SECOND AMENDMENT TO SECURITIES PURCHASE AGREEMENT
SECOND AMENDMENT TO SECURITIES PURCHASE
AGREEMENT
THIS SECOND AMENDMENT TO SECURITIES
PURCHASE AGREEMENT is dated as of December 31, 2009 (this “Second Amendment”),
by and among Emerald Dairy Inc., a Nevada
corporation (the “Company”), and the
investors set forth on the signature page hereto (each, an “Investor,” and
collectively, the “Investors”).
RECITALS:
A. In
June 2008, the Company conducted a private offering of up to a maximum of (a)
$3,000,000 of its 8% promissory notes, due on December 31, 2008 (the “Original Notes”) and
(b) three-year warrants to purchase 300,000 shares of its Common Stock, at an
exercise price of $2.61 per share (the “Original Warrants”),
pursuant to the terms and conditions of a Securities Purchase Agreement (the
“Purchase
Agreement”).
B. As
of June 12, 2008, one Investor purchased, for a purchase price of $1,500,000, an
Original Note in the principal amount of $1,500,000, and Original Warrants to
purchase 150,000 shares of the Company’s Common Stock.
C. On
June 20, 2008, an additional Investor purchased, for a purchase price of
$750,000, an Original Note in the principal amount of $750,000, and Original
Warrants to purchase 75,000 shares of the Company’s Common Stock.
D. As
of December 31, 2008, the Company and the Investors entered into an Amendment to
the Purchase Agreement (the “First Amendment”),
pursuant to which, among other things: (i) the maturity date of each Original
Note was extended from December 31, 2008 to December 31, 2009, (ii) as of
December 31, 2008, the initial interest rate of the Original Notes of 8% per
annum was increased to 10% per annum, (iii) the Company issued and delivered to
each Investor, against delivery by such Investor of his or its Original Note,
marked “canceled”, a duly executed Amended and Restated Note (the “First Amended Notes”)
reflecting the changes set forth in (i) and (ii) above, (iv) the expiration date
of the Original Warrants was extended from the third anniversary of their
original issue date to the fifth anniversary of their original issue date, (v)
the per share exercise price of the Original Warrants was reduced from $2.61 to
$1.63; and (vi) the Company issued and delivered to each Investor, against
delivery by such Investor of his or its Original Warrants, marked “canceled,”
duly executed amended and restated warrants (the “Amended Warrants”)
reflecting the changes set forth in (iv) and (v) above.
E. The
parties desire to further amend the Purchase Agreement and to amend the First
Amended Notes, in order to, among other things, modify the terms and conditions
thereof upon the terms and subject to the conditions set forth in this Second
Amendment and the Exhibits hereto.
NOW, THEREFORE, in
consideration of the premises and the other mutual covenants contained herein,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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1. Accuracy
of Recitals; Definitions. Each of the Company and the
Investors acknowledges and agrees that the foregoing Recitals are true and
accurate and are incorporated herein by reference. The Purchase
Agreement, First Amendment, First Amended Notes and Amended Warrants shall be
referred to herein collectively as the “Transaction
Documents.” Capitalized terms used and not otherwise defined herein
are used as defined in the Transaction Documents.
2. Amendments
to the First Amended Notes.
2.1 Upon
satisfaction of the conditions set forth in Section 4 below, the First Amended
Notes shall be amended so that:
(a) Accrued
and unpaid interest on the Original Notes and First Amended Notes, in the
aggregate amount of $323,301, shall be added to the principal amount of the
Second Amended Notes (as defined below), as follows:
|
Name
|
Accrued
Interest
($)
|
Principal
Amount Due
($)
|
||||||
|
JAG
Multi Investments, LLC
|
$ | 216,411 | $ | 1,716,411 | ||||
|
Xxxx
Xxxxxxxx
|
$ | 106,890 | $ | 856,890 | ||||
|
Total
|
$ | 323,301 | $ | 2,573,301 | ||||
(b) The
Maturity Date of each First Amended Note is extended from December 31, 2009 to December 31,
2010.
2.2 The Company shall issue and deliver, or cause to be
delivered, to each Investor, against delivery by such Investor of his or its
First Amended Note, marked “canceled”, a duly executed amended and restated
promissory note reflecting the changes set forth in Section 2.1 above, in the
form of Second Amended and Restated Promissory Note attached hereto as
Exhibit
A (the “Second Amended Notes”).
3. Issuance
of Additional Warrants.
3.1 Upon
satisfaction of the conditions set forth in Section 4 below, the Company shall issue and deliver, or cause to be
delivered, to the Investors, additional three-year warrants to purchase an
aggregate of 789,356 shares of the Company’s common stock at
an exercise price of $1.63 per share, in the form attached hereto as
Exhibit
B (the “Additional Warrants”), in the
following denominations:
|
Name
|
Additional
Warrants
($)
|
|||
|
JAG
Multi Investments, LLC
|
526,506 | |||
|
Xxxx
Xxxxxxxx
|
262,850 | |||
|
Total
|
789,356 | |||
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4. Pledge of
Shares. As further inducement to the Investors to
enter into the Second Amendment, the Corporation’s
obligations under the Second Amended Notes will be secured by a pledge of an
aggregate of 3,157,425 shares of common stock of the Company beneficially owned
by Xxxx Xxxx Shan, the Company’s Chief Executive Officer (the “Pledgor”),
pursuant to the terms and conditions of a Pledge Agreement to be entered into by
the Pledgor, the Investors and the Corporation (the “Pledge Agreement”), as soon
as practicable, but in no event more than 15 days following the date
hereof. Upon execution, the Pledge Agreement shall be deemed to be a
Transaction Document, as defined hereunder.
5. Conditions
Precedent. The effectiveness
of this Second Amendment is subject to satisfaction of each of the following
conditions precedent:
5.1 The
representations and warranties made by the Company in this Second Amendment are
accurate in all respects.
5.2 No
Event of Default shall be in existence under the First Amended
Notes.
5.3 No
Material Adverse Effect shall have occurred since the date of filing of the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 2009, which has not otherwise been disclosed to the Investors.
5.4 No
suit, proceeding or action shall have been commenced against or involving the
Company which, if successful, would result in a Material Adverse
Effect.
5.5 Each
Investor shall have received the following documents and other items from the
Company, duly executed by an authorized representative of the Company, as
necessary:
(a) An
executed copy of this Second Amendment.
(b) Evidence
that the execution, delivery and performance of this Second Amendment by the
Company has been duly authorized by all necessary corporate action.
5.6 The
Company shall have received the following documents and other items from each
Investor, duly executed by an authorized representative of such Investor, as
necessary:
(a) An
executed copy of this Second Amendment.
(b) Evidence
that the execution, delivery and performance of this Second Amendment by the
Investor has been duly authorized by all necessary corporate action, as
applicable.
6. Post-Closing
Covenants. As soon as
practicable, but in no event more than 15 days following the date hereof, the
parties agree that:
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6.1 Each
Investor shall receive the following documents and other items from the Company,
duly executed by an authorized representative of the Company:
(a) An
executed copy of the Pledge Amendment.
(b) An
executed original Second Amended Note.
(c) An
executed original Additional Warrant.
6.2 The
Company shall have received the following documents and other items from each
Investor, duly executed by an authorized representative of such Investor, as
applicable:
(a) An
executed copy of the Pledge Amendment.
(b) The
First Amended Note, marked “canceled”.
7. Transaction
Documents in Full Force and Effect as Amended. Except as
specifically amended hereby, the Transaction Documents shall remain in full
force and effect and hereby are ratified and confirmed as so
amended. This Second Amendment shall not constitute a novation,
satisfaction and accord, cure, release and/or satisfaction of the Transaction
Documents, but shall constitute an amendment thereof. The parties
hereto agree to be bound by the terms and conditions of the Transaction
Documents as amended by this Second Amendment, as though such terms and
conditions were set forth herein and therein in full. Each reference
in the Transaction Documents or any other document or instrument to any
Transaction Documents, or words of similar import shall mean and be a reference
to the Transaction Documents as amended hereby.
8. Representations. The Company
hereby represents and warrants to the Investors as follows: (a) it is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (b) the execution, delivery and performance by it
of this Second Amendment are within its powers, have been duly authorized, and
do not contravene (i) its articles of incorporation, bylaws or other
organizational documents, or (ii) any applicable law, statute, regulation,
ordinance, tariff or order; (c) no consent, license, permit, approval or
authorization of, or registration, filing or declaration with any governmental
authority or other person is required in connection with the execution,
delivery, performance, validity or enforceability of this Second Amendment by or
against it; (d) this Second Amendment has been duly executed and delivered by
it; (e) this Second Amendment constitutes its legal, valid and binding
obligations enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally or by general principles of equity; (f) to the best of its knowledge, it is in compliance with all covenants and
agreements in the Transaction Documents and it is not in default under the
Transaction Documents, and no Event of Default exists, has occurred and is
continuing or would result by the execution, delivery or performance of this
Second Amendment; and (g) the representations and warranties contained in the
Transaction Documents are true and correct in all material respects as of the
date hereof as if made on the date hereof.
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7. Miscellaneous.
7.1 The execution, delivery and
effectiveness of this Second Amendment shall not, except as expressly provided
herein, be deemed to be an amendment or
modification of, or operate as a waiver of, any provision of the
Transaction Documents, or any right, power or remedy of the Investors, nor
constitute a waiver of any provision of the Transaction Documents, or any other
document, instrument and/or agreement executed or delivered in connection
therewith or of any Event of Default under any of the foregoing, in each case
whether arising before or after the date hereof or as a result of performance
hereunder or thereunder. This Second Amendment shall not preclude the
future exercise of any right, remedy, power or privilege available to the
parties whether under the Transaction Documents,
at law, or otherwise.
7.2 This
Second Amendment may be executed in any number of counterparts (including by
facsimile), and by the different parties hereto or thereto on the same or
separate counterparts, each of which shall be deemed to be an original
instrument but all of which together shall constitute one and the same
agreement. Each party agrees that it will be bound by its own
facsimile signature and that it accepts the facsimile signature of
each other party. The descriptive headings of the various sections of this
Second Amendment are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction
of any of the provisions hereof or thereof. Whenever the context and
construction so require, all words herein in the singular number herein shall be
deemed to have been used in the plural, and vice
versa, and the masculine gender shall
include the feminine and neuter and the neuter shall include the masculine and
feminine.
7.3 This
Second Amendment may not be changed, amended, restated, waived, supplemented,
discharged, canceled, terminated or otherwise modified
orally or by any course of dealing or in any manner other
than as provided in the applicable Transaction Documents. This Second
Amendment shall be considered part of the Transaction Documents for all purposes
under the Transaction Documents. In the event of any inconsistency
between this Second Amendment and any of the other Transaction Documents, the
terms of this Second Amendment shall control.
7.4 This
Second Amendment, the Second Amended Notes, Additional Warrants and the
Transaction Documents constitute the final, entire agreement and understanding
between the parties with respect to the subject matter hereof and thereof and
may not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements between the parties, and shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto and
thereto. There are no unwritten oral agreements between the parties
with respect to the subject matter hereof and thereof. If any
provision of this Second Amendment is adjudicated to be invalid under applicable
laws or regulations, such provision shall be inapplicable to the extent of such
invalidity without affecting the validity or enforceability of the remainder of
this Second Amendment which shall be given effect so far as
possible.
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7.5 THIS
SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF
LAW PROVISIONS SET FORTH IN THE TRANSACTION DOCUMENTS, AS AMENDED BY THIS SECOND
AMENDMENT.
7.7 Each
party shall execute and deliver such other documents, certificates and/or
instruments and
take such other actions as reasonably requested by the other party in
order more effectively to consummate the transactions contemplated
hereby.
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IN
WITNESS WHEREOF,
the parties have caused this Second Amendment to be executed under seal
by their respective
officers thereunder duly authorized, as of the date first above
written.
|
COMPANY:
|
||
|
By:
|
/s/
Xxx Xxxxxx
|
|
|
Name:
|
Xxx
Xxxxxx
|
|
|
Title:
|
Chief
Financial Officer
|
|
|
INVESTORS:
|
||
|
/s/
Xxxx Xxxxxxxx
|
||
|
Xxxx
Xxxxxxxx
|
||
|
JAG
MULTI INVESTMENTS LLC
|
||
|
By:
|
/s/
Xxxxxxxxx Xxxxx
|
|
|
Name:
|
Xxxxxxxxx
Xxxxx
|
|
|
Managing
Member
|
||
EXHIBIT
A
(Form of
Second Amended Note)
EXHIBIT
B
(Form of
Additional Warrants)
