INVESTOR RIGHTS AGREEMENT
THIS
INVESTOR RIGHTS AGREEMENT (the “Agreement”) made this 30th day
of October 2009 by and among GC China Turbine Corp. f.k.a. Nordic Turbines,
Inc., a Nevada corporation (“Company”), NewMargin Growth
Fund L.P. (“NewMargin”),
Ceyuan Ventures II, L.P. (“Ceyuan LP”), Ceyuan Ventures
Advisors Fund II, LLC (“Ceyuan
LLC”, collectively with NewMargin and Ceyuan LP, “Investors”) and Golden Wind Holdings Limited (“Golden Wind”).
BACKGROUND:
A.
Company entered into a financing agreement dated July 20,
2009, as amended and restated on July 31, 2009 (the “Financing Agreement”) with
Luckcharm Holdings Limited (“Luckcharm”), Wuhan Guoce Nordic
New Energy Co., Ltd. (“GC Nordic”), Ceyuan LP, Ceyuan LLC and NewMargin whereby
the Company agreed to lend Luckcharm (i) $2,500,000 before July 24, 2009 and
(ii) $7,500,000 before July 31, 2009. In order to guarantee the
Company’s lending obligations under the Financing Agreement, NewMargin agreed to
lend $5,000,000 and Ceyuan LP and Ceyuan LLC agreed to lend the aggregate of
$5,000,000 of the above amounts to the Company.
B.
Concurrent with this Agreement, Company, certain shareholders of Company, GC
Nordic, Luckcharm, and Golden Wind entered into a Share Exchange Agreement
(“Exchange
Agreement”). Pursuant to the terms of the Exchange Agreement,
upon the closing of the voluntary share exchange (“Exchange”), all of the shares
of capital stock of Luckcharm issued and outstanding and all securities
convertible or exchangeable into capital stock of the Luckcharm will be
exchanged (including by reservation for future issuances) for shares of common
stock of Company (“Common
Stock”).
C.
Upon the consummation of the Exchange, the $10,000,000 loan made to
Company by the Investors will be converted into Company’s Common Stock.
D.
The parties hereto desire to
set forth certain rights and restrictions of Investors as shareholders of the
Company, as further set forth herein.
NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as
follows:
AGREEMENT:
1. Investor Rights
Provisions. As long as the Investors, together with their Affiliates, own at least fifteen percent (15%) of the
Company’s outstanding Common Stock (the “Investor Shares”), the Company
shall not, without first obtaining the written consent of a majority of the
Investor Shares:
§
amend, alter or repeal any provision of the Articles of
Incorporation of the Company if such action would adversely alter the rights,
preferences, privileges or powers of, or restrictions provided for the benefit
of the Company’s Common Stock;
§
amend, alter or repeal any provision of the Articles of
Incorporation or Bylaws of the Company if such action would increase the
authorized maximum number of directors on the Board of Directors;
§
authorize or create any new class or series of shares having
rights, preferences or privileges with respect to dividends, redemption or
payments upon liquidation senior to or on a parity
with the Company’s Common Stock or having greater or equivalent voting rights than or to those granted to the Company’s Common
Stock generally;
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§
reclassify any new class
or series of shares having rights, preferences or privileges with respect to
dividends, redemption or payments upon liquidation senior to or on a parity with the Company’s common stock or
having greater or equivalent voting rights
than or to those granted to the Company’s
Common Stock generally;
§
enter into any Reorganization
Transaction;
§
issue any Additional Shares of the
Company’s Common Stock;
§
redeem or repurchase any shares of the Company,
other than (i) repurchases of Common Stock issued to or held by employees,
officers, directors or consultants of the Company or its subsidiaries upon
termination of their employment or services pursuant to agreements providing for
the right of said repurchase, (ii) repurchases of Common Stock issued to or held
by employees, officers, directors or consultants of the Company or its
subsidiaries pursuant to rights of first refusal contained in agreements
providing for such right, or (iii) repurchase of capital stock of the Company in
connection with the settlement of disputes with any shareholder.
§
voluntarily liquidate or dissolve;
§
appoint or terminate executive officers of the Company,
except as required of the Board of Directors in the exercise of their fiduciary
duties to the Company;
§
approve any Related Party Transaction; or
§
declare or pay any dividends with respect to the Common
Stock of the Company.
2. Board
Composition.
(a) All Shareholders shall vote at regular or special
meetings of shareholders, and to give written consent with respect to, the
shares of Common Stock that they own (or as to which they have voting power) to
ensure that the size of the Board of Directors shall be set and remain at five
(5) directors.
(b) On all matters relating to the election of one or more
directors of the Company, each of the Shareholders shall vote at regular or
special meetings of shareholders and give written consent with respect to, such
number of shares of Common Stock then owned by them (or as to which they then
have voting power) as may be necessary to elect the following individual to the
Board of Directors: one (1) director to be designated by Ceyuan LP, Ceyuan LLC
and New Margin, collectively.
(c) On all matters relating to the removal of one or more
directors of the Company, each of the Shareholders shall vote at regular or
special meetings of shareholders and give written consent with respect to, such
number of shares of Common Stock then owned by them (or as to which they then
have voting power) as may be necessary to remove from the Board of Directors any
director selected for removal by those Shareholders entitled to designate such
director pursuant to Section 2(b). Any vacancy created by such
removal shall be filled pursuant to Section 2(b). No director elected
pursuant to Section 2(b) may be removed without the vote or written consent of
the Shareholders entitled to designate such director pursuant to Section
2(b). In the event of the resignation, death or disqualification of a
director designated and elected pursuant to Section 2(b), the Shareholders
entitled to designate such director shall promptly nominate a new director in
accordance with Section 2(b), and each Shareholder shall promptly vote his, her
or its shares of capital stock of the Company to elect such nominee to the Board
of Directors. In the event that any director is elected to the Board
of Directors as the result of the filling of a vacancy by members of the Board
of Directors, then at any time thereafter, upon the written request of
Shareholders entitled to designate such director pursuant to Section 2(b), and
without limiting the generality of Section 13, the Company shall use best
efforts to cause, as promptly as is possible and in compliance with the
Company’s Articles of Incorporation and Bylaws, either a meeting of shareholders
to be held or a written consent of shareholders to be circulated, in each case
submitting to the vote or written consent of shareholders, respectively, the
proposed removal of such director and/or election of a substitute director in
lieu thereof in accordance with this Agreement.
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3. Registration
Rights. If the Company agrees to
register any of its securities after the date hereof, then the Company shall use
reasonable best efforts to include in such registration its securities held by
the Investors and their Affiliates, subject to the same terms, conditions,
requirements and limitations as are applicable to the holders of other
securities included in such registration. If the Company has granted, or caused or permitted to be created, or
will grant, or cause or permit to be
created, for the benefit of any security holder of the Company other than the
Investors or their Affiliates any registration rights relating to any securities
of the Company which are more favorable to such security holder than those
granted to the Investors and their Affiliates, the Company shall grant the same
registration rights to the Investors and their Affiliates as those granted to
such security holder, subject to the same terms, conditions, requirements and
limitations as are applicable to such security holder.
4. Definitions. For
purposes of this Agreement, the following definitions shall apply:
(a) “Additional
Shares of the Company’s Common Stock” means all shares of Common Stock issued or
deemed to be issued after the date of this Agreement, other than the following:
(i) shares of Common Stock issued or issuable to officers, directors and
employees of, or consultants to, the Company pursuant to stock grants, option
plans, purchase plans or other employee stock incentive programs or arrangements
approved by the Board of Directors, or upon exercise of options or warrants
granted to such parties pursuant to any such plan or arrangement including
the issuance of 6,000,000 shares of Common Stock of the Company under
an employee stock option plan described in Section 8.01 of Exchange
Agreement immediately after the Closing Date of the Exchange Agreement
(the “Closing Date” being as such term is
defined in the Exchange Agreement) of the Exchange Agreement; (ii) shares of
Common Stock issued upon the exercise or conversion of options or convertible
securities outstanding as of the date of this Agreement; (iii) shares of Common
Stock issued or issuable pursuant to the acquisition of another business entity
by the Company by merger, purchase of substantially all of the assets or other
reorganization or to a joint venture
agreement, provided, that such issuances are approved by the Board of Directors;
(iv) shares of Common Stock issued or issuable to banks, equipment lessors or
other financial institutions pursuant to a debt financing or commercial leasing
transaction approved by the Board of Directors; (v) shares of Common Stock
issued or issuable in connection with any settlement of any action, suit,
proceeding or litigation approved by the Board of Directors; (vi) shares of
Common Stock issued or issuable in connection with sponsored research,
collaboration, technology license, development, marketing or other similar
agreements or strategic partnerships approved by the Board of Directors; (vii)
shares of Common Stock issued or issuable to suppliers or third party service
providers in connection with the provision of goods or services pursuant to
transactions approved by the Board of Directors; and (viii) shares of Common
Stock to be issued to the new investors and Clarus in accordance with the
5.01(e) of Article V as provided in the Exchange Agreement.
(b) “Affiliate”
of any particular person or entity means any other person or entity controlling,
controlled by or under common control with such particular person or entity
(including, without limitation, with respect to NewMargin, Ceyuan LP and Ceyuan LLC and each
of their Affiliates, each of their constituent partners, retired partners,
members or investment or venture capital fund Affiliates), where “control” means
the possession, directly or indirectly, of the power to direct the management
and policies of a person or entity whether through the ownership of voting
securities, contract or otherwise.
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(c) “Board of Directors” means the Board of Directors of the
Company.
(d) “Related
Party Transaction” means any transaction between the Company and an Affiliate of
the Company in excess of $100,000 individually or
in excess of $500,000 in the aggregate during any fiscal year, except for
the following when approved by a majority of disinterested members of the Board
of Directors: (i) the compensation of officers, directors and employees of, or
consultants to the Company or (ii) transactions where the terms and conditions
of the transaction, on an overall basis, are fair and reasonable to the Company
and are at least as favorable to the Company as those generally available
between parties operating at arm’s length.
(e) “Reorganization
Transaction” means (i) the acquisition of the Company by another entity by means
of any transaction or series of related transactions to which the Company is
party (including, without limitation, any stock acquisition, reorganization,
merger or consolidation but excluding any sale of stock for capital raising
purposes) other than a transaction or series of transactions in which the
holders of the voting securities of the
Company outstanding immediately prior to such transaction continue to retain
(either by such voting securities remaining outstanding or by such voting
securities being converted into voting securities of the surviving entity), as a
result of shares in the Company held by such holders prior to such transaction,
at least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding immediately after
such transaction or series of transactions; or (ii) a sale, lease or other
conveyance of all or substantially all of the assets of the
Company.
(f) “Shareholders” means, collectively, Ceyuan LP, Ceyuan
LLC, NewMargin, and Golden Wind.
5. Notices. Any
and all notices and other communications hereunder shall be in writing and shall
be deemed duly given to the party to whom the same is so delivered, sent or
mailed at addresses and contact information set forth below (or at such other
address for a party as shall be specified by like notice.) Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be deemed given and effective on the earliest of: (a)
on 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. (Pacific Standard Time) on a business day, (b) on the
next business 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 business day or later
than 5:30 p.m. (Pacific Standard Time) on any business day, (c) on the second
business day following the date of mailing, if sent by a nationally recognized
overnight courier service, or (d) if by personal delivery, upon actual receipt
by the party to whom such notice is required to be given.
if to
Company (before the closing of the Exchange):
0000
Xxxxxxxx Xxxx, #000
Xxxxxxxxxxx,
Xxxxxxxxxxxxx 00000-0000
Attention:
Xxxxxx Xxxx
Telephone
No.: (000) 000-0000
with a copy to (which copy shall not
constitute notice):
Xxxx
Xxx
Xxxxxxxxx
Genshlea Chediak
000
Xxxxxxx Xxxx, 00xx
Xxxxx
Xxxxxxxxxx,
Xxxxxxxxxx 00000
Telephone:
(000) 000-0000
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Fax:
(000) 000-0000
Email: xxxx@xxxxxxxxx.xxx
if to NewMargin:
Ma
Huan
NewMargin
Growth Fund L.P.
Villa #3,
Radisson Xingguo Hotel, 00 Xxxxxxx Xxxx
Xxxxxxxx
000000, XXX
Fax:
000-00000000
if to Ceyuan LP or Ceyuan
LLC:
Xx. Xxxxx
Xxxxxxxxx
Ceyuan
Ventures II, L.P.
Xx. 00
Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxx,
Xxxxxxx
000000, PRC
Fax:
86-10-8402 0999
if to
Golden Wind or the Company (after the closing of the Exchange):
Wuhan
Guoce Nordic New Energy Co. Ltd.
Xx. 00,
Xxxxx Xxxxxx
Xxxx Xxxx
Xxxxxxxxxxx Xxxx, Xxxxx, Xxxxx
Attention:
Xx. Xxx Tie Xin, Chairman
Telephone
No.: x00 00 0000 0000
Facsimile
No.: x00 00 0000 0000
with copies to:
Xxxxxxxxxx
& Xxxxx LLP
Attention:
Xxxxx X. Xxxxx, Esq.
00000
Xxxxxxxx Xxxxxxxxx
Xxxxx
000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Xxxxx
Xxx
Global
Law Office
15th Xxxxx,
Xxxxx 0, Xxxxx Xxxxxxx Xxxxx
Xx. 00
Xxxxxxx Xxxx, Xxxxxxx, Xxxxx 000000
Telephone:
(8610) 0000-0000
Fax:
(8610) 0000-0000
Email: xxxxxxxx@xxxxxxxxxxxxxxx.xxx.xx
6. Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without limitation”.
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7. Entire Agreement; No
Third-Party Beneficiaries. This Agreement and the other
agreements referred to herein constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person other than the parties any rights or
remedies.
8. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
9. Assignment.
(a) Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other parties,
except that the rights of the Investors and their Affiliates under Sections 1,
2, and 3 are fully assignable in connection with a transfer of securities of the
Company by any Investor or its Affiliates; provided, however, that no party may
be assigned any of the foregoing rights unless the Company is given written
notice at least seven (7) business days prior to any
assignment by such Investor or its Affiliates stating the name and
address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned; and provided further, that any
such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement.
(b) Any attempt by a Shareholder to sell or transfer any
Company’s securities shall be void and the Company hereby agrees that it will
not effect such a transfer nor will it treat any alleged transferee as the
holder of such securities unless (i) the transferee in such transfer agrees in
writing to be subject to the terms hereof by executing and delivering a Deed of
Adherence substantially in the form attached hereto as Exhibit A (a “Deed of
Adherence”), (ii) such transfer complies in all respects with the applicable
provisions of the Bylaws and other agreements among the Shareholders, and (iii)
the transferee in such transfer complies in all respects with the applicable
securities laws. Upon the execution and delivery of a Deed of
Adherence by such transferee, it shall be deemed to be a party hereto as a
Shareholder as if such transferee’s signature appeared on the signature page of
this Agreement.
(c) Subject to the preceding subsections (a) and (b), this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
10. Enforcement. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Nevada, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) agrees
that it will not attempt to deny or defeat such personal jurisdiction or venue
by motion or other request for leave from any such court, and (b) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any state court other than such
court.
11. Severability. Whenever
possible, each provision or portion of any provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law but
if any provision or portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or portion of any provision in such jurisdiction,
and this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
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12. Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
Agreement. This Agreement, to the extent delivered by means of a
facsimile machine or electronic mail (any such delivery, an "Electronic
Delivery"), shall be treated in all manner and respects as an original agreement
or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in
person. At the request of any party hereto, each other party hereto
shall re-execute original forms hereof and deliver them in person to all other
parties. No party hereto shall raise the use of Electronic Delivery
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of Electronic Delivery as a
defense to the formation of a contract, and each such party forever waives any
such defense, except to the extent such defense related to lack of
authenticity.
13. Covenants of the
Company. Subject to compliance
with applicable laws, the Company agrees to use its best efforts to ensure that the rights granted hereunder are
effective and that the parties hereto enjoy the benefits
thereof. Such actions may include, without limitation, the use of the
Company’s best efforts to cause the nomination and election of the
directors as provided above, by causing a meeting of shareholders to be held or by causing a written consent of shareholders to
be circulated. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all of the provisions of this Agreement and in the taking
of all such actions as may be necessary, appropriate or reasonably requested by
the holders of a majority of the outstanding voting securities held by the
parties hereto assuming conversion of all outstanding securities in order to
protect the rights of the parties hereunder against
impairment.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the undersigned have caused their duly authorized officers to
execute this Agreement as of the date first above written.
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By:
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Name:
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Title:
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GOLDEN
WINDS HOLDINGS LIMITED
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By:
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Name:
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Title:
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IN
WITNESS WHEREOF, the undersigned have caused their duly authorized officers to
execute this Agreement as of the date first above written.
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NEW
MARGIN GROWTH FUND, L.P.
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By:
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Name:
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Title:
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CEYUAN
VENTURES II, L.P.
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By:
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Name:
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Title:
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CEYUAN
VENTURES ADVISORS FUND II, LLC
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By:
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Name:
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Title:
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EXHIBIT A
FORM OF DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made this __________ day of
____________by and between GC China Turbine Corp. f.k.a. Nordic Turbines, Inc.,
a Nevada corporation (“Company”), and________________________________
(the “New Shareholder”).
The Company and the New Shareholder shall be referred to
collectively as the Parties.
WHEREAS:
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(A)
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As of [____], 2009, certain shareholders of the
Company and the Company entered into an Investor Rights Agreement (the "Investor Rights
Agreement"), a copy of which is attached hereto as Exhibit
1.
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(B)
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The New Shareholder wishes to acquire an aggregate of _____________ _______________
[INSERT NUMBER and TYPE/CLASS OF SECURITIES] in the capital of the Company from _______________________________ (the “Transferor”) and
in accordance with the Investor Rights Agreement has agreed to enter into
this Deed of Adherence (the
"Deed").
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(C)
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The Company is entering into this Deed on behalf
of itself and as agent for all the existing Shareholders of the
Company.
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NOW, THEREFORE, the Parties hereby agree as
follows:
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1.
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Interpretation. In this Deed, except as the
context may otherwise require, all words and expressions defined in the
Investor Rights Agreement shall have the same meanings when used
herein.
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2.
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Covenant. The New Shareholder hereby
covenants to the Company as trustee for all other persons who are at
present or who may hereafter become bound by the Investor Rights
Agreement, and to the Company itself, to adhere to and be bound by all the
duties, burdens and obligations of the Transferor imposed pursuant to the
provisions of the Investor Rights Agreement and all documents expressed in
writing to be supplemental or ancillary thereto as if the New Shareholder
had been an original party to the Investor Rights Agreement since the date
thereof.
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3.
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Enforceability. Each existing
Shareholder and the Company shall be entitled to enforce the Investor
Rights Agreement against the New Shareholder, and the New Shareholder
shall be entitled to all rights and benefits of the Transferor under the
Investor Rights Agreement in each case as if such New Shareholder had been
an original party to the Investor Rights Agreement since the date
hereof.
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4.
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Governing Law. This Deed shall be governed by, and construed in
accordance with, the laws of the State of Nevada, regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof.
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5.
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Counterparts. This Deed may be signed
in any number of counterparts which together shall form one and the same
agreement.
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6.
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Further Assurance. Each party agrees to
take all such further action as may be reasonably necessary to give full
effect to this Deed on its terms and
conditions.
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7.
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Headings. The headings used in this Deed are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
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[REMINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]
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IN WITNESS whereof the parties have executed and
delivered this Deed as a deed on the day and year first hereinbefore
mentioned.
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COMPANY:
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Signed as a deed on behalf
of
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By:
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Name:
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Title:
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NEW SHAREHOLDER:
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signed as a deed on behalf
of
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[NAME]
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By:
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Name:
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Title:
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[SIGNATURE PAGE
TO DEED OF ADHERENCE]
12
EXHIBIT 1 TO DEED OF ADHERENCE
COPY OF INVESTOR RIGHTS
AGREEMENT
13
