INVESTMENT AGREEMENT
EXECUTION
COPY
INVESTMENT
AGREEMENT
(the
“Agreement”),
dated
as of December 11, 2007, by and among China-Biotics, Inc., a Delaware
corporation, with headquarters located at No. 999 Ningqiao Road, Jinqiao Export
Processing Zone, Pudong, Shanghai 201206, People’s Republic of China
(the ”Company”),
Mr.
Jinan Song (the “Major
Shareholder”),
and
Xxxx Investments II LLC, a Delaware limited liability company (“Xxxx”)
with
headquarters located at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000.
WHEREAS:
A. The
Company wishes to sell and Xxxx wishes to purchase, upon the terms and
conditions stated in this Agreement, the Company’s 4% senior, guaranteed
convertible promissory note due 2010 (the “Note”
and
collectively “Notes”)
in the
original aggregate principal amount of Twenty Five Million Dollars ($25,000,000)
in substantially the form attached hereto as Exhibit
A,
convertible into shares of Common Stock (defined herein) at a conversion price
of $12.00 per share, subject to certain adjustments. The Note shall be
convertible into shares of Company common stock, par value $0.001 per share
(“Common
Stock”)
upon
the terms and conditions set forth herein and in the Notes. The shares of Common
Stock to be issued upon conversion of the Note are referred to herein as the
“Note
Shares”.
B. As
an
inducement to the purchase of the Note by Xxxx, the Major Shareholder has agreed
to personally guarantee the Note pursuant to a personal guarantee in
substantially the form attached hereto as Exhibit
B
(the
“Guarantee”)
and to
secure the Guarantee with the pledge of four million (4,000,000) shares of
Common Stock (the “Guarantee
Shares”)
pursuant to a pledge agreement substantially in the form attached hereto as
Exhibit
C
(“Pledge
Agreement”).
C. The
Company, the Major Shareholder and Xxxx are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”),
and
Rule 506 of Regulation D (“Regulation D”)
as
promulgated by the United States Securities and Exchange Commission (the
“SEC”)
under
the 1933 Act.
D.
Contemporaneously with the Closing, the Company and Xxxx will execute and
deliver a Registration Rights Agreement, substantially in the form attached
hereto as Exhibit
D
(the
“Registration
Rights Agreement”),
pursuant to which the Company will agree to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement) under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
E. The
Note(s) and the Note Shares into which the Note(s) may be converted collectively
are referred to herein as the “Securities”.
F. Unless
specifically defined in the Sections hereof, certain definitions used herein
are
set forth in Annex
I.
NOW,
THEREFORE,
the
Company, the Major Shareholder and Xxxx hereby agree as follows:
1. PURCHASE
AND SALE OF NOTE
(a) Purchase
of Note.
(i) Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
7
below, the Company shall issue and sell to Xxxx, and Xxxx agrees to purchase
from the Company, the Notes on December 11, 2007 (the “Closing
Date”).
The
Notes shall be issuable in registered form without coupons in denominations
of
$500,000 principal amount and integral multiples of $10,000 in excess thereof,
as directed by Xxxx at the Closing. Each Note shall be dated the Closing Date.
(ii) Closing.
The
time of the Closing shall be 10:00 a.m., Eastern Standard Time, on the Closing
Date (or such later date as is mutually agreed to by the Company and Xxxx)
after
notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below, at the offices of Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxx Xxxxx Xxxxx LLP in Seattle, Washington.
(iii) Purchase
Price.
The
purchase price for the Notes (the “Purchase
Price”)
shall
be Twenty Five Million Dollars ($25,000,000).
(b) Form
of Payment.
On the
Closing Date, subject to the satisfaction of the conditions to Closing, (i)
Xxxx
shall deliver by wire transfer to an account designated by the Company, the
aggregate Purchase Price for the Notes, and (ii) the Company shall deliver
to Xxxx the Notes, in the amounts so designated, in each case duly executed
on
behalf of the Company and registered in the name of Xxxx.
2. XXXX'X
REPRESENTATIONS AND WARRANTIES.
Xxxx
represents and warrants that:
(a) No
Sale or Distribution.
Xxxx is
acquiring the Notes, and upon conversion of any one or more of the Notes, in
whole or in part, will acquire the Note Shares issuable upon any such full
or
partial conversion of the Note for its own account and not with a view towards,
or for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered or exempted under the 1933 Act; provided,
however,
that by
making the representations herein, Xxxx does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time and from time to time in accordance with
or pursuant to a registration statement or an exemption under the 1933 Act
and
pursuant to the applicable terms of the Transaction Documents (as defined in
Section 3(b)). Xxxx is acquiring the Securities hereunder in the ordinary course
of its business. Xxxx does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Securities.
(b) Accredited
Investor Status.
Xxxx is
an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D.
(c) Reliance
on Exemptions.
Xxxx
understands that the Securities are being offered and sold to it in reliance
on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the
truth
and accuracy of, and Xxxx'x compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Xxxx set forth herein in
order
to determine the availability of such exemptions and the eligibility of Xxxx
to
acquire the Securities.
(d) Speculative
Investment.
Xxxx
understands that its investment in the Securities involves a high degree of
risk
and is able to afford a complete loss of such investment.
(e) No
Governmental Review.
Xxxx
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.
(f) Transfer
or Resale.
Xxxx
understands that except as provided in the Registration Rights Agreement: (i)
the Securities have not been and are not being registered under the 1933 Act
or
any state securities laws, and may not be offered for sale, sold, assigned
or
transferred unless (A) subsequently registered thereunder, (B) Xxxx shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may
be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) Xxxx provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act, as amended (or a successor rule thereto)
(collectively, “Rule
144”);
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(s)) through whom the sale is made)
may
be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules
and
regulations of the SEC thereunder; and (iii) other than with respect to the
Registration Rights Agreement, neither the Company nor any other Person is
under
any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. The Securities may be pledged in connection with a bona fide margin
account or other loan or financing arrangement secured by the Securities and
such pledge of Securities shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and should Xxxx effect a pledge of
Securities it shall not be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document (as defined in Section 3(b)), including,
without limitation, this Section 2(f); provided, that any transfer of such
pledged Securities, including to the pledge, will require compliance with the
provisions set forth in this paragraph.
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(g) Legends.
Xxxx
understands that the Notes and, until such time as the resale of the Note Shares
have been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the stock certificates representing the Note Shares, except
as
set forth below, shall bear any legend as required by the “blue sky” laws of any
state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock
certificates):
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE
SECURITIES.
(i) The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection
with
a sale, assignment or other transfer, such holder provides the Company with
an
opinion of a law firm reasonably acceptable to the Company (with Wells, Moore,
Xxxxxxx & Xxxxxxx, PLLC being deemed acceptable), in a generally acceptable
form, to the effect that such sale, assignment or transfer of the Securities
may
be made without registration under the applicable requirements of the 1933
Act,
or (iii) such holder provides the Company with reasonable assurance that the
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A. If the Company shall fail for any reason or for no reason to issue to
the
holder of the Securities within ten (10) Trading Days (as defined below) after
the occurrence of any of (i) through (iii) above, a certificate without such
legend to the holder or to issue such Securities to such holder by electronic
delivery at the applicable balance account at DTC or if the Company fails to
deliver unlegended Securities within three (3) Trading Days of the holder’s
election to receive such unlegended Securities pursuant to clause (ii) below,
and if on or after such Trading Day the holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a
sale by the holder of such Securities that the holder anticipated receiving
without legend from the Company (a “Buy-In”),
then
the Company shall, within three (3) Business Days after the holder's request
for
payment hereunder, promptly honor its obligation to deliver to the holder such
unlegended Securities as provided above and pay cash to the holder in an amount
equal to the excess (if any) of the amount equal to the holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased (the “Buy-In Price”) over the product of (A) such number of shares
of Common Stock, times (B) the Closing bid price on the date of
exercise
3
(h) Organization
and Qualification.
Xxxx is
duly organized and validly existing and, to the extent legally applicable,
in
good standing under the laws of the jurisdiction in which it was formed, and
has
the requisite power and authorization to own its properties and to carry on
its
business as now being conducted. Xxxx is duly qualified as a foreign entity
to
do business and to the extent legally applicable, is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary.
(i) Validity;
Enforcement.
The
Transaction Documents to which Xxxx is a party have been duly and validly
authorized, executed and delivered on behalf of Xxxx and shall constitute the
legal, valid and binding obligations of Xxxx enforceable against Xxxx in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(j) No
Conflicts.
The
execution, delivery and performance by Xxxx of the Transaction Documents to
which it is a party and the consummation by Xxxx of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of Xxxx or (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or
cancellation of, any agreement, indenture or instrument to which Xxxx is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable
to
Xxxx, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of Xxxx to perform its obligations hereunder.
(k) Residency.
Xxxx is
a resident of the State of Tennessee.
(l) Certain
Trading Activities.
Other
than with respect to the transactions contemplated herein, since the time that
Xxxx was first contacted by the Company or any other Person regarding this
investment in the Company, neither Xxxx nor any Affiliate of Xxxx which (x)
had
knowledge of the transactions contemplated hereby, (y) has or shares discretion
relating to Xxxx'x investments or trading or information concerning Xxxx'x
investments and (z) is subject to Xxxx'x review or input concerning such
Affiliate's investments or trading (collectively, “Trading
Affiliates”)
has
directly or indirectly, nor has any Person acting on behalf of or pursuant
to
any understanding with Xxxx or its Trading Affiliates, effected or agreed to
effect any transactions in the securities of the Company. Xxxx hereby covenants
and agrees not to, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in any transactions in the securities of the Company
or
involving the Company's securities during the period from the date hereof until
such time as (i) the transactions contemplated by this Agreement are first
publicly announced as described in Section 4(i) hereof or (ii) this Agreement
is
terminated in full pursuant to Section 8 hereof.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. Except
as
disclosed in reports, schedules, forms, statements and other documents filed
by
the Company with the SEC, including the registration statement on form SB-2
as
most recently filed (the “SEC
Documents”),
the
Company represents and warrants to Xxxx that, as of the date hereof and as
of
the Closing Date as follows (which representations and warranties shall be
deemed to apply, as appropriate, to each Subsidiary of the
Company):
(a) Organization
and Qualification.
The
Company and its Subsidiaries are entities duly organized and validly existing
and, to the extent legally applicable, in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and
authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified
as a
foreign entity to do business and to the extent legally applicable, is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except
to
the extent that the failure to be so qualified or be in good standing would
not
reasonably be expected to have a Material Adverse Effect. The Company
Subsidiaries are set forth in the SEC Documents.
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Registration Rights Agreement,
the Notes, and each of the other agreements entered into by the Company in
connection with the transactions contemplated by this Agreement (collectively,
the “Transaction
Documents”)
and to
issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Notes and the reservation
for
issuance and the issuance of the Note Shares issuable upon conversion of ay
one
or more of the Notes have been duly authorized by the Company's Board of
Directors and other than as set forth in Section 3(e), no further filing,
consent, or authorization is required by the Company, its Board of Directors
or
its stockholders. This Agreement and the other Transaction Documents of even
date herewith have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
4
(c) Issuance
of Securities.
The
issuance of the Notes has been duly authorized and upon issuance, in accordance
with the terms of the Transaction Documents, shall be free from all taxes,
liens
and charges with respect to the issue thereof. As of the Closing, a number
of
shares of Common Stock shall have been duly authorized and reserved for issuance
which equals or exceeds the sum of 150% of the maximum aggregate number of
shares of Common Stock issuable upon conversion of the aggregate principal
amount of Notes. Upon conversion in accordance with the Notes, the Note Shares
so issued will be validly issued, fully paid and nonassessable and free from
all
preemptive or similar rights, taxes, liens and charges with respect to the
issue
thereof, with the holders being entitled to all rights accorded to a holder
of
Common Stock. Assuming the accuracy of each of the representations and
warranties set forth in Section 2 of this Agreement, the offer and issuance
by
the Company of the Securities is exempt from registration under the Securities
Act of 1933, as amended (the “1933
Act”).
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance of the Notes and
reservation for issuance and issuance of the Note Shares) will not (i) result
in
a violation of any certificate of incorporation, certificate of formation,
any
certificate of designations or other constituent documents of the Company or
any
of its Subsidiaries, any Capital Stock of the Company or any of its Subsidiaries
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with,
or
constitute a default or breach (or an event which with notice or lapse of time
or both would become a default or breach) in any respect under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in violation of any law, rule,
regulation, order, judgment or decree (including foreign, federal and state
securities laws and regulations and the rules and regulations of the Principal
Market) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected, except in the case of clauses (ii) and (iii) above, to the extent
that
such violations, conflict, default or right would not reasonably be expected
to
have a Material Adverse Effect.
(e) Consents.
Neither
the Company nor any of its Subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof, except for the filing of (i) one or more
Registration Statements with the SEC in accordance with the requirements of
the
Registration Rights Agreement (which is not required to be filed before the
Closing), (ii) one ore more Current Reports on Form 8-K with the SEC, and
(iii) one or more Notices of Sales of Securities with the SEC and certain
states. The Company and its Subsidiaries are unaware of any facts or
circumstances that might prevent the Company from obtaining or effecting any
of
the registration, application or filings pursuant to the preceding sentence.
(f) Acknowledgment
Regarding Xxxx'x Purchase of Securities.
The
Company acknowledges and agrees that Xxxx is acting solely in the capacity
of an
arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that as of the date hereof
Xxxx
is not (i) an officer or director of the Company or (ii) an “affiliate” of the
Company or any of its Subsidiaries (as defined in Rule 144 of the 0000
Xxx) The
Company further acknowledges that Xxxx is not acting as a financial advisor
or
fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by Xxxx or any of its representatives
or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to Xxxx'x purchase of
the
Securities. The Company further represents to Xxxx that the Company's decision
to enter into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.
5
(g) No
General Solicitation; Placement Agent's Fees.
Neither
the Company, nor any of its Subsidiaries or affiliates, nor any Person acting
on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer
or
sale of the Securities. The Company shall be responsible for the payment of
any
placement agent's fees, if any, financial advisory fees, or brokers' commissions
(other than for persons engaged by Xxxx or its investment advisor) relating
to
or arising out of the transactions contemplated hereby. Neither the Company
nor
any of its Subsidiaries has engaged any placement agent or other agent in
connection with the sale of the Securities.
(h) No
Integrated Offering.
None of
the Company, its Subsidiaries, any of their affiliates, and any Person acting
on
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company
are
listed or designated. None of the Company, its Subsidiaries, their affiliates
and any Person acting on their behalf will take any action or steps referred
to
in the preceding sentence that would require registration of any of the
Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings.
(i) Dilutive
Effect.
The
Company and the Major Shareholder each understands and acknowledges that the
number of Note Shares issuable upon conversion of the Notes, will increase
in
certain circumstances. The Company and the Major Shareholder each further
acknowledges that the Company’s obligation to issue the Note Shares upon
conversion of the Notes in accordance with this Agreement and the Notes is,
in
each case, absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of
the
Company.
(j) Application
of Takeover Protections; Rights Agreement.
The
Company and its 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 its Certificate of Incorporation
or Bylaws or the laws of the state of its incorporation which is or could become
applicable to Xxxx as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of the
Securities and Xxxx'x ownership of the Securities. The Company and its board
of
directors have taken all necessary action, if any, in order to render
inapplicable any stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control
of
the Company.
(k) SEC
Documents; Financial Statements.
Since
March 22, 2006, the Company has filed with the SEC all documents, reports and
schedules required to be filed by it by the SEC. The Company has delivered
to
Xxxx or its representatives true, correct and complete copies of any SEC
Documents not available on the XXXXX system. As of their respective filing
dates, except as the same may have been amended prior to the date hereof the
SEC
Documents complied in all material respects with the requirements, to the extent
applicable, of the 1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and except as the same may have
been
amended prior to the data hereof, none of the SEC Documents, at the time they
were filed with the SEC, 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. As of their respective filing dates,
the
financial statements of the Company included in the SEC Documents complied
as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as
may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company
to
Xxxx which is not included in the SEC Documents, including, without limitation,
information referred to in Section 2(d) of this Agreement or in any disclosure
schedules, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made not misleading.
6
(l) Absence
of Certain Changes.
Since
March 31, 2007, there has been no material adverse change and no material
adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company
or
its Subsidiaries. Since March 31, 2007, the Company has not (i) declared or
paid any dividends, (ii) sold any assets, individually or in the aggregate,
in
excess of $100,000 outside of the ordinary course of business or (iii) had
capital expenditures, individually or in the aggregate, in excess of $5,000,000.
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 that 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(l), “Insolvent”
means,
with respect to any Person (as defined in Section 3(s)), (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 Section 3(s)), (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.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form SB-2 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced.
(n) Conduct
of Business; Regulatory Permits.
Neither
the Company nor any of its Subsidiaries is in material violation of any term
of
or in default under its Certificate of Incorporation, any certificate of
designations of any outstanding series of preferred stock of the Company or
the
Bylaws or their organizational charter or bylaws, respectively. Neither the
Company nor any of its Subsidiaries is in material violation of any judgment,
decree or order or any statute, ordinance, rule or regulation applicable to
the
Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except for
possible violations which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries possess all certificates, authorizations and permits issued by
the
appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate,
a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification
of
any such certificate, authorization or permit.
(o) Foreign
Corrupt Practices.
Neither
the Company nor any of its Subsidiaries nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
7
(p) Transactions
With Affiliates.
Except
as set forth in the SEC Documents filed at least ten (10) days prior to the
date
hereof, none of the officers, directors or employees of the Company or any
of
its Subsidiaries is presently a party to any material transaction with the
Company or any of its Subsidiaries (other than for ordinary course services
as
employees, officers or 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 such officer, director or employee or, to the knowledge of the
Company or any of its Subsidiaries, any corporation, partnership, trust or
other
entity in which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner.
(q) Equity
Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
110,000,000 shares, of which as of the date hereof, (i) 100,000,000 shares
are
designated Common Stock, of which 37,080,000 shares are issued and outstanding
(20,000,000 of which are treasury shares) and (ii) 10,000,000 shares are
designated Preferred Stock, of which none are issued and outstanding. All of
such outstanding shares have been, or upon issuance will be, validly issued
and
are fully paid and nonassessable. Except as disclosed in the SEC Documents,
none
of the Company's capital stock is subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) there
are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933
Act
(except pursuant to the Registration Rights Agreement and the registration
rights agreement dated as of March 22, 2006); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to redeem a security of the Company or
any
of its Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
the Securities; (viii) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's
or
its Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The Company
has
furnished to Xxxx true, correct and complete copies of the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof (the
“Certificate
of Incorporation”),
and
the Company's Bylaws, as amended and as in effect on the date hereof (the
“Bylaws”),
and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof
in
respect thereto.
(r) Indebtedness
and Other Contracts.
Except
as disclosed in the Financial Statements, the SEC Documents or incurred in
the
ordinary course of business September 30, 2007, neither the Company nor any
of
its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii)
is a party to any contract, agreement or instrument, the violation of which,
or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any contract, agreement
or instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of
the
Company's officers, has or is expected to have a Material Adverse Effect. For
purposes of this Agreement: (x) “Indebtedness”
of
any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services, including (without limitation) “capital leases” in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) “Contingent
Obligation”
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
8
(s) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers or directors,
except for such actions, suits, proceedings, inquiries or investigations that
would not, either individually or in the aggregate, reasonably be expected
to
result in a Material Adverse Effect.
(t) Employee
Relations.
(i) Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company and its Subsidiaries
believe that their relations with their employees are good. No executive officer
of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the
0000
Xxx) has notified the Company or any such Subsidiary that such officer intends
to leave the Company or any such Subsidiary or otherwise terminate such
officer's employment with the Company or any such Subsidiary. No executive
officer of the Company or any of its Subsidiaries, is, or is now expected to
be,
in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement,
or
any other contract or agreement or any restrictive covenant, 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.
(ii) The
Company and its Subsidiaries, to their knowledge, are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(u) Title.
Except
as would either, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, the Company and its Subsidiaries have
good
and marketable title to all real property and good and marketable title to
all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances
and
defects or such as do not materially affect the value of such property and
do
not interfere with the use made and proposed to be made of such property by
the
Company and any of its Subsidiaries. Any real property and facilities held
under
lease by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases except for such exceptions that would not,
either individually or in the aggregate, reasonably be expected to result in
a
Material Adverse Effect.
9
(v) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all trademarks, service marks and all applications and registrations therefor,
trade names, patents, patent rights, copyrights, original works of authorship,
inventions, trade secrets and other intellectual property rights (“Intellectual
Property Rights”)
necessary to conduct their respective businesses as now conducted such
exceptions that would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. The Company does not have
any knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened,
against the Company or its Subsidiaries regarding its Intellectual Property
Rights. Neither the Company nor any of its Subsidiaries is aware of any facts
or
circumstances which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property Rights.
(w) Environmental
Laws.
The
Company and its Subsidiaries, to their knowledge, (i) are in compliance with
any
and all applicable Environmental Laws (as hereinafter defined), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license
or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or
in
the aggregate, a Material Adverse Effect. The term “Environmental
Laws”
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous
Materials”) into
the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
(x) Subsidiary
Rights.
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.
(y) Tax
Status.
The
Company and each of its Subsidiaries (i) has made or filed all foreign, federal
and state income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any
such
claim.
(z) Internal
Accounting and Disclosure Controls.
The
Company and each of its 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 generally accepted accounting principles and
to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities
at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the 0000 Xxx) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits to the SEC is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC,
including, without limitation, controls and procedures designed in to ensure
that information required to be disclosed by the Company in the reports that
it
files or submits to the SEC is accumulated and communicated to the Company's
management, including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. During the twelve months prior to
the
date hereof neither the Company nor any of its Subsidiaries have received any
notice or correspondence from any accountant relating to any potential material
weakness in any part of the system of internal accounting controls of the
Company or any of its Subsidiaries.
10
(aa) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its SEC Documents and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse
Effect.
(bb) Investment
Company Status.
The
Company is not, and upon consummation of the sale of the Securities will not
be,
an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended.
(cc) Transfer
Taxes.
On the
Closing Date, all stock transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the sale and transfer
of
the Securities to be sold to Xxxx hereunder will be, or will have been, fully
paid or provided for by the Company, and all laws imposing such taxes will
be or
will have been complied with.
(dd) Manipulation
of Price.
The
Company has not, and to its knowledge 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.
(ee) Disclosure.
All
disclosure provided to Xxxx regarding the Company or any of its Subsidiaries,
their business and the transactions contemplated hereby, furnished by or on
behalf of the Company is true and correct and does 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 the light of the circumstances
under which they were made, not misleading. Each press release issued by the
Company or any of its Subsidiaries during the twelve (12) months preceding
the
date of this Agreement did not at the time of release contain any untrue
statement of a material fact or omit 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. No event
or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
(ff) U.S.
Real Property Holding Corporation.
The
Company is not, nor has it ever 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 Xxxx'x request.
4. COVENANTS.
(a) Efforts.
Each
party shall use commercially reasonable efforts timely to satisfy each of the
conditions to be satisfied by it as provided in Sections 6 and 7 of this
Agreement.
(b) Form
D
and Blue Sky.
The
Company shall file a Form D (if required due to the fact that an applicable
exemption under the Securities Act is available) with respect to the Securities
as required under Regulation D and to provide a copy thereof to Xxxx promptly
after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to Xxxx at the Closing
pursuant to this Agreement under applicable securities or “Blue Sky” laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to Xxxx on or prior
to
the Closing Date. The Company shall make all filings and reports relating to
the
offer and sale of the Securities required under applicable securities or “Blue
Sky” laws of the states of the United States following the Closing Date.
11
(c) Reporting
Status.
Until
the date on which all of the Note Shares outstanding have been sold, (the
“Reporting
Period”),
the
Company shall timely file all periodic reports and Current Reports on Form
8-K
required to be filed with the SEC pursuant to the 1934 Act.
(d) Use
of
Proceeds.
Subject
to the discretion of the board of directors of the Company, the Company will
use
the proceeds from the sale of the Securities as
follows: (i) $18 million ($18,000,000) for the construction of a new
processing facility with at least 150 ton annual production capacity, (ii)
$7
million ($7,000,000) for capital expenditures relating to the expansion of
the
Company’s existing business through (x) opening new Company operated retail
outlets, and (y) expanding its operations in the bulk additive business, and
(iii) if there are any remaining proceeds, for general expansion, capital
expenditures and such other uses as the Company may from time to time
designate.
(e) Financial
Information.
The
Company agrees to send the following to the Noteholders during the Reporting
Period (i) unless the following are filed with the SEC through XXXXX and are
available to the public through the XXXXX system, within one (1) Business Day
after the filing thereof with the SEC, a copy of its Annual Reports and
Quarterly Reports on Form 10-K, 10-KSB, 10-Q or 10-QSB, any Current Reports
on
Form 8-K and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release thereof,
facsimile or e-mailed copies of all press releases issued by the Company or
any
of its Subsidiaries, and (iii) copies of any notices and other information
made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders. As used herein, “Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(f) Fees.
The
Company shall be responsible for the payment of any placement agent's fees,
if
any, financial advisory fees, or broker's commissions relating to or arising
out
of the transactions contemplated hereby. The Company shall pay, and hold Xxxx
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.
(g) Pledge
of Securities.
The
Company acknowledges and agrees that the Securities may be pledged by a
Noteholder in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and should any Noteholder effect a pledge of Securities,
it shall not be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(f) hereof;
provided that the Noteholders and its pledgee shall be required to comply with
the provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by a
Noteholder.
(h) Disclosure
of Transactions and Other Material Information.
On or
before 8:30 a.m., New York City time, within four (4) Business Days following
the Closing Date, the Company shall issue a press release and file a Current
Report on Form 8-K describing the terms of the transactions contemplated by
the
Transaction Documents in the form required by the 1934 Act and attaching the
material Transaction Documents (including, without limitation, this Agreement,
the form of Note, the form of the Registration Rights Agreement, the form of
Guarantee, the form of Investor rights Agreement, and such financial statements
and other information as required in connection with the Exchange Agreement)
as
exhibits to such filing (including all attachments, the “8-K
Filing”).
Subject to the foregoing, neither the Company, its Subsidiaries nor Xxxx shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall
be
entitled, without the prior approval of Xxxx, to make any press release or
other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as
is
required by applicable law and regulations (provided that in the case of clause
(i) Xxxx shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release). Without the prior
written consent of Xxxx, neither the Company nor any of its Subsidiaries or
affiliates shall disclose the name of Xxxx in any filing, announcement, release
or otherwise, unless required by law or unless required by any securities
exchange on which the Company’s stock is traded or upon which the Company is
applying for trading privileges.
12
(i) No
Senior Indebtedness.
The
Company shall not issue any notes, bonds, indentures or similar instruments
for
borrowed money with rights to payment senior to that of the Notes.
(j) Corporate
Existence.
The
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect its existence and rights (charter and statutory);
provided that the Company shall not be required to preserve any such right
if
the Company and the Major Shareholder shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and
that the loss thereof is not disadvantageous in any material respect to the
Noteholders. Notwithstanding the foregoing, the Company shall not be party
to
any Fundamental Transaction (as defined in the Note) unless the Company is
in
compliance with the applicable provisions governing Fundamental Transactions
set
forth in the Note.
(k) Reservation
of Shares.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 150% of the maximum number
of
shares of Common Stock issuable upon conversion of the Notes then
outstanding.
(l) Government
Approvals and Licenses; Compliance with Law.
The
Company shall, and the Company shall cause its Subsidiaries to, (a) obtain
and
maintain in full force and effect all Governmental Approvals, authorizations,
consents, permits, concessions and licenses as are necessary to engage in the
business of the Company and the Subsidiaries, (b) preserve and maintain good
and
valid title to its properties and assets (including land-use rights) free and
clear of any Liens other than Permitted Liens and (c) comply with all laws,
regulations, orders, judgments and decrees of any governmental body, except
to
the extent that failure so to obtain, maintain, preserve and comply would
reasonably be expected to have a material adverse effect on (1) the business,
results of operations or prospects of the Company and its Subsidiaries taken
as
a whole or (2) the ability of the Company to perform its obligations under
the
Notes and this Agreement.
(m) Additional
Issuances of Securities.
(i) For
purposes of this Section 4(m), the following definitions shall
apply.
(1) “Convertible
Securities”
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for shares of Common
Stock.
(2) “Options”
means
any rights, warrants or options to subscribe for or purchase shares of
Common
Stock or
Convertible Securities.
(3) “Common
Stock Equivalents”
means,
collectively, Options and Convertible Securities.
(ii) For
so
long as the Notes remain outstanding, in whole or in part, the Company will
not,
directly or indirectly, effect, offer, sell, grant any option to purchase,
or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life
and
under any circumstances, convertible into or exchangeable or exercisable for
shares of Common Stock or Common Stock Equivalents of the Company or any
Subsidiary (any such offer, sale, grant, disposition or announcement being
referred to as a “Subsequent
Placement”),
except for grants or issuances with respect to not more than 1,700,000 shares
of
Common Stock pursuant to an Approved Stock Plan (as defined in the Note), unless
the Company shall have first complied with this Section 4(m)(ii).
(1) The
Company shall deliver to the Noteholders an irrevocable written notice
(the ”Offer
Notice”)
of any
proposed or intended issuance or sale or exchange (the ”Offer”)
of the
securities being offered (the “Offered
Securities”)
in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they
are to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with the Noteholders (a) such portion of the Offered Securities
(“Pro
Rata Share”)
as
would be necessary for the Noteholders to retain, after the issuance of the
Offered Securities, its respective pro rata share of Common Stock outstanding
determined on a fully diluted basis and assuming the issuance of the full amount
of Offered Securities, and (b) if a Noteholder elects to purchase its Pro Rata
Share, any additional portion of the Offered Securities offered as the
Noteholders shall indicate it will purchase or acquire should any remain
unsubscribed for (the “Undersubscription
Amount”)
which
process shall be repeated until the Noteholders shall have an opportunity to
subscribe for any remaining Undersubscription Amount.
13
(2) To
accept
an Offer, in whole or in part, the Noteholder must deliver a written notice
to
the Company prior to the end of the tenth (10th)
Business Day after it's receipt of the Offer Notice (the “Offer
Period”),
setting forth the portion of its Pro Rata Share that such Noteholder elects
to
purchase and, if a Noteholder shall elect to purchase all of its Pro Rata Share,
such portion of the Undersubscription Amount, if any, that such Noteholder
elects to purchase (in either case, the “Notice
of Acceptance”).
If
the aggregate of (i) the Pro Rata Shares subscribed for by Noteholders pursuant
hereto, plus (ii) the aggregate amount of Offered Securities subscribed for
by
other Noteholders be less than the total amount of Offered Securities, then
if a
Noteholder has set forth an Undersubscription Amount in its Notice of
Acceptance, it shall be entitled to purchase, in addition to its initial Pro
Rata Share subscribed for, its Pro Rata Share of the Undersubscription
Amount.
(3) The
Company shall have fifteen (15) Business Days from the expiration of the Offer
Period above to (i) offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by
Noteholders (the “Refused
Securities”),
but
only to the offerees described in the Offer Notice (if so described therein)
and
only upon terms and conditions (including, without limitation, prices and
interest rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer Notice and
(ii) to publicly announce (a) the execution of such Subsequent Placement
Agreement, and (b) either (x) the consummation of the transactions contemplated
by such Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report
on
Form 8-K with such Subsequent Placement Agreement and any documents contemplated
therein filed as exhibits thereto.
(4) In
the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
4(m)(ii)(3) above), then any Noteholder may, at its sole option and in its
sole
discretion, reduce the number or amount of the Offered Securities specified
in
its Notice of Acceptance to an amount that shall be not less than the number
or
amount of the Offered Securities that such Noteholder elected to purchase
pursuant to Section 4(m)(ii)(2) above multiplied by a fraction, (i) the
numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Noteholders pursuant to Section 4(m)(ii)(3)
above prior to such reduction) and (ii) the denominator of which shall be the
original amount of the Offered Securities. In the event that a Noteholder so
elects to reduce the number or amount of Offered Securities specified in its
Notice of Acceptance, the Company may not issue, sell or exchange more than
the
reduced number or amount of the Offered Securities unless and until such
securities have again been offered to Noteholders in accordance with
Section 4(m)(ii)(1) above.
(5) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Noteholders shall acquire from the Company, and the Company
shall issue to the Noteholders, the number or amount of Offered Securities
specified in their respective Notices of Acceptance, as reduced pursuant to
Section 4(m)(ii)(3) above if the Noteholder has so elected, upon the terms
and
conditions specified in the Offer. Notwithstanding anything to the contrary
contained in this Agreement, if the Company does not consummate the closing
of
the issuance, sale or exchange of all or less than all of the Refused Securities
within fifteen (15) Business Days of the expiration of the Offer Period, the
Company shall issue to the Noteholders the number or amount of Offered
Securities specified in their respective Notices of Acceptance, as reduced
pursuant to Section 4(m)(ii)(4) above if a Noteholder has so elected, upon
the
terms and conditions specified in the Offer. The purchase by any Noteholder
of
any Offered Securities is subject in all cases to the preparation, execution
and
delivery by the Company and the holders of a majority of the principal amount
of
then outstanding Notes who have delivered Notices of Acceptance of a purchase
agreement relating to such Offered Securities reasonably satisfactory in form
and substance to them.
14
(6) Any
Offered Securities not acquired by a Noteholder or other persons in accordance
with Section 4(m)(ii)(3) above may not be issued, sold or exchanged until they
are again offered to Noteholders under the procedures specified in this
Agreement.
(7) The
Company covenants and agrees that if any Noteholder elects to participate in
the
Offer, neither the Subsequent Placement Agreement with respect to such Offer
nor
any other transaction documents related thereto (collectively, the “Subsequent
Placement Documents”)
shall
include any term or provisions whereby any Noteholder shall be required to
agree
to any restrictions in trading as to any securities of the Company owned by
such
Noteholder prior to such Subsequent Placement.
(iii) The
restrictions contained in subsection (ii) of this Section 4(m) shall not apply
in connection with the issuance of up to 1,700,000 shares of Common Stock
pursuant to an Approved Stock Plan (as defined in the Note).
(n) Listing
on The NASDAQ Capital Market or The American Stock Exchange.
As soon
as practicable following qualification therefor, the Company shall file a
listing application with The NASDAQ Capital Market or The American Stock
Exchange with respect to the Company's Common Stock and all of the Registrable
Securities, and the Company shall use commercially reasonable efforts to cause
such securities to be listed on The NASDAQ Capital Market or The American Stock
Exchange as soon as practicable thereafter.
(o) Board
Observer Rights.
Subject
to the execution of a non-disclosure agreement, customary in form and substance,
as requested in good faith by the Company, the Company shall allow one
representative of Xxxx, for so long as Xxxx and its Affiliates beneficially
own
in the aggregate at least 1,100,000 shares of Common Stock (including any Notes
Shares that would be issuable upon conversion of any Notes), subject to
proportional adjustments to reflect stock-splits, combinations, subdivisions,
or
the like, to attend all meetings of the Board and the Audit Committee of the
Board, in each case in a nonvoting capacity, and in connection with such
observer’s attendance, the Company shall give such representative copies of all
notices, minutes, consents and other materials, financial or otherwise, which
the Company provides to the Board or Audit Committee, as the case may be, prior
to any such meeting. Xxxx shall provide the Company with written notice
identifying the individual who shall exercise board observation rights on behalf
of Xxxx from time to time, which individual shall be reasonably acceptable
to
the Company.
Notwithstanding
the foregoing, the Board reserves the right, in the good faith exercise of
its
reasonable business judgment, to exclude any board observer from (1) attending
any portion(s) of any Board or Audit Committee meeting or (2) receiving
materials delivered to the rest of the Board or Audit Committee in connection
with such portion(s) of such Board meeting if
(x) the Company believes upon advice of counsel that such exclusion is
reasonably necessary to preserve the attorney-client privilege between the
Company and its counsel; (y) access to such information or attendance at such
meeting could create a conflict of interest between Xxxx or its observer
representative, on the one hand, and the Company, on the other hand, or (z)
such
portion of a meeting is an executive session limited solely to members of the
Board of Directors and legal counsel;
provided, however, that notwithstanding the foregoing, the Board may, in the
exercise of its reasonable business judgment, permit such observer to attend
such portions of a Board or Audit Committee meeting and receive such materials
on the condition that such observer does not trade in the Company’s common stock
based on such information or share the contents of the meeting or the materials
with any person or entity. The decision of the Board with respect to any such
exclusion shall be final and binding.
(p) Maintenance
of Properties.
The
Company shall cause all properties used or useful in the conduct of the
Company’s business or the business of its Subsidiaries to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment
of
the Company may be necessary so that the business carried on in connection
therewith may be properly conducted at all times; provided
that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is,
in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect
to
the Noteholders.
15
(q) Payment
of Taxes and other Claims.
The
Company will pay or discharge, or cause to be paid or discharged, before the
same may become delinquent, (i) all taxes, assessments and governmental charges
levied or imposed upon the Company or any Subsidiary or upon the income, profits
or property of the Company or any Subsidiary, (ii) all claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon the property of the Company or any Subsidiary and (iii) all stamp taxes
and
other duties, if any, which may be imposed under the laws of any applicable
jurisdiction in connection with the issuance, transfer, exchange, conversion,
redemption or repurchase of any Notes or with respect to this Agreement;
provided
that, in
the case of clauses (i) and (ii), the Company shall not be required to pay
or
discharge or cause to be paid or discharged any such tax, assessment, charge
or
claim (A) if the failure to do so will not, in the aggregate, have a Material
Adverse Effect on the Company, or (B) if the amount, applicability or validity
is being contested in good faith by appropriate proceedings.
(r) Stay,
Extension and Usury Laws.
The
Company covenants (to the extent that it may lawfully do so) that it shall
not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or
the
performance of this Agreement or the Notes, and the Company (to the extent
it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such
law, and covenants that it will not, by resort to any such law, hinder, delay
or
impede the execution of any power herein granted to the Noteholders, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
(s) Additional
Debt.
The
Company shall not permit any of its Subsidiaries to incur any additional
Indebtedness if the proceeds thereof are used, directly or indirectly, to
refinance any then outstanding Indebtedness of the Company.
(t) Restricted
Payments.
The
Company shall not, and shall not permit its Subsidiaries to, directly or
indirectly, make any Restricted Payment if at the time of, and after giving
effect to, such proposed Restricted Payment,
(i) the
Consolidated Net Worth would be less than $25 Million ($25,000,000), or (ii)
a
Default or Event of Default (as defined in the Notes) shall have occurred and
be
continuing. The term “Restricted
Payments”
means:
(1)
any
dividend or distribution (whether made in cash, securities or other Property)
declared or paid on or with respect to any shares of Capital Stock of the
Company or any of its Subsidiaries (including any payment in connection with
any
merger or consolidation with or into the Company or any of its Subsidiaries)
in
an amount in excess of $500,000 annually, except for any dividend or
distribution that is made solely to the Company or any of its Subsidiaries
or
any dividend or distribution payable solely in shares of Capital Stock of the
Company; or
(2)
the
purchase, repurchase, redemption, acquisition or retirement for value of any
Capital Stock of the Company or any of its Subsidiaries (other than from the
Company or any of its Subsidiaries) or any securities exchangeable for or
convertible into any such Capital Stock, including the exercise of any option
to
exchange any Capital Stock.
(u) Asset
Sales. The
Company shall not, shall not permit its Subsidiaries to, directly or indirectly,
consummate any Asset Sale unless approved by Xxxx or in the ordinary course
of
business.
(v) Affiliate
Transactions. Except
in
the ordinary course of business, the Company shall not, and shall not permit
its
Subsidiaries to, directly or indirectly, conduct any business or enter into
or
suffer to exist any transaction or series of transactions (including the
purchase, sale, transfer, assignment, lease, conveyance or exchange of any
Property or the rendering of any service) with, or for the benefit of, any
Affiliate of the Company (an “Affiliate
Transaction”),
unless:
16
(i)
the
terms of such Affiliate Transaction are:
(1)
set
forth in writing,
(2)
in
the best interest of the Company or such Subsidiary, as the case may be, and
(3)
except as required by Applicable Law, no less favorable to the Company or such
Subsidiary, as the case may be, than those that could be obtained in a
comparable arm’s-length transaction with a Person that is not an Affiliate of
the Company,
(ii)
if
any single such Affiliate Transaction or series of related payments comprising
part of a single transaction (“Related
Affiliate Transactions”)
involve or involves total aggregate payments or value in excess of US$2.5
million, the Board of Directors (including a majority of the disinterested
members of the Board of Directors) approves such Affiliate Transaction or
Related Affiliate Transactions and, in its good faith judgment, believes that
such Affiliate Transaction or Related Affiliate Transactions comply with clauses
(i)(2) and (3) of this paragraph as evidenced by a Board Resolution promptly
delivered to the Noteholders, and
(iii)
if
such single such Affiliate Transaction or Related Affiliate Transactions involve
or involves total aggregate payments or value in excess of US$5.0 million,
the
Company obtains a written opinion from an Independent Financial Advisor to
the
effect that the consideration to be paid or received in connection with such
Affiliate Transaction or Related Affiliate Transactions are fair, from a
financial point of view, to the Company and its Subsidiaries.Notwithstanding
the foregoing limitation, the Company or any of its Subsidiaries may enter
into
or suffer to exist the following:
(a) any
transaction or series of transactions between the Company and one or more of
its
Subsidiaries or between two or more of its Subsidiaries in the ordinary course
of business, provided
that no
more than 10% of the total voting power of the Voting Stock (on a fully diluted
basis) of any such Subsidiary is owned by an Affiliate of the Company (other
than any Subsidiary of the Company);
(b) the
payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of the
Company or any of its Subsidiaries, so long as the Board of Directors in good
faith shall have approved the terms thereof and deemed the services theretofore
or thereafter to be performed for such compensation to be fair consideration
therefor; and
(c) loans
and
advances to employees made in the ordinary course of business and consistent
with the past practices of the Company or such Subsidiary, as the case may
be,
provided
that
such
loans and advances do not exceed US$100,000 in the aggregate at any one time
outstanding.
(x)
Pledge
of Subsidiary Stock.
The
Company shall enter into a pledge agreement (the “SGI
Pledge Agreement”)
with
Xxxx as promptly as reasonably practicable after the Closing in order to provide
Xxxx with a security interest in all of the shares of the capital stock (the
“SGI
Shares”)
of
Sinosmart Group, Inc. (“SGI”),
a
wholly-owned subsidiary of the Company. The Company will use commercially
reasonable efforts to the extent legally practicable to effect such security
interest in the SGI shares. The SGI Pledge Agreement and any ancillary documents
shall be in form and substance reasonably satisfactory to the Company.
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS.
(a) Register.
The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Note in which the Company shall record the
name
and address of the Person in whose name the Note has been issued (including
the
name and address of each transferee of all or any portion of the Note) and
the
number of Note Shares issuable upon conversion of the held by such Person.
The
Company shall keep the register open and available at all times during business
hours for inspection of Xxxx or its legal representatives.
17
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Notes to Xxxx at
the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its
sole
discretion by providing Xxxx with prior written notice thereof:
(i) Xxxx
shall have executed each of the Transaction Documents to which it is a party
and
delivered the same to the Company.
(ii) The
representations and warranties of Xxxx shall be true and correct in all material
respects (except for those representations and warranties that are qualified
by
materiality or Material Adverse Effect, which shall be true and correct in
all
respects) as of the date when made and as of the Closing Date as though made
at
that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specified date), and Xxxx
shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by Xxxx at or prior to the Closing Date.
(iii) Xxxx
shall have delivered to the Company the Purchase Price.
(iv) All
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Securities shall have been obtained.
7. CONDITIONS
TO XXXX'X OBLIGATION TO PURCHASE.
The
obligation of Xxxx hereunder to purchase the Note at the Closing is subject
to
the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for Xxxx'x sole benefit and
may
be waived by Xxxx at any time in its sole discretion by providing the Company
with prior written notice thereof:
(i) The
Company shall have duly executed and delivered to Xxxx (i) each of the
Transaction Documents and (ii) the Notes to be purchased by Xxxx at the Closing
pursuant to this Agreement.
(ii) Xxxx
shall have received the opinion of Xxxxxxxxxxx and Xxxxxxxx Xxxxxxx Xxxxx &
Xxxxx LLP, the Company’s outside counsel, dated as of the Closing Date.
(iii) The
Company shall have delivered to Xxxx a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware
within ten (10) days of the Closing Date.
(iv) The
Company shall have delivered to Xxxx a certificate, executed by the Secretary
of
the Company and dated as of the Closing Date in a form reasonably acceptable
to
Xxxx, as to (i) the resolutions consistent with Section 3(b) as adopted by
the
Company's board of directors, (ii) the Certificate of Incorporation and (iii)
the Bylaws, each as in effect at the Closing.
(v) The
Major
Shareholder shall have executed and delivered (i) the Guarantee and (ii) the
Pledge Agreement (and shall have delivered or cause to be delivered, or
registered, the Guarantee Shares in accordance with the Pledge Agreement, and
taken such other actions as Xxxx may reasonably require to perfect its interests
in the Guarantee Shares).
(vi) The
representations and warranties of the Company shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Xxxx shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect in a form reasonably acceptable to
Xxxx.
18
(vii) The
Company shall have delivered to Xxxx a letter from the Company's transfer agent
certifying the number of shares of Common Stock outstanding as of a date within
five days of the Closing Date.
(viii) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
8. TERMINATION.
In
the
event that the Closing shall not have occurred on or before fifteen (15)
Business Days from the date hereof due to the Company's or Xxxx'x failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the no breaching
party's failure to waive such unsatisfied condition(s)), the no breaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party
to
any other party.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the
state and federal courts sitting in the State of Delaware, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. 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.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
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;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
19
(e) Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral
or
written agreements between Xxxx, the Company, their affiliates and Persons
acting on their behalf with respect to this transaction and this Agreement,
the
other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor Xxxx makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder, and any amendment to
this
Agreement made in conformity with the provisions of this Section 9(e) shall
be
binding on Xxxx and holders of Securities as applicable. No provision hereof
may
be waived other than by an instrument in writing signed by the party against
whom enforcement is sought. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the applicable Securities
then outstanding. 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 also is offered to all
of
the parties to the Transaction Documents. The Company has not, directly or
indirectly, made any agreements with Xxxx relating to the terms or conditions
of
the transactions contemplated by the Transaction Documents except as set forth
in the Transaction Documents. Without limiting the foregoing, the Company
confirms that, except as set forth in this Agreement, Xxxx has not made any
commitment or promise or has any other obligation to provide any financing
to
the Company or otherwise.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile; or upon receipt, when sent by overnight
delivery service. The addresses and facsimile numbers for such communications
shall be:
If
to the
Company:
No.
999
Ningqiao Road
Jinqiao
Export Processing Zone
Pudong,
Shanghai 201206
People’s
Republic of China
Telephone: (00
00)
0000 0000
Facsimile: (00-00)
0000 0000
Attention:
Song
Jinan
with
a
copy to:
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx, LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Telephone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attention:
Xxxx
Xxxxxxxx
If
to
Xxxx:
0000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000
Telephone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attention:
Xxxxxxx
Xxxxx, Manager
with
a
copy to:
Wells,
Moore, Xxxxxxx & Xxxxxxx, PLLC
Xxxxxxxx
Xxxxx Xxxxx, Xxxxx 000
20
0000
Xxx
Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxxxxxx 00000
Telephone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attention:
X.
Xxxx
Xxxxxxx, Esq.
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebut table evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder, including by way of a
Fundamental Transaction (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Note).
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(i) Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and Xxxx contained in Sections 2 and 3, and the agreements and
covenants set forth in Sections 4, 5 and 9 shall survive the Closing.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
In
consideration of Xxxx'x execution and delivery of the Transaction Documents
and
acquiring the Securities thereunder and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless Xxxx and each other holder of the
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnities”)
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnities is a party to the action for
which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the “Indemnified
Liabilities”),
incurred by any Indemnities as a result of, or arising out of, or relating
to
(a) any misrepresentation or breach of any representation or warranty made
by
the Company in the Transaction Documents or any other certificate, instrument
or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby
or
(c) any cause of action, suit or claim brought or made against such Indemnities
by a third party (including for these purposes a derivative action brought
on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, or (ii)
any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities. 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 that is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.
21
(l) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(m) Remedies.
Xxxx
and each holder of the Securities shall have all rights and remedies set forth
in the Transaction Documents and all rights and remedies which such holders
have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any Person having any rights
under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages
by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under the Transaction Documents, any remedy at law may prove to
be
inadequate relief to Xxxx and any other holder of Securities. The Company
therefore agrees that Xxxx and any other holder of Securities shall be entitled
to seek temporary and permanent injunctive relief in any such case without
the
necessity of proving actual damages and without posting a bond or other
security.
(n) Rescission
and
Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever Xxxx or any
successive holder of Securities exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Person may rescind
or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
(o) Payment
Set Aside.
To the
extent that the Company makes a payment or payments to a Noteholder hereunder
or
pursuant to any of the other Transaction Documents or a Noteholder enforces
or
exercises its rights hereunder or 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, foreign, 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.
(p) Independent
Nature of Xxxx'x Obligations and Rights.
Nothing
contained herein or in any other Transaction Document, and no action taken
by
any Xxxx pursuant hereto or thereto, shall be deemed to constitute Xxxx as,
and
the Company acknowledges that Xxxx does not so constitute, a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that Xxxx is in any way acting in concert or as a group, and the
Company will not assert any such claim with respect to such obligations or
the
transactions contemplated by the Transaction Documents. The Company acknowledges
and Xxxx confirms that it has independently participated in the negotiation
of
the transaction contemplated hereby with the advice of its own counsel and
advisors. Xxxx shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement
or out of any other Transaction Documents.
(q) Agent
for Service of Process .
(i) The Company agrees that any document may be effectively served on it in
connection with any action, suit or proceeding in the United States by service
on its registered agent in the state of Delaware.
(ii)
Any
document shall be deemed to have been duly served if marked for the attention
of
the agent at its address as set forth in this Section 9(q) or such other address
in the United States as may be notified to the party wishing to serve the
document and (a) left at the specified address if its receipt is acknowledged
in
writing; or (b) sent to the specified address by post, registered mail return
receipt requested. In the case of (a), the document will be deemed to have
been
duly served when it is left and signed for. In the case of (b), the document
shall be deemed to have been duly served when received and
acknowledged.
22
(iii)
If
the Company’s agent at any time ceases for any reason to act as such, the
Company shall promptly appoint a replacement agent having an address for service
in the United States and shall promptly notify Xxxx at such time of the name
and
address of the replacement agent. Failing such appointment and notification,
the
holders of a majority of the Securities at such time shall be entitled by notice
to the Company to appoint a replacement agent to act on the Company’s behalf.
The provisions of this Section 9(q) applying to service on an agent apply
equally to service on a replacement agent.
(r) Currency.
As used
herein, “Dollar”, “US Dollar” and “$” each mean the lawful money of the United
States.
[Signature
Page Follows]
23
IN
WITNESS WHEREOF,
Xxxx,
the Company, and the Major Shareholder have caused their respective signature
page to this Investment Agreement to be duly executed as of the date first
written above.
| COMPANY: | ||
| |
|
|
| By: | /s/ Song Jinan | |
|
Name: Song Jinan |
||
|
Title:
Chief Executive Officer
|
||
24
IN
WITNESS WHEREOF,
Xxxx,
the Company, and the Major Shareholder have caused their respective signature
page to this Investment Agreement to be duly executed as of the date first
written above.
| XXXX: | ||
|
XXXX
INVESTMENTS II LLC
By:
Xxxx Asset Management, LLC
Its:
Manager
|
||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxx | |
|
Name:
Xxxxxxx X. Xxxxx
|
||
|
Title:
Manager
|
||
25
IN
WITNESS WHEREOF,
Xxxx,
the Company, and the Major Shareholder have caused their respective signature
page to this Investment Agreement to be duly executed as of the date first
written above.
| MAJOR SHAREHOLDER: | ||
|
SONG
JINAN
|
||
| |
|
|
| /s/ Song Jinan | ||
26
ANNEX
1
MISCELLANEOUS
DEFINITIONS:
The
terms
defined in this Annex 1 (except as herein otherwise expressly provided or unless
the context otherwise requires) for all purposes of this Agreement and the
Notes
shall have the respective meanings specified in this Annex. All other terms
used
in this Agreement that are defined in the 1933 Act (except as herein otherwise
expressly provided or unless the context otherwise requires) shall have the
meanings assigned to such terms in the 1933 Act as in force at the date of
the
execution of this Agreement. The words “herein,” “hereof,” “hereunder” and words
of similar import refer to this Agreement as a whole and not to any
“Affiliate”
of
any
specified Person means:
(a)
any
other
Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person, or
(b)
any
other
Person who is a director or officer of:
(i)
such
specified Person,
(ii)
any
Subsidiary of such specified Person, or
(iii)
any
Person described in clause (a) above.
For
the
purposes of this definition, “control,” when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing. Notwithstanding the foregoing, in no event shall
either Xxxx Investments, LLC or Xxxx Asset Management, LLC or any of its or
their Affiliates be considered an Affiliate of the Company.
“Asset
Sale”
means
any sale, lease, transfer, issuance or other disposition (or series of related
sales, leases, transfers, issuances or dispositions) by the Company or any
of
its Subsidiaries, including any disposition by means of a merger, consolidation
or similar transaction (each referred to for the purposes of this definition
as
a “disposition”), of
(a)
any
shares of Capital Stock of a Subsidiary of the Company (other than directors’
qualifying shares), or
(b)
any
other
property
of the
Company or any of its Subsidiaries outside of the ordinary course of business
of
the Company or such Subsidiary,
other
than, in the case of clause (a) or (b) above,
(1)
any
disposition by a Subsidiary of the Company to the Company or by the Company
or
one of its Subsidiaries to a Subsidiary,
(2)
any
disposition of inventory of the Company or any of its Subsidiaries in the
ordinary course of business, or inventory or other property that in the
reasonable judgment of the Company have become uneconomic, obsolete or worn
out,
(3)
the
sale
or discount of accounts receivable in connection with the compromise or
collection thereof in the ordinary course of business, or
27
(3)
any
disposition in a single transaction or a series of related transactions of
assets for aggregate consideration of less than US$5.0 million.
“Capital
Stock”
means,
with respect to any Person, any shares or other equivalents (however designated)
of any class of corporate stock or partnership interests or any other
participations, rights, warrants, options or other interests in the nature
of an
equity interest in such Person, including preferred stock, but excluding any
debt security convertible or exchangeable into such equity
interest.
“Consolidated
Net Income”
means
the consolidated net income of the Company determined in accordance with GAAP
as
reflected in the SEC Documents.
“Consolidated
Net Worth”
means
the
consolidated net worth of the Company determined in accordance with GAAP as
reflected in the SEC Documents.
“Fiscal
Quarter”
means
each of the three month periods ending on March 31, June 30, September 30 and
December 31.
“Intangible
Assets” shall
mean as of the date of any determination thereof the total amount of all assets
of the Company and its Subsidiaries classified as goodwill, patents, trade
names, trademarks, copyrights, franchises, experimental expense, organization
expense, unamortized debt discount and expense, deferred assets other than
prepaid insurance and prepaid taxes, the excess of cost of shares acquired
over
book value of related assets and such other assets as are properly classified
as
“intangible
assets”
in
accordance with GAAP.
“Lien”
means,
with respect to any property of any Person, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest,
lien,
charge, easement (other than any easement not materially impairing usefulness
or
marketability), encumbrance, preference, priority or other security agreement
or
preferential arrangement of any kind or nature whatsoever on or with respect
to
such property.
“Noteholder”
or
“holder”
as
applied to any Note, or other similar terms (but excluding the term “Beneficial
Holder”), means any Person in whose name at the time a particular Note is
registered on the Registrar’s books.
“Permitted
Liens”
means:
(a)
Liens
in
favor of the Company;
(b)
Liens
securing, or created for the benefit of securing, the Notes or the
Guarantee;
(c)
Liens
securing debt of a Subsidiary, provided
that any
such Lien is limited to the property of such Subsidiary;
(d) leases,
licenses, subleases and sublicenses of assets (including, without limitation,
real property and intellectual property rights) which do not materially
interfere with the ordinary conduct of the business of the Company or any of
the
Subsidiaries;
(e) Liens
for
taxes, assessments or governmental charges or levies on the property of the
Company or any of its Subsidiaries if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested
in
good faith and by appropriate proceedings promptly instituted and diligently
concluded, provided
that any
reserve or other appropriate provision that shall be required in conformity
with
GAAP shall have been made therefor;
(f)
Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other
similar Liens, on the property of the Company or any of its Subsidiaries arising
in the ordinary course of business and securing payment of obligations that
are
not more than 60 days past due or are being contested in good faith and by
appropriate proceedings;
28
(g)
Liens
on
the property of the Company or any of its Subsidiaries incurred in the ordinary
course of business to secure performance of obligations with respect to
statutory or regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature and incurred in a manner
consistent with industry practice, in each case which are not incurred in
connection with the borrowing of money, the obtaining of advances or credit
or
the payment of the deferred purchase price of property and which do not in
the
aggregate impair in any material respect the use of property in the operation
of
the business of the Company and its Subsidiaries taken as a whole;
(h)
Liens
on
property at the time the Company or any of its Subsidiaries acquired such
property, including any acquisition by means of a merger or consolidation with
or into the Company or any of its Subsidiaries; provided,
however,
that
any such Lien may not extend to any other property of the Company or any of
its
Subsidiaries; provided
further, that
such
Liens shall not have been incurred in anticipation of or in connection with
the
transaction or series of transactions pursuant to which such property was
acquired by the Company or any of its Subsidiaries;
(i)
Liens
on
the property of a Person at the time such Person becomes a Subsidiary of the
Company; provided,
however,
that
any such Lien may not extend to any other property of the Company or any other
Subsidiary of the Company that is not a direct Subsidiary of such Person;
provided
further, that
any
such Lien was not incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Person became
a
Subsidiary of the Company;
(j)
Pledges
or deposits by the Company or any of its Subsidiaries under workers’
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for
the
payment of debt) or leases to which the Company or any of its Subsidiaries
is
party, or deposits to secure public or statutory obligations of the Company,
or
deposits for the payment of rent, in each case Incurred in the ordinary course
of business;
(k)
utility
easements, building restrictions and such other encumbrances or charges against
real property as are of a nature generally existing with respect to properties
of a similar character;
(l)
Liens
existing on the Closing Date not otherwise described in clauses (a) through
(h)
above;
(m)
Liens
on
the property of the Company or any of its Subsidiaries to secure any
refinancing, in whole or in part, of any debt secured by Liens referred to
in
clause (h), (i) or (l) above; provided,
however,
that
any such Lien shall be limited to all or part of the same property that secured
the original Lien (together with improvements and accessions to such property),
and the aggregate principal amount of debt (and other obligations thereunder)
that is secured by such Lien shall not be increased to an amount greater than
the sum of:
(i)
the
outstanding principal amount, or, if greater, the committed amount, of the
debt
(and other obligations thereunder) secured by Liens described under clause
(h),
(i) or (l) above, as the case may be, at the time the original Lien became
a
Permitted Lien under this Agreement, and
(ii)
an
amount
necessary to pay any fees and expenses, including premiums and defeasance costs,
incurred by the Company or such Subsidiary in connection with such
refinancing;
(n)
judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly initiated
for the review of such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired.
“Senior
Debt”
of
the
Company means:
(a)
all
obligations consisting of the principal, premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition
in
bankruptcy or for reorganization relating to the Company whether or not such
post-filing interest is allowed in such proceeding) in respect of:
29
(i)
debt
of
the Company for borrowed money, and
(ii)
debt
of
the Company evidenced by notes, debentures, bonds or other similar instruments
permitted under this Indenture for the payment of which the Company is
responsible or liable;
(b)
all
obligations of the Company:
(i)
for
the
reimbursement of any obligor on any letter of credit, banker’s acceptance or
similar credit transaction, or
(ii)
issued
or
assumed as the deferred purchase price of property and all conditional sale
obligations of the Company and all obligations under any title retention
agreement permitted under this Agreement; and
(c)
all
obligations of other Persons of the type referred to in clauses (a), (b) and
(c)
for the payment of which the Company is responsible or is liable for as
guarantor;
provided,
however,
that
Senior Debt shall not include:
(1)
debt
of
the Company that is by its terms subordinate in right of payment to the Notes;
(2)
accounts
payable or any other obligations of the Company to trade creditors created
or
assumed by the Company in the ordinary course of business in connection with
the
obtaining of materials or services (including guarantees thereof or instruments
evidencing such liabilities);
(3)
any
liability for federal, state, national, provincial, local, foreign or other
taxes owed or owing by the Company;
(4)
any
obligation of the Company to any of its Subsidiaries; or
(5)
any
obligations with respect to any Capital Stock of the Company.
To
the
extent that any payment of Senior Debt (whether by or on behalf of the Company
as proceeds of security or enforcement or any right of setoff or otherwise)
is
declared to be fraudulent or preferential, set aside or required to be paid
to a
trustee, receiver or other similar party under any bankruptcy, insolvency,
receivership or similar law, then if such payment is recovered by, or paid
over
to, such trustee, receiver or other similar party, the Senior Debt or part
thereof originally intended to be satisfied shall be deemed to be reinstated
and
outstanding as if such payment had not occurred.
30
EXHIBITS
| Exhibit A | Form of Note |
| Exhibit B | Form of Guarantee |
| Exhibit C | Form of Major Shareholder Pledge Agreement |
| Exhibit D | Form of Registration Rights Agreement |
31
