shares of Common Stock issued or issuable upon exercise of the Warrants.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth
herein, the Company agrees to sell, and the Purchasers, severally and not
jointly, agree to purchase, up to an aggregate of $32,000,000 of Shares and
Warrants. Each Purchaser shall deliver to the Company, via wire transfer or
a
certified check, immediately available funds equal to its Subscription Amount
and the Company shall deliver to each Purchaser its respective Shares and a
Warrant as determined pursuant to Section 2.2(a)(iii) and Section 2.2(a)(iv),
respectively, and the Company and each Purchaser shall deliver the other items
set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of Winston & Xxxxxx LLP (counsel to Xxxxx Xxxxxx,
Carret & Co., LLC ("BMC")), with an office located at 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000, or such other location as the parties shall mutually
agree.
2.2 Deliveries.
(a) On
or
prior to the Closing Date, the Company shall deliver or cause to be delivered
to
each Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
legal
opinion of Company Counsel in form and substance reasonably acceptable to the
Purchasers;
(iii) delivery
via the Depository Trust Company Deposit Withdrawal Agent Commission System
(“DWAC”)
Shares
equal to such Purchaser’s Subscription Amount divided by the Per Unit Purchase
Price, registered in the name of such Purchaser; and
(iv) a
Warrant
registered in the name of such Purchaser to purchase up to a number of shares
of
Common Stock equal to 100% of such Purchaser’s Subscription Amount divided by
the Per Unit Purchase Price.
(v) the
Prospectus and Prospectus Supplement (which may be delivered in accordance
with
Rule 172 under the Securities Act).
(b) On
or
prior to the Closing Date, each Purchaser shall deliver or cause to be delivered
to the Company the following:
(i) this
Agreement duly executed by such Purchaser; and
(ii) such
Purchaser’s Subscription Amount
(less
any amount contemplated in Section 4.12)
by wire
transfer to the account as specified in writing by the Company.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement; and
(b) The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:
(i) the
accuracy in all respects on the Closing Date of the representations and
warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company required to be performed
at
or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since
the
date hereof;
(v) no
stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; no order preventing or
suspending the use of any Prospectus Supplement shall have been issued and
no
proceeding for that purpose shall have been initiated or threatened by the
Commission; no order having the effect of ceasing or suspending the distribution
of the Securities or any other securities of the Company shall have been issued
by any securities commission, securities regulatory authority or stock exchange
and no proceedings for that purpose shall have been instituted or shall be
pending or, to the knowledge of the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange; all requests
for
additional information on the part of the Commission shall have been complied
with;
(vi) the
Company shall have delivered a certificate of the Company, dated as of the
Closing Date and signed by the Chief Executive Officer and Chief Financial
Officer of the Company (which shall also be considered a representation and
warranty of the Company for purposes of this Agreement), to the effect that:
(1) the
representations and warranties of the Company in this Agreement are true and
correct, as if made on and as of such Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date;
(2) no
stop
order suspending the effectiveness of the Registration Statement or the use
of
the Prospectus or any Prospectus Supplement has been issued and no proceedings
for that purpose have been instituted or are pending or, to the Company’s
knowledge, threatened under the Securities Act; no order having the effect
of
ceasing or suspending the distribution of the Securities or any other securities
of the Company has been issued by any securities commission, securities
regulatory authority or stock exchange in the United States and no proceedings
for that purpose have been instituted or are pending or, to the knowledge of
the
Company, contemplated by any securities commission, securities regulatory
authority or stock exchange in the United States;
(3)when
the
Registration Statement became effective, at the sale time, and at all times
subsequent thereto up to the delivery of such certificate, the Registration
Statement and the Incorporated Documents, if any, when such documents became
effective or were filed with the Commission, contained all information required
to be included therein by the Securities Act and the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the case
may
be, and in all material respects conformed to the requirements of the Securities
Act and the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and the Registration Statement and
the Incorporated Documents did not and do not include any untrue statement
of a
material fact or omit to state a 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, since the effective date of
the
Registration Statement, there has occurred no event required by the Securities
Act and the rules and regulations of the Commission thereunder to be set forth
in the SEC Reports which has not been so set forth;
(vii) from
the
date hereof to the Closing Date, trading in the Common Stock shall not have
been
suspended by the Commission or the Company’s principal Trading Market, and, at
any time prior to the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or minimum prices
shall not have been established on securities whose trades are reported by
such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or inadvisable
to
purchase the Securities at the Closing.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except
as
set forth in the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or warranty otherwise
made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following
representations and warranties to each Purchaser:
(a) Subsidiaries.
All of
the Subsidiaries of the Company are set forth in the SEC Reports. Except as
disclosed in the SEC Reports, the Company owns, directly or indirectly, all
of
the capital stock or other equity interests of each Subsidiary free and clear
of
any Liens, and all of the issued and outstanding shares of capital stock of
each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities. The
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(b) Organization
and Qualification.
The
Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and
to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and
the consummation by it of the transactions contemplated hereby and thereby
have
been duly authorized by all necessary action on the part of the Company and
no
further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection therewith other than in connection with the
Required Approvals. Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by Legal Requirements.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company,
the issuance and sale of the Securities and the consummation by the Company
of
the other transactions contemplated hereby and thereby do not and will not
(i)
conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company
or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any Legal Requirement or other
restriction of any court or Governmental Body to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
(e) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other Governmental Body or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Section
4.2
of this Agreement, (ii) the filing with the Commission of the Prospectus
Supplement, and (iii) such filings as are required to be made under applicable
state securities laws (collectively, the “Required
Approvals”).
(f) Issuance
of the Securities; Registration.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens (other
than Liens arising as the result of a pledge of the Securities by the
Purchaser).
The
Warrant Shares, when issued in accordance with the terms of the Warrants, will
be validly issued, fully paid and nonassessable, free and clear of all Liens
other than restrictions on transfer provided in the Transaction Documents
(and
other
than Liens arising as the result of a pledge of the Securities by the
Purchaser).
The
Company has reserved from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to this Agreement and the Warrants.
The Company has prepared and filed the Registration Statement in conformity
with
the requirements of the Securities Act, which became effective on July 10,
2008 (the “Effective
Date”),
including the Prospectus, and such amendments and supplements thereto as may
have been required to the date of this Agreement. The Registration Statement
is
effective under the Securities Act and no stop order preventing or suspending
the effectiveness of the Registration Statement or suspending or preventing
the
use of the Prospectus has been issued by the Commission and no proceedings
for
that purpose have been instituted or, to the knowledge of the Company, are
threatened by the Commission. The Company proposes to file the Prospectus
Supplement with the Commission pursuant to Rule 424(b). At the time the
Registration Statement and any amendments thereto became effective, at the
date
of this Agreement and at the Closing Date, the Registration Statement and any
amendments thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not and 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
the Prospectus and any amendments or supplements thereto, at the time the
Prospectus or any amendment or supplement thereto was issued and at the Closing
Date, conformed and will conform in all material respects to the requirements
of
the Securities Act and did not and will not contain an untrue statement of
a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(g) Capitalization.
The
capitalization of the Company is as set forth in the SEC Reports. Except as
set
forth in the SEC Reports, the Company has not issued any capital stock since
its
most
recently filed periodic report under the Exchange Act, other
than pursuant to the exercise of stock options under the Company’s incentive
plans, the issuance of shares of Common Stock pursuant to the Company’s
incentive plans and pursuant to the conversion or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed periodic
report under the Exchange Act. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate
in
the transactions contemplated by the Transaction Documents. Except as a result
of the purchase and sale of the Securities or except as set forth in the SEC
Reports, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for,
or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares
of
Common Stock or Common Stock Equivalents. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No approval or authorization of any stockholder or others,
or further approval by the Board of Directors is required for the issuance
and
sale of the Securities. Except as disclosed in the SEC Reports, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
(h) SEC
Reports; Financial Statements.
Except
as set forth in Schedule
3.1(h),
the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required
by
law or regulation to file such material) (the foregoing materials, including
the
exhibits thereto and documents incorporated by reference therein, together
with
the Prospectus and the Prospectus Supplement, being collectively referred to
herein as the “SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act, as applicable,
and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Incorporated
Documents, if any, when they became effective or were filed with the Commission,
as the case may be, conformed in all material respects to the requirements
of
the Securities Act and the Exchange Act, as applicable, and the applicable
rules
and regulations of the Commission thereunder, and none of such documents
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
Prospectus Supplement, if any, when such documents become effective or are
filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act and the Exchange Act, as applicable,
and the applicable rules and regulations of the Commission thereunder, and
will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading. The financial
statements of the Company included in the SEC Reports complied in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.
Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal
year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report filed
prior
to the date hereof or in the Prospectus Supplement, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected
to
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv)
the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock and (v) the Company has
not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company incentive plans. The Company does not have pending
before the Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this Agreement or
as
set forth on Schedule
3.1(i),
no
event, liability or development has occurred or exists with respect to the
Company or its Subsidiaries or their respective business, properties, operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is made that
has not been publicly disclosed at least one Trading Day prior to the date
that
this representation is made.
(j) Litigation.
Except
as disclosed in the SEC Reports, there is no action, suit, inquiry, notice
of
violation, Proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any
of
their respective properties before or by any court, arbitrator, governmental
or
administrative agency or regulatory authority (federal, state, county, local
or
foreign) (collectively, an “Action”)
which
(i) adversely affects or challenges the legality, validity or enforceability
of
any of the Transaction Documents or the Securities or (ii) could, if there
were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Except as disclosed in the SEC Reports, neither the Company
nor
any Subsidiary, nor any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal
or
state securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or, to the knowledge
of the Company, any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) Labor
Relations.
No
labor dispute exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect. Except as disclosed in the
SEC
Reports, neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer
of
the Company, to the knowledge of the Company, is, or is now expected to be,
in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement,
or
any other contract or agreement or any restrictive covenant in favor of any
third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. and PRC Legal Requirements relating to employment
and
employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance could not, individually or in
the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(l) Compliance.
Except
as disclosed on Schedule
3.1(l),
neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or Governmental Body, or (iii) is or has been in violation of any
statute, rule or regulation of any Governmental Body, including without
limitation, all Legal Requirements applicable to its business and all such
laws
that affect the environment, except in each case as could not have or reasonably
be expected to result in a Material Adverse Effect.
(m) Regulatory
Permits.
Except
as disclosed in the SEC Reports, the Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material
Permits”),
and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(n) Title
to Assets.
Except
as disclosed in the SEC Reports, the Company and the Subsidiaries have valid
land use rights for all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business
of
the Company and the Subsidiaries, in each case free and clear of all Liens,
except for Liens as do not materially affect the value of such property and
do
not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Except as disclosed in the SEC Reports, any real property
and facilities held under lease by the Company and the Subsidiaries are held
by
them under valid, subsisting and enforceable leases with which the Company
and
the Subsidiaries are in compliance.
(o) Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or material for use in connection with
their
respective businesses as described in the SEC Reports and which the failure
to
so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”).
Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary
has received a written notice that any of the Intellectual Property Rights
used
by the Company or any Subsidiary violates or infringes upon the intellectual
property rights of any Person. Except as disclosed in the SEC Reports, to the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(p) Insurance.
Except
as set forth in the SEC Reports, the Company and the Subsidiaries are insured
by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company deems adequate for the businesses in which
the Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance. Neither the Company nor any 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 without a
significant increase in cost.
(q) Transactions
With Affiliates and Employees.
Except
as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction of a value of $120,000 or
greater with the Company or any of its Subsidiaries which would be required
to
be reported under Item 404 of Regulation S-K with the Company or any Subsidiary
(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 entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.
(r) Xxxxxxxx-Xxxxx;
Internal Accounting Controls.
The
Company is in compliance with all provisions of the Xxxxxxxx-Xxxxx Act of 2002
which are applicable to it as of the Closing Date. The
Company and the 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 GAAP 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. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation
Date”).
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
(s) Certain
Fees.
Except
as set forth in the Prospectus Supplement, no brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other
Person with respect to the transactions contemplated by the Transaction
Documents. The Purchasers shall have no obligation with respect to any fees
or
with respect to any claims made by or on behalf of other Persons for fees of
a
type contemplated in this Section 3.1(s) that may be due in connection with
the
transactions contemplated by the Transaction Documents.
(t) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act of 1940, as amended.
(u) Registration
Rights.
Except
as disclosed in the SEC Reports, no Person has any right to cause the Company
to
effect the registration under the Securities Act of any securities of the
Company.
(v) Listing
and Maintenance Requirements.
The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which is likely to
have
the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not, in the
12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements; provided, the Company makes no warranty
as
to the future price of its Common Stock and its impact on such listing or
maintenance requirements.
(w) Application
of Takeover Protections.
The
Company and the Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s articles of
incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without limitation,
as
a result of the Company’s issuance of the Securities and the Purchasers’
ownership of the Securities.
(x) No
Integrated Offering.
Assuming
the accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any sales of
any
security, under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of any
applicable shareholder approval provisions of any Trading Market on which any
of
the securities of the Company are listed or designated.
(y) Indebtedness.
The
Company does not intend to incur debts beyond its ability to pay such debts
as
they mature (taking into account the timing and amounts of cash to be payable
on
or in respect of its debt). Neither the Company nor any of its Subsidiaries
has
taken any steps to seek protection pursuant to any bankruptcy law nor does
the
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any
fact
which would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to
occur
at the Closing, will not be Insolvent (as defined below). For purposes of this
Section 3.1(y), "Insolvent" means, with respect to any Person (i) the present
fair saleable value of such Person's assets is less than the amount required
to
pay such Person's total Indebtedness (as defined in this Section 3.1(y)), (ii)
such Person is unable to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured, (iii)
such Person intends to incur or believes that it will incur debts that would
be
beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.
Except as set forth on Schedule
3.1(y),
the SEC
Reports set forth as of the respective dates thereof all outstanding secured
and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness”
means
(a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect
of
indebtedness of others, whether or not the same are or should be reflected
in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value
of
any lease payments
in excess of $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any
Indebtedness.
(z) Tax
Status.
Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and the Company has no knowledge of a tax deficiency which has been asserted
or
threatened against the Company or any Subsidiary.
There
are no transfer taxes or other similar fees or charges under any Legal
Requirement in the United States or any state or any political subdivision
thereof, required to be paid by the Company in connection with the execution
and
delivery of this Agreement or the sale by the Company of the Securities. No
stamp or other issuance or transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by or on behalf of the Purchasers
to the United States or the PRC or any political subdivision or taxing authority
thereof or therein in connection with (A) the issuance of the Securities by
the
Company, and (B) the consummation by the Company of any other transaction
contemplated in this Agreement or the performance by the Company of its
obligations under this Agreement.
(aa) Foreign
Corrupt Practices.
Neither
the Company, nor any agent or other person acting on behalf of the Company,
has
(i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf
of
which the Company is aware) which is in violation of law, or (iv) violated
in
any material respect any provision of the Foreign Corrupt Practices Act of
1977,
as amended.
(bb) Accountants.
The
Company’s accountants are identified in the Prospectus or Prospectus Supplement.
Such accountants, who the Company expects will express their opinion with
respect to the financial statements to be included in the Company’s Annual
Report on Form 10-K for the year ending September 30, 2008, are a registered
public accounting firm as required by the Securities Act.
(cc) Regulation
M Compliance.
The Company has not, and no one acting on its behalf has, (i) taken, directly
or
indirectly, any action designed to cause or to result in the stabilization
or
manipulation of the price of any security of the Company to facilitate the
sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid
any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses
(ii) and (iii), compensation paid to the Company’s placement agent in connection
with the placement of the Securities.
(dd) U.S.
Real Property Holding Corporation.
The
Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon any Purchaser's
request.
(ee) No
Additional Agreements.
The
Company does not have any agreement or understanding with any Purchaser with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
(ff) Other
Representations and Warranties Relating to the Company and
Subsidiaries.
(i) All
consents, approvals, authorizations or licenses requisite under PRC Legal
Requirements for the due and proper establishment and operation of the Company
and Subsidiaries have been duly obtained from the relevant PRC Governmental
Bodies and are in full force and effect; except where the failure to obtain
any
such consent, approval, authorization or license or maintain the same in full
force and effect would not have, or be reasonably likely to result in, a
Material Adverse Effect.
(ii) Except
as
set forth on Schedule
3.1(ff)(ii),
all
filings
and registrations with the PRC Governmental Bodies required in respect of the
Company and Subsidiaries and their capital structure and operations including,
without limitation, the registration with the Ministry of Commerce, the China
Securities Regulatory Commission, the State Administration of Industry, or
their
respective local divisions of Commerce, the State Administration of Foreign
Exchange, tax bureau and customs authorities have been duly completed in
accordance with the relevant PRC Legal Requirements, except where, the failure
to complete such filings and registrations does not, and would not, individually
or in the aggregate, have a Material Adverse Effect.
(iii) The
Company and Subsidiaries have complied with all relevant PRC Legal Requirements
regarding the contribution and payment of its registered share capital, the
payment schedule of which has been approved by the relevant PRC Governmental
Bodies. There are no outstanding commitments made by the Company or any
Subsidiary (or any of their shareholders) to sell any equity interest in the
Company or any Subsidiary.
(iv) Neither
the Company nor any Subsidiary has received any letter or notice from any
relevant PRC Governmental Body notifying it of revocation of any licenses or
qualifications issued to it or any subsidy granted to it by any PRC Governmental
Body for non-compliance with the terms thereof or with applicable PRC Legal
Requirements, or the lack of compliance or remedial actions in respect of the
activities carried out by the Company or any Subsidiary, except such revocation
as does not, and would not, individually or in the aggregate, have a Material
Adverse Effect.
(v) The
Company and Subsidiaries have conducted their business activities within the
permitted scope of business or have otherwise operated their business in
compliance with all relevant Legal Requirements and with all requisite licenses
and approvals granted by competent PRC Governmental Bodies other than such
non-compliance that do not, and would not, individually or in the aggregate,
have a Material Adverse Effect. As to licenses, approvals and government grants
and concessions requisite or material for the conduct of any material part
of
the Company or Subsidiaries’ business which is subject to periodic renewal, the
Company has no knowledge of any reasons for which such requisite renewals will
not be granted by the relevant PRC Governmental Bodies.
(vi) With
regard to employment and staff or labor, the Company and Subsidiaries have
complied with all applicable PRC Legal Requirements in all material respects,
including, without limitation, those pertaining to welfare funds, social
benefits, medical benefits, insurance, retirement benefits, pensions or the
like, other than such non-compliance that do not, and would not, individually
or
in the aggregate, have a Material Adverse Effect.
(gg) Disclosure.
Neither
the Company nor any Person acting on its behalf has provided any Purchaser
or
its respective agents or counsel with any information that constitutes material,
non-public information concerning the Company, the Subsidiaries or their
respective businesses, except insofar as the existence and terms of the proposed
transactions contemplated hereunder may constitute such information. The Company
understands and confirms that the Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company and
its
businesses and the transactions contemplated hereby, furnished by or on behalf
of the Company (including their representations and warranties set forth in
this
Agreement and the disclosure set forth in any diligence report or business
plan
provided by the Company or any Person acting on the Company’s behalf) are true
and correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(hh) Acknowledgment
Regarding Each Purchaser’s Purchase of the Securities. The Company acknowledges
and agrees that each Purchaser is acting solely in the capacity of arm’s length
purchaser with respect to this Agreement and the other Transaction Documents
and
the transactions contemplated hereby and thereby, and that no Purchaser is
(i)
an officer or director of the Company, (ii) an “affiliate” of the Company (as
defined in Rule 144 under the Securities Act (including any successor rule,
“Rule 144”)) or (iii) a “beneficial owner” of more than 10% of the Common Stock
(as defined for purposes of Rule 13d-3 of the Exchange Act). The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of
the Company (or in any similar capacity) with respect to this Agreement or
the
other Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by a Purchaser or any of its representatives
or
agents in connection with this Agreement or the other Transaction Documents
and
the transactions contemplated hereby and thereby is merely incidental to such
Purchaser’s purchase of the Shares. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation by
the
Company and its representatives.
3.2 Representations
and Warranties of the Purchasers. Each
Purchaser, for itself and for no other Purchaser, hereby represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of
this
Agreement and performance by such Purchaser of the transactions contemplated
by
this Agreement have been duly authorized by all necessary corporate or similar
action on the part of such Purchaser. Each Transaction Document to which it
is a
party has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by Legal
Requirements.
(b) Ordinary
Course; Regulation M.
Such
Purchaser is acquiring the Shares and Warrants hereunder in the ordinary course
of its business. Such Purchaser has complied with the provisions of Rule 105
of
Regulation M in connection with the purchase of the Shares and
Warrants.
(c) Purchaser
Status.
At the
time such Purchaser was offered the Shares and Warrants, it was, and at the
date
hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under Section
15
of the Exchange Act.
(d) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(e) Information.
Such
Purchaser and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested
by
such Purchaser. Such Purchaser and its advisors, if any, have been afforded
the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by such Purchaser or its advisors,
if any, or its representatives shall modify, amend or affect such Purchaser's
right to rely on the Company's representations and warranties contained herein.
(f) Certain
Trading Activities.
Such
Purchaser has not directly or indirectly, nor has any Person acting on behalf
of
or pursuant to any understanding with such Purchaser, engaged in any purchase
or
sale in the securities of the Company (including, without limitations, any
Short
Sales involving the Company’s securities) since the time
that
such Purchaser was first contacted by the Company or any placement agent acting
on behalf of the Company regarding this
investment in the Company. Such Purchaser covenants that neither it nor any
Person acting on its behalf or pursuant to any understanding with it will engage
in any purchase or sale in the securities of the Company (including Short Sales)
prior to the time that the transactions contemplated by this Agreement are
publicly disclosed
pursuant
to the Press Release (as defined below).
(g) No
Governmental Review.
Such
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
(h) Independent
Investment Decision.
Such
Purchaser has independently evaluated the merits of its decision to purchase
the
Securities pursuant to the Transaction Documents, and such Purchaser confirms
that it has not relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser has not relied on the
business or legal advice of BMC or any of its agents, counsel or Affiliates
in
making its investment decision hereunder, and confirms that none of such Persons
has made any representations or warranties to such Purchaser in connection
with
the transactions contemplated by the Transaction Documents.
(i) Limited
Ownership.
The
purchase by such Purchaser of the Securities issuable to it at the Closing
will
not result in such Purchaser (individually or together with any other Person
with whom such Purchaser has identified, or will have identified, itself as
part
of a “group” in a public filing made with the Commission involving the Company’s
securities) acquiring, or obtaining the right to acquire, in excess of 19.999%
of the outstanding shares of Common Stock or the voting power of the Company
on
a post transaction basis that assumes that the Closing shall have occurred.
Such
Purchaser does not presently intend to, alone or together with others, make
a
public filing with the Commission to disclose that it has (or that it together
with such other Persons have) acquired, or obtained the right to acquire, as
a
result of the Closing (when added to any other securities of the Company that
it
or they then own or have the right to acquire), in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a
post
transaction basis that assumes that the Closing shall have
occurred.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent
transaction.
4.2 Securities
Laws Disclosure; Publicity. The Company shall, by 9:30 a.m. (New York City
time) on the Trading Day immediately following the date hereof, issue a press
release (the “Press Release”) disclosing the material terms of the
transactions contemplated hereby, and within 4 Trading Days file a Current
Report on Form 8-K, and shall attach this Agreement and the form of Warrant
thereto. The Company and each Purchaser shall consult with each other in issuing
any other press releases with respect to the transactions contemplated hereby,
and neither the Company nor any Purchaser shall issue any such press release
or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except
if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement
or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in
any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with the filing of final Transaction Documents
(including signature pages thereto) with the Commission and (ii) to the extent
such disclosure is required by law or Trading Market regulations, in which
case
the Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii).
4.3 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “Acquiring
Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that
any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers, provided
that no Purchaser, together with its Affiliates, will beneficially hold more
than 15% of the Common Stock outstanding as of the Closing Date.
4.4 Non-Public
Information. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company covenants
and agrees that neither it nor any other Person acting on its behalf will
provide any Purchaser or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. From
and
after the filing of the Press Release, no Purchaser shall be in possession
of
any material, nonpublic information received from the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents,
that is not disclosed in the Press Release. The Company shall not disclose
the
identity of any Purchaser in any filing with the SEC except as required by
the
rules and regulations of the SEC thereunder. The Company shall not, and shall
cause each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents, not to, provide any Purchaser with any
material, nonpublic information regarding the Company or any of its Subsidiaries
from and after the filing of the Press Release without the express written
consent of such Purchaser. In the event of a breach of the foregoing covenant
by
the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees and agents, in addition to any other remedy
provided herein or in the Transaction Documents, a Purchaser may notify the
Company, and the Company shall make public disclosure of such material nonpublic
information within two (2) Trading Days of such notification.
The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the
Company.
4.5 Use
of
Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder as set forth in the Prospectus Supplement and not to redeem
any Common Stock or Common Stock Equivalents.
4.6 Indemnification
of Purchasers. Subject to the provisions of this Section 4.6, the Company
will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities
Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding
a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and out-of pocket expenses, including
all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation
(the
“Indemnified Liabilities”)
that any
such Purchaser Party may suffer or incur as a result of or relating to (a)
any
breach of any of the representations, warranties, covenants or agreements made
by the Company in this Agreement or in the other Transaction Documents, (b)
any
action instituted against a Purchaser, or any of them or their respective
Affiliates, by any third
party,
with
respect to any of the transactions contemplated by the Transaction Documents
(except
to
the extent
such
action is based upon conduct
by such Purchaser which constitutes fraud, gross negligence or willful
misconduct),
(c)
any untrue statement or alleged untrue statement of a material fact contained
in
the Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A, Rule 430B and Rule 430C
under
the Securities Act, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (d) upon any untrue statement or alleged untrue statement
of
a material fact contained in the Prospectus, any Prospectus Supplement or any
Incorporated Document (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make
the
statements therein, in the light of the circumstances under which they were
made, not misleading. If any action shall be brought against any Purchaser
Party
in respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. To the extent that a
Purchaser Party fails to provide timely notice of a claim for indemnity under
this Section 4.6, and such failure materially prejudices the Company’s ability
to defend against such claim, then the Company shall have no obligation under
this Section 4.6 to indemnify the Purchaser Party for the claim (or portion
thereof) that was so affected. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense
of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. Legal
counsel referred to in the immediately proceeding sentence shall be selected
by
the Purchasers holding at least a majority of the Shares issued and issuable
hereunder. The
Company will not be liable to any Purchaser Party under this Agreement (i)
for
any settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (ii)
to
the extent, but only to the extent, that a loss, claim, damage or liability
is
attributable to any
conduct
by such Purchaser which constitutes fraud, gross negligence, or willful
misconduct.
The
Company shall not, without the prior written consent of the Purchaser Party,
which consent shall not be unreasonably withheld, conditioned or delayed,
consent to entry of any judgment or enter into any settlement or other
compromise which (i) does not include as an unconditional term thereof giving
by
the claimant or plaintiff to such Purchaser Party of a release from all
liability in respect to such Indemnified Liabilities or litigation, (ii)
requires any admission of wrongdoing by such Purchaser Party, or (iii) obligates
or requires a Purchaser Party to take, or refrain from taking, any action.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Purchaser Party with respect to all
third parties, firms or corporations relating to the matter for which
indemnification has been made. 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. The indemnification
required by this Section 4.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
are
received or Indemnified Liabilities are incurred. The indemnity agreements
contained herein shall be in addition to (x) any cause of action or similar
right of the Purchaser Party against the indemnifying party or others, and
(y)
any liabilities the indemnifying party may be subject to pursuant to the
law.
4.7 Reservation
of Common Stock.
As of
the date hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the Company to
issue Shares pursuant to this Agreement and Warrant Shares pursuant to any
exercise of the Warrants.
4.8 Listing
of Common Stock. The
Company hereby agrees to
maintain the listing of the Common Stock on a Trading Market, and as soon as
reasonably practicable following the Closing (but not later than the Closing
Date) to list all of the Shares on such Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application all of the Shares, and
will
take such other action as is reasonably necessary to cause all of the Shares
to
be listed on such other Trading Market as promptly as possible. The Company
shall
continue
the listing and trading of its Common Stock on a Trading Market and will comply
in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market.
4.9 Equal
Treatment of Purchasers. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of
any
of the Transaction Documents unless the same consideration is also offered
to
all of the parties to the Transaction Documents. For clarification purposes,
this provision constitutes a separate right granted to each Purchaser by the
Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.
4.10 Confidentiality
After The Date Hereof. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until the time the transactions contemplated
by
this Agreement are publicly disclosed by the Company pursuant to the Press
Release as described in Section 4.2, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules.
4.11 No
Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
4.12 Variable
Securities. For so long as any Warrants remain outstanding, the Company
shall not, in any manner, issue or sell any rights, warrants or options to
subscribe for or purchase Common Stock or directly or indirectly convertible
into or exchangeable or exercisable for Common Stock at a price which varies
or
may vary with the market price of the Common Stock, including by way of one
or
more reset(s) to any fixed price unless the conversion, exchange or exercise
price of any such security cannot be less than the then applicable Exercise
Price (as defined in the Warrants) with respect to the Common Stock into which
any Warrant is exercisable. This provision shall not prohibit the Company from
issuing or selling any securities that contain customary anti-dilution
provisions.
4.13 Warrant
Shares. If all or any portion of a Warrant is exercised at a time when there
is an effective registration statement to cover the issuance or resale of the
Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant
Shares issued pursuant to any such exercise shall be issued free of all legends.
If at any time following the date hereof the Registration Statement (or any
subsequent registration statement registering the Warrant Shares) is not
effective or is not otherwise available for the sale or resale of the Warrant
Shares, the Company shall immediately notify the holders of the Warrants in
writing that such registration statement is not then effective and thereafter
shall promptly notify such holders when the registration statement is effective
again and available for the sale or resale of the Warrant Shares. The Company
shall use its best efforts to keep a registration statement (including the
Registration Statement) registering the issuance or resale of the Warrant Shares
effective during the term of the Warrants; provided, such obligation will
terminate when all Warrant Shares may be sold pursuant to Rule 144 or any
successor.
ARTICLE
V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before the tenth day
following the date of this Agreement; provided, however, that no
such termination will affect the right of any party to xxx for any breach by
the
other party (or parties).
5.2 Fees
and Expenses. At
the
Closing, the Company shall reimburse Empery Asset Master Ltd. for its reasonable
expenses incurred in connection with this Agreement and the Transaction
Documents, including, without limitation, reasonable legal fees and expenses,
up
to a maximum of $10,000, which amount may be withheld by such Purchaser from
its
Subscription Amount at the Closing. In addition, (i) Xxxxxx Bay Fund, LP may
withhold $86,428 from its Subscription Amount, (ii) Xxxxxx Bay Overseas Fund,
Ltd. may withhold $114,568 from its Subscription Amount and (iii) any of Enable
Growth Partners LP, Enable Opportunity Partners LP and Xxxxxx Diversified
Strategy Master Fund LLC may withhold $200,996, in the aggregate, from its
Subscription Amount, all in satisfaction of registration delay payments owed
by
the Company to each of them. The Company shall be responsible for the payment
of
any placement agent's fees, financial advisory fees, or broker's commissions
(other than for Persons engaged by any Purchaser) relating to or arising out
of
the transactions contemplated hereby, including, without limitation, any fees
or
commissions payable to the Agent. The Company shall pay, and hold each Purchaser
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except
as
expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to
the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees, stamp taxes and other taxes
and
duties levied in connection with the delivery of any Securities to the
Purchasers.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, the Prospectus and the Prospectus Supplement, contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
on
the signature pages attached hereto prior to 5:30 p.m. (New York City time)
on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
set
forth on the signature pages attached hereto on a day that is not a Trading
Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
2nd
Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and
the
Purchasers of at least a majority of the Securities still held by the Purchasers
or, in the case of a waiver, by the party against whom enforcement of any such
waived provision is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.
5.6 Headings.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns. The Company may
not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Purchaser (other than by merger). Any Purchaser may
assign any or all of its rights under this Agreement to any Person to whom
such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchasers.”
5.8 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is
not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.6, except that BMC is a
third
party beneficiary of the representations and warranties of the Company contained
in this Agreement as if it was a party hereto. Accordingly, all representations
and warranties of the Company made to the Purchasers shall have also been deemed
to be made directly to BMC. Further, BMC is hereby accorded all of the benefits
of Section 4.6 as if it was a Purchaser Party, and all references to Purchaser
Parties shall be deemed to include BMC and its directors, officers,
shareholders, agents, members, partners or employees (and any other Persons
with
a functionally equivalent role of a Person holding such titles notwithstanding
a
lack of such title or any other title) of such controlling persons.
5.9 Arbitration.
Any dispute, controversy or claim arising out of or relating to this Agreement,
or the breach, termination or invalidity thereof, shall be settled definitively
and exclusively by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association by a single arbitrator appointed
in accordance with said Rules. The arbitration shall take place in New York,
New
York, United States of America. The language to be used in the arbitral
proceedings shall be English. The arbitrator shall apply the law of the State
of
New York, United States of America, without regard for its principles of
conflict of laws. Judgment upon the award may be entered in any court having
jurisdiction thereof. If either party shall commence a Proceeding to enforce
any
provisions of a Transaction Document, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Proceeding.
Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. The Company hereby appoints Xxxxxx Xxxx Xxxxx
Raysman & Xxxxxxx LLP, with offices at 000 Xxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000, as its agent for service of process in New York. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
5.10 Survival.
The representations and warranties contained herein shall survive the Closing
and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when
taken together 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, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by
a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
5.13 Replacement
of Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of an affidavit of loss or presentation
of
other evidence reasonably satisfactory to the Company of such loss, theft or
destruction. The applicant for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs (including
customary indemnity) associated with the issuance of such replacement
Securities.
5.14 Remedies.
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, each of the Purchasers and the Company
will be entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at
law
would be adequate.
5.15 Payment
Set Aside. To the extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds
of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation
or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
5.16 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in
any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out
of
this Agreement or out of the other Transaction Documents, and it shall not
be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. Winston & Xxxxxx LLP does not represent any of the Purchasers,
only Xxxxx Xxxxxx, Carret & Co., LLC. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience
of
the Company and not because it was required or requested to do so by the
Purchasers.
5.17 Saturdays,
Sundays, Holidays, etc. If
the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then such action
may be taken or such right may be exercised on the next succeeding Business
Day.
5.18 Construction.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore,
the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
5.19 Currency.
Unless otherwise indicated, all dollar amounts referred to in this Agreement
are
in United States Dollars. All amounts owing under this Agreement or any
Transaction Document shall be paid in US dollars. All amounts denominated in
other currencies shall be converted in the US dollar equivalent amount in
accordance with the Exchange Rate on the date of calculation. "Exchange Rate"
means, in relation to any amount of currency to be converted into US dollars
pursuant to this Agreement, the US dollar exchange rate as published in The
Wall
Street Journal on the relevant date of calculation.
5.20 Judgment
Currency.
(a) If
for
the purpose of obtaining or enforcing judgment against the Company in any court
in any jurisdiction it becomes necessary to convert into any other currency
(such other currency being hereinafter in this Section 5.20 referred to as
the
"Judgment Currency") an amount due in US Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Business Day
immediately preceding:
(b) date
of
actual payment of the amount due, in the case of any proceeding in the courts
of
New York or in the courts of any other jurisdiction that will give effect to
such conversion being made on such date: or
(i) the
date
on which the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such conversion is made
pursuant to this Section being hereinafter referred to as the "Judgment
Conversion Date").
(c) If
in the
case of any proceeding, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.
(d) Any
amount due from the Company under this provision shall be due as a separate
debt
and shall not be affected by judgment being obtained for any other amounts
due
under or in respect of this Agreement.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
CHINA
BAK BATTERY, INC.
|
Address
for Notice:
BAK
Industrial Park
No.
1 BAK Street
Kuichong
Town, Longgang District
Shenzhen,
People’s Republic of China 518119
Attn:
President
|
||
|
By:
|
Fax:
00-000-00000000
|
||
|
Name:
Title:
|
|||
|
With
a copy to (which shall not constitute notice):
Xxxxxx
Xxxx Xxxxx Raysman & Xxxxxxx LLP
000
0xx
Xxxxxx XX
Xxxxxxxxxx,
X.X. 00000
Facsimile:
(000) 000-0000
Attn.:
Xxxxx X. Xxxxxxxxxx, Esq.
|
|||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Purchaser: ________________________________________________________
Signature
of Authorized Signatory of Purchaser:
__________________________________
Name
of
Authorized Signatory:
____________________________________________________
Title
of
Authorized Signatory:
_____________________________________________________
Email
Address of
Purchaser:________________________________________________
Fax
Number of Purchaser:
________________________________________________
Address
for Notice of Purchaser:
Address
for Delivery of Securities for Purchaser (if not same as address for
notice):
Subscription
Amount: $_________________
Shares:
_________________
Warrant
Shares:
EIN
Number:
[PURCHASER
SIGNATURE PAGES TO CHINA BAK BATTERY, INC. SECURITIES PURCHASE
AGREEMENT]
