SECURITIES PURCHASE AGREEMENT BETWEEN ACHIEVERS MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION LIMITED DATED December 14, 2007
BETWEEN
AND
XINGGUANG
INVESTMENT CORPORATION LIMITED
DATED
December
14, 2007
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”)
is
made and entered into as of the 14th
day of
December, 2007 between Achievers
Magazine Inc.,
a
Nevada corporation (the “Company”),
and
XingGuang Investment Corporation Limited,
a
British
Virgin Islands corporation (“Investor”).
RECITALS:
WHEREAS,
the
Investor wishes to purchase from the Company, upon the terms and subject to
the
conditions of this Agreement, for the Purchase Price, as hereinafter defined,
one or more convertible notes (the “Notes”)
in the
aggregate principal amount of $1,200,000, which Notes are convertible into
either:
(a)
an
aggregate of (i) 1,200,499 shares of the Company’s Series A Convertible
Preferred Stock, par value $.001 per share (“Series
A Preferred Stock”),
with
each share of Series A Preferred Stock being initially convertible into one
(1)
share of the Company’s common stock, par value $.001 per share (“Common
Stock”),
subject to adjustment, and (ii) common stock purchase warrants (the
“Warrants”)
to
purchase 3,000,000 shares of Common Stock at $1.20 per share, and 3,000,000
shares of Common Stock at $2.00 per share; or
(b)
until
the Restated Certificate, as hereinafter defined, is filed with the Secretary
of
State of Nevada, an aggregate of (i) 1,200,499 shares of the Common Stock,
subject to adjustment, and (ii) Warrants to purchase 3,000,000 shares of Common
Stock at $1.20 per share, and 3,000,000 shares of Common Stock at $2.00 per
share.
WHEREAS,
Investor is purchasing Notes in the principal amount set forth in Schedule
A of
this Agreement;
WHEREAS,
upon
conversion of the Note, the Common Stock and Warrants will be issued in the
names set forth in Schedule A;
WHEREAS,
contemporaneously with the Closing, the Company is acquiring all of the issued
and outstanding capital stock of Talent Int’l Investment Limited, a British
Virgin Islands corporation (“Talent”), which owns all of the capital stock of
Xinghe Yongle Carbon Co., Ltd., a corporation organized under the laws of the
People’s Republic of China as a wholly foreign owned enterprised (“Yongle”);
and
WHEREAS,
Yongle
is a party to agreements with Xinghe Xingyong Carbon Co., Ltd., a corporation
organized under the laws of the People’s Republic of China (the “PRC Company”),
pursuant to which Yongle has the right to advise, consult, manage and operate
the business and assets of the PRC Company and collect and own all of its net
profits, and, has voting and other rights pursuant to a proxy and voting
agreement and a voting trust and escrow agreement as a result of which Yongle
has voting control over the PRC Company; and
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
1
WHEREAS,
the
parties intend to memorialize the terms on which the Company will sell to the
Investor and the Investor will purchase the Securities;
NOW,
THEREFORE,
in
consideration of the mutual covenants and premises contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby conclusively acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
Article
1
INCORPORATION
BY REFERENCE AND DEFINITIONS
1.1 Incorporation
by Reference.
The
foregoing recitals and the Exhibits and Schedules attached hereto and referred
to herein, are hereby acknowledged to be true and accurate, and are incorporated
herein by this reference.
1.2 Supersedes
Other Agreements.
This
Agreement, to the extent that it is inconsistent with any other instrument
or
understanding among the parties, shall supersede such instrument or
understanding to the fullest extent permitted by law. A copy of this Agreement
shall be filed at the Company’s principal office.
1.3 Certain
Definitions.
For
purposes of this Agreement, the following capitalized terms shall have the
following meanings (all capitalized terms used in this Agreement that are not
defined in this Article 1 shall have the meanings set forth elsewhere in this
Agreement):
1.3.1 “4.9%
Limitation”
has
the
meaning set forth in Section 2.1.2 of this Agreement.
1.3.2 “1933
Act”
means
the Securities Act of 1933, as amended.
1.3.3 “1934
Act”
means
the Securities Exchange Act of 1934, as amended.
1.3.4 “Affiliate”
means
a
Person or Persons directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with the Person(s) in
question. The term “control,” as used in the immediately preceding sentence,
means, with respect to a Person that is a corporation, the right to the
exercise, directly or indirectly, of more than 50% of the voting rights
attributable to the shares of such controlled corporation and, with respect
to a
Person that is not a corporation, the possession, directly or indirectly, of
the
power to direct or cause the direction of the management or policies of such
controlled Person.
1.3.5 “Articles”
means
the articles of incorporation of the Company, as the same may be amended from
time to time.
1.3.6 “Authorized
Stock Proviso”
has
the
meaning set forth in Section 4.4.3 of this Agreement.
1.3.7 “Bylaws”
means
the bylaws of the Company, as the same may be amended from time to
time.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 2
1.3.8 “Certificate
of Designation”
means
the certificate of the rights, preferences and privileges, subject to the
limitations, with respect to the Series A Preferred Stock. The Certificate
of
Designation shall be in substantially the form of Exhibit
A
to this
Agreement.
1.3.9 “Closing” means
the
consummation of the transactions contemplated by this Agreement, all of which
transactions shall be consummated contemporaneously with the
Closing.
1.3.10 “Closing
Date”
means
the date on which the Closing occurs.
1.3.11 “Common
Stock”
means
the Company’s common stock, which is presently designated as the common stock,
par value $.00002 per share. Pursuant to the Restated Certificate, the par
value
will be changed to $.001 per share.
1.3.12 “Company’s
Governing Documents”
means
the Articles and Bylaws.
1.3.13 “EBITDA”
means
consolidated earnings before interest, taxes, depreciation and amortization,
determined in accordance with GAAP.
1.3.14 “Exempt
Issuance”
means
the
issuance of (a) shares of Common Stock or options to employees, officers,
directors of and consultants (other than consultants whose services relate
to
the raising of funds) of the Company pursuant to any stock or option plan that
was or may be adopted by a majority of independent members of the Board of
Directors of the Company or a majority of the members of a committee of
independent directors established for such purpose, (b) securities upon the
exercise of or conversion of any (i) securities issued hereunder and pursuant
to
the Registration Rights Agreement, the Notes, the Warrants and the Certificate
of Designation, (ii) any other options, warrants or convertible securities
which
are outstanding on after completion of the Closing or (iii) securities issued
pursuant to options and warrants issued under a plan adopted pursuant to (a)
above, and (c) securities issued pursuant to acquisitions, licensing agreements,
or other strategic transactions, provided any such issuance shall only be to
a
Person which is, itself or through its subsidiaries, an operating company in
a
business which the Company’s board of directors believes is beneficial to the
Company and in which the Company receives benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.
1.3.15 “GAAP”
means
United States generally accepted accounting principles consistently
applied.
1.3.16 “Material
Adverse Effect”
means
any adverse effect on the business, operations, properties or financial
condition of the Company or any of its Subsidiaries that is material and adverse
to the Company and its Subsidiaries taken as a whole and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company or any Subsidiary to perform any of its material
obligations under this Agreement, the Registration Rights Agreement or the
Warrants or to perform its obligations under any other material agreement.
1.3.17 “Nevada
Law”
shall
mean the Nevada Corporation Law.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 3
1.3.18 “Note(s)”
shall
have the meaning set forth in the introductory paragraph of this Agreement
and
shall be in substantially the form of Exhibit
B
to this
Agreement.
1.3.19 “Person”
means
an individual, partnership, firm, limited liability company, trust, joint
venture, association, corporation, or any other legal entity.
1.3.20 “PRC
Agreements”
shall
mean the agreements between Yongle and the PRC Company.
1.3.21 “PRC
Company Stockholders”
shall
mean the stockholders of the PRC Company, which, as of the date of this
Agreement, are ____________________________.
1.3.22 “Preferred
Stock”
means
the preferred stock, par value $.001 per share, as created by the Restated
Certificate.
1.3.23 “Proxy
Statement”
means
a
proxy statement filed with the SEC pursuant to Section 14(a) of the 1934 Act
which seeks stockholder approval of the Restated Certificate or an information
statement pursuant to Section 14(c) of the 1934 Act advising stockholders that
the holders of a majority of the shares of Common Stock have approved the
Restated Certificate, whichever shall be appropriate.
1.3.24 “Purchase
Price”
means
the $1,200,000 to be paid by the Investor to the Company for the
Securities.
1.3.25 “Registration
Rights Agreement”
means
the registration rights agreement between the Investor and the Company in
substantially the form of Exhibit
C
to this
Agreement.
1.3.26 “Registration
Statement”
means
the registration statement under the 1933 Act to be filed with the SEC for
the
registration of the Shares pursuant to the Registration Rights
Agreement.
1.3.27 “Related
Companies”
shall
mean Sincere, Talent and the PRC Company, each of which is a “Related
Company.”
1.3.28 “Restated
Certificate”
means
the restated certificate of incorporation which is in substantially the form
of
Exhibit
D
to this
Agreement.
1.3.29 “Securities”
means
the Note, the shares of Series A Preferred Stock, the Warrants and the
Shares.
1.3.30 “SEC”
means
the Securities and Exchange Commission.
1.3.31 “SEC
Documents”
means,
at any given time, the Company’s latest Form 10-K or Form 10-KSB and all Forms
10-Q or 10-QSB and 8-K and all proxy statements or information statements filed
between the date the most recent Form 10-K or Form 10-KSB was filed and the
date
as to which a determination is being made.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 4
1.3.32 “Series
A Preferred Stock”
means
the shares of Series A Preferred Stock having the rights, preferences and
privileges and subject to the limitations set forth in the Certificate of
Designation.
1.3.33 “Shares”
means,
collectively, the shares of Common Stock issued or issuable (i) upon conversion
of the Notes or Series A Preferred Stock and (ii) upon exercise of the
Warrants.
1.3.34 “Subsidiary”
means
an entity in which the Company and/or one or more other Subsidiaries directly
or
indirectly own either 50% of the voting rights or 50% of the equity
interests.
1.3.35 “Subsequent
Financing”
means
any offer and sale of shares of Preferred Stock or debt that is initially
convertible into shares of Common Stock or otherwise senior or superior to
the
Series A Preferred Stock.
1.3.36 “Total
Shares”
means
the number of shares of Common Stock as have been or would be issued upon
conversion of the Notes and the Series A Preferred Stock and Warrants issuable
upon conversion of the Notes. The number of Total Shares shall be adjusted
to
reflect any change in the conversion price of the Notes or Series A Preferred
Stock and the expiration of any Warrants.
1.3.37 “Transaction
Documents”
means
this Agreement, all Schedules and Exhibits attached hereto, the Notes, the
Certificate of Designation, the Warrants, the Registration Rights Agreement,
the
Closing Escrow Agreement and all other documents and instruments to be executed
and delivered by the parties in order to consummate the transactions
contemplated hereby.
1.3.38 “Unsold
Shares”
means
the difference between (a) the number of shares of Series A Preferred Stock
which were initially issued upon conversion of the Notes and (b) the number
of
shares of Series A Preferred Stock, regardless of when such shares were issued,
which have been converted into Common Stock with the Common Stock having been
sold.
1.3.39 “Warrants”
means
the common stock purchase warrants in substantially the forms of Exhibits
E-1 and E-2 to
this
Agreement.
1.4 References.
All
references in this Agreement to “herein” or words of like effect, when referring
to preamble, recitals, article and section numbers, schedules and exhibits
shall
refer to this Agreement unless otherwise stated.
1.5 Value
of Series A Preferred Stock.
Wherever this Agreement provides for the delivery of shares of Series A
Preferred Stock in satisfaction of an obligation under this Agreement, a share
of Series A Preferred Stock shall have a value equal to the market price of
the
shares of Common Stock issuable upon conversion of the Series A Preferred
Stock
Article
2
SALE
AND PURCHASE OF NOTES; PURCHASE PRICE
2.1 Sale
of Notes.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 5
Upon
the
terms and subject to the conditions set forth herein, and in accordance with
applicable law, the Company agrees to sell to the Investor, and Investor agrees
to purchase from the Company. The Purchaser Price shall be paid as follows:
(a)
at least $217,000 has been paid on behalf of the Company by the Investor, (b)
$183,000 is payable at the closing, (c) $400,000 is payable on March 31, 2008
and (d) $400,000 is payable on June 30, 2008. At or prior to the Closing the
Investor shall wire the that portion of the Purchase Price that is payable
at
closing to the Escrow Agent, who shall release the Purchase Price to the Company
upon receipt of instructions from the Investor and the Company.
2.1.1 Except
as
expressly provided in the Certificate of Designation and the Warrants, an
Investor shall not be entitled to convert the Notes or Series A Preferred
Stock
into
shares of Common Stock or to exercise the Warrants to the extent that such
conversion or exercise would result in beneficial ownership by the Investor
and
its Affiliates of more than 4.9% of the then outstanding number of shares of
Common Stock on such date after giving effect to such conversion or exercise.
For the purposes of this Agreement beneficial ownership shall be determined
in
accordance with Section 13(d) of the 1934 Act, and Regulation 13d-3 thereunder.
The limitation set forth in this Section 2.1.3 is referred to as the
“4.9%
Limitation.”
As
a
result of the 4.9% Limitation, no Investor will have 5% of the voting power
of
the Company; provided, however, that this sentence shall not affect any of
an
Investor’s rights under the Certificate of Designation.
Article
3
CLOSING
DATE AND DELIVERIES AT CLOSING
3.1 Closing
Date.
The
Closing of the transactions contemplated by this Agreement, unless expressly
determined herein, shall be held at the offices of the Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP, 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 2:00 P.M. local time,
on
the Closing Date or on such other date and at such other place as may be
mutually agreed by the parties, including closing by facsimile with originals
to
follow.
3.2 Deliveries
by the Company.
In
addition to and without limiting any other provision of this Agreement, the
Company agrees to deliver, or cause to be delivered, to the escrow agent under
the Escrow Agreement, the following:
(a) At
or
prior to Closing, an executed Agreement with all exhibits and schedules attached
hereto;
(b) At
the
Closing, Notes in the names of the Investor in the amounts set forth in Schedule
A to this Agreement;
(c) The
executed Registration Rights Agreement;
(d) Evidence
that the Company has acquired all of the shares of Talent.
(e) Executed
disbursement instructions;
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 6
(f) Copies
of
all SEC correspondence since last Form 10-KSB and any correspondence which
was
issued prior to the last Form 10-KSB which has not been resolved to the
satisfaction of the SEC.
(g) Certifications
in form and substance acceptable to the Company and the Investor from any and
all brokers or agents involved in the transactions contemplated hereby as to
the
amount of commission or compensation payable to such broker or agent as a result
of the consummation of the transactions contemplated hereby and from the Company
or Investor, as appropriate, to the effect that reasonable reserves for any
other commissions or compensation that may be claimed by any broker or agent
have been set aside;
(h) Management
letter from the Company’s registered independent accounting firm or confirmation
from such firm that no such letter were issued in connection with the Company’s
most recent audit;
(i) Evidence
of approval of the Board of Directors of the Company of the Transaction
Documents and the transactions contemplated hereby and thereby;
(j) Evidence
that the Restated Certificate has been approved by the directors, and that
the
board of directors has authorized the filing of the Proxy Statement with the
SEC.
(k) Good
standing certificate from the Secretary of State of the State of
Nevada;
(l) Copy
of
the Company’s Articles, as currently in effect, certified by the Secretary of
State of the State of Nevada;
(m) An
opinion from the Company’s PRC counsel that (i) each of the Related Companies is
legally established and validly existing as an independent legal entity; (ii)
each of the Related Companies is an independent legal person and none of them
is
exposed to liabilities incurred by the other party; (iii) the PRC Agreements
constitute valid and binding obligations of the parties to such agreements,
and
(iv) each of the PRC Agreements and the rights and obligations of the parties
thereto are enforceable and valid in accordance with the laws of the
PRC;
(n) Such
other documents or certificates as shall be reasonably requested by Investor
or
their counsel; and
(o) The
Company must be current in its filings with the SEC, and the Company’s Common
Stock must be trading on the OTC Bulletin Board.
3.3 Deliveries
by Investor.
In
addition to and without limiting any other provision of this Agreement, the
Investor agree to deliver, or cause to be delivered, to the Escrow Agent under
the Escrow Agreement, the following:
(a) A
deposit
from each Investor as to the Investor’s portion of the Purchase
Price;
(b) The
executed Agreement with all Exhibits and Schedules attached hereto;
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 7
(c) The
executed Registration Rights Agreement;
(d) Executed
disbursement instructions; and
(e) Such
other documents or certificates as shall be reasonably requested by the Company
or its counsel.
3.4 Delivery
of Original Documents.
In the
event any document provided to the other party in Paragraphs 3.2 and 3.3 herein
are provided by facsimile, the party shall forward an original document to
the
other party within seven (7) business days.
3.5 Further
Assurances.
The
Company and each Investor shall, upon request, on or after the Closing Date,
cooperate with each other (specifically, the Company shall cooperate with the
Investor, and each Investor shall cooperate with the Company) by furnishing
any
additional information, executing and delivering any additional documents and/or
other instruments and doing any and all such things as may be reasonably
required by the parties or their counsel to consummate or otherwise implement
the transactions contemplated by this Agreement.
3.6 Waiver.
An
Investor may waive any of the requirements of Section 3.2 of this Agreement,
and
the Company may waive any of the provisions of Section 3.3 of this Agreement.
The Investor may also waive any of the requirements of the Company under the
Escrow Agreement.
Article
4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Investor as of the date hereof and as
of
Closing Date (which warranties and representations shall survive the Closing
regardless of any examinations, inspections, audits and other investigations
the
Investor have heretofore made or may hereinafter make with respect to such
warranties and representations) as follows:
4.1 Organization
and Qualification.
Each of
the Company, each Subsidiary and each of the Related Companies is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and is duly qualified to do business in any other
jurisdiction by virtue of the nature of the businesses conducted by it or the
ownership or leasing of its properties, except where the failure to be so
qualified will not, when taken together with all other such failures, have
a
Material Adverse Effect on the business, operations, properties, assets,
financial condition or results of operation of the Company, its Subsidiaries
and
the Related Companies taken as a whole.
4.2 Company’s
Governing Documents.
The
complete and correct copies of the Company’s Governing Documents (a) have been
provided to the Investor and (b) have been filed with the SEC in accordance
with
the regulations of the SEC and (c) will be in full force and effect on the
Closing Date.
4.3 Capitalization.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 8
4.3.1 The
authorized and outstanding capital stock of the Company as of the date of this
Agreement and as adjusted to reflect the issuance and sale of the Securities
pursuant to this Agreement is set forth in Schedule 4.3.l to this Agreement.
Schedule 4.3.1 lists all shares and potentially dilutive events, including
shares issuable pursuant to employment, consulting and other services
agreements, acquisition agreements, options and equity-based incentive plans,
debt securities, convertible securities, financing or business relationships
as
well as each agreement, plan, arrangement or understanding pursuant to which
any
shares of any class of capital stock may be issued, a copy of each of which
has
been provided to the Investor.
4.3.2 All
shares of capital stock described above to be issued have been duly authorized
and when issued, will be validly issued, fully paid and non-assessable and
free
of preemptive rights.
4.3.3 Except
pursuant to this Agreement and as set forth in Schedule 4.3.1, there are no
outstanding options, warrants, rights to subscribe for, calls or commitments
of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any class of capital stock of the Company, or
agreements, understandings or arrangements to which the Company is a party,
or
by which the Company is or may be bound, to issue additional shares of its
capital stock or options, warrants, scrip or rights to subscribe for, calls
or
commitment of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of any class of its capital
stock. The Company agrees to inform the Investor in writing of any additional
warrants granted prior to the Closing Date.
4.3.4 Neither
of the PRC Company, nor ____________ has any agreement or understanding, whether
formal or informal, which could result in the issuance of any equity securities
or right to purchase or otherwise acquire equity securities of such
corporation.
4.4 Authority.
4.4.1 The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, Notes and the Securities issuable upon conversion of the Notes,
the Registration Rights Agreement, the Closing Escrow Agreement and any other
Transaction Documents to which the Company is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement,
the Notes and the Securities issuable upon conversion of the Notes, the
Registration Rights Agreement, the Closing Escrow Agreement and any other
Transaction Documents to which the Company is a party have been duly authorized
by all necessary corporate action and no other corporate proceedings on the
part
of the Company is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby and thereby except as disclosed in this
Agreement. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency and other laws of
general application affecting the enforcement of creditors’ rights and except
that any the granting of equitable relief is in the discretion of the
court.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 9
4.4.2 The
Note,
when issued pursuant to this Agreement, constitutes the valid, binding and
obligation of the Company enforceable in accordance with its terms, except
as
enforceability may be limited by bankruptcy, insolvency and other laws of
general application affecting the enforcement of creditors’ rights and except
that any the granting of equitable relief is in the discretion of the court.
The
Restated Certificate has been approved by the board of directors. Upon the
filing of the Restated Certificate and the Certificate of Designation, the
equity Securities issuable upon conversion of the Note, when so issued, will
be
duly and validly authorized and issued, fully paid and non-assessable and the
Warrants will be the valid and binding obligations of the Company, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any the granting of equitable
relief is in the discretion of the court. All such Securities, when so issued,
will be free and clear of all liens, charges, claims, options, pledges,
restrictions, preemptive rights, rights of first refusal and encumbrances
whatsoever (other than those incurred by the Investor).
4.4.3 Notwithstanding
any contrary representations and warranties, no
representation is made with respect to the ability of any Investor to convert
the Note or, following the filing of the Restated Certificate and the
Certificate of Designation, the Series A Preferred Stock or exercise any Warrant
if and to the extent that the conversion price of the Note or the Series A
Preferred Stock, as defined in the Note or the Certificate of Designation,
or
the number of Shares issuable upon exercise of the Warrants would result in
the
issuance of a number of shares of Common Stock which is greater than the amount
by which the authorized Common Stock exceeds the sum of the outstanding Common
Stock and the shares of Common Stock reserved for issuance pursuant to
outstanding agreements and outstanding options, warrants, rights, convertible
securities and other securities upon the exercise or conversion of which or
pursuant to the terms of which additional shares of Common Stock may be issuable
(the foregoing proviso being referred to as the “Authorized
Stock Proviso”).
4.4.4 Each
Related Company is legally established, and validly existing as an independent
legal entities; (ii) each Related Company is an independent legal person and
none of them is exposed to liabilities incurred by the other party; (iii) the
PRC Agreements constitute valid and binding obligations of the parties to such
agreements, and (iv) each of the PRC Agreements and the rights and obligations
of the parties thereto are enforceable and valid in accordance with the laws
of
the PRC.
4.5 No
Conflict; Required Filings and Consents.
Neither
the execution and delivery of this Agreement by the Company nor the issuance
of
the Notes and other Transaction Documents, and the performance by the Company
of
its obligations hereunder and thereunder will: (i) conflict with or violate
the
Company’s or any Subsidiary’s Governing Instruments; (ii) conflict with, breach
or violate any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, judgment or decree (collectively, “Laws”)
in
effect as of the date of this Agreement and applicable to the Company or any
Subsidiary; or (iii) result in any breach of, constitute a default (or an event
that with notice or lapse of time or both would become a default) under, give
to
any other entity any right of termination, amendment, acceleration or
cancellation of, require payment under, or result in the creation of a lien
or
encumbrance on any of the properties or assets of the Company or any Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any of their respective properties or assets is bound, other than such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens that would not, in the aggregate, have a Material Adverse
Effect
except
to the extent that stockholder approval may be required as a result of the
Authorized Stock Proviso, in which event, the Company will seek stockholder
approval to an increase in the authorized Common Stock sufficient to enable
the
Company to be in compliance with this Section 4.5. Neither the execution of
this
Agreement nor the consummation of the terms contemplated by this Agreement
will
impair Investor’s rights under the PRC Agreements.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 10
4.6 Reports
and Financial Statements.
4.6.1 The
consolidated financial statements of the Related Companies for the years ended
July 31, 2007 and 2006, including consolidated balance sheets, statements of
operations, stockholders’ equity and cash flows, together with the notes
thereon, certified by Xxxxxxx
Xxxxxx, Chartered Accountants (“Xxxxxxx”),
the
Company’s independent registered accounting firm, together with the unaudited
consolidated financial statements for the three months ended October 31, 2007
and 2006, which have been reviewed by Xxxxxxx have
been
delivered to the Investor. Each of the consolidated balance sheets fairly
presents the financial position of the Related Companies, as of its date, and
each of the consolidated statements of income, stockholders’ equity and cash
flows (including any related notes and schedules thereto) fairly presents the
results of operations, cash flows and changes in stockholders’ equity, as the
case may be, of the Related Companies for the periods to which they relate,
in
each case in accordance with GAAP consistently applied during the periods
involved. Xxxxxxx
is
independent as to the Company and each of the Related Companies in accordance
with the rules and regulations of the SEC. The books and records of the Related
Companies have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transaction. Neither the Company nor any of the Related
Companies has received any advice from Xxxxxxx to
the
effect that there is any significant deficiency or material weakness in the
Company’s or any Related Party’s controls or recommending any corrective action
on the part of the Company or any Related Party. Neither the Company nor any
Related Party has any contingent liability which is not reflected in the
financial statements. To the extent that the consolidated financial statements
of Xxxxxxx do not include the financial condition or results of operations
of
the PRC Company, separate statements for the PRC Company, conforming to the
delivery requirements of this Section 4.6.1, shall have been
delivered.
4.6.2 The
Company’s Form 10-KSB for the year ended July 31, 2007, contains the audited
financial statements of the Company, certified by Xxxxxxx Xxxxxx, Chartered
Accountants,
(“Xxxxxxx”),
the
Company’s independent registered accounting firm, for the years ended July 31,
2007 and 2006. The balance sheets fairly present the financial position of
the
Company, as of their respective dates, and each of the consolidated statements
of income, stockholders’ equity and cash flows (including any related notes and
schedules thereto) fairly presents the results of operations, cash flows and
changes in stockholders’ equity, as the case may be, of the Company for the
periods to which they relate, in each case in accordance with GAAP consistently
applied during the periods involved. Xxxxxxx is independent as to the Company
in
accordance with the rules and regulations of the SEC. The books and records
of
the Company have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transaction. The Company has not received any letters
of
comments from the SEC relating to any filing made by the Company with the SEC
which has not been addressed by an amended filing, and each amended filing
fully
responds to the questions raised by the staff of the SEC. The Company maintains
disclosure controls and procedures that are effective to ensure that information
required to be disclosed by the Company in its annual and quarterly reports
filed with the SEC is accumulated and communicated to the Company’s management,
including its principal executive and financial officers as appropriate, to
allow timely decisions regarding required disclosure. There were no significant
changes in the Company’s internal controls or other factors that could
significantly affect such controls subsequent to December 31, 2006. The Company
has not received any advice from Xxxxxxx to the effect that there is any
significant deficiency or material weakness in the Company’s controls or
recommending any corrective action on the part of the Company or any Subsidiary.
The Company does not have any contingent liabilities.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 11
4.7 Compliance
with Applicable Laws.
Neither
the Company nor any Subsidiary nor any Related Party is in violation of, or,
to
the knowledge of the Company is under investigation with respect to or has
been
given notice or has been charged with the violation of, any Law of a
governmental agency, except for violations which individually or in the
aggregate do not have a Material Adverse Effect.
4.8 Brokers.
Except
as set forth on Schedule 4.8, no broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or
on behalf of the Company.
4.9 SEC
Documents.
The
Investor acknowledge that the Company is a publicly held company and has made
available to the Investor upon request true and complete copies of any requested
SEC Documents. The Company has registered its Common Stock pursuant to Section
12(d) of the 1934 Act, and the Common Stock is quoted and traded on the OTC
Bulletin Board of the National Association of Securities Dealers, Inc. The
Company has received no notice, either oral or written, with respect to the
continued quotation or trading of the Common Stock on the OTC Bulletin Board.
The Company has not provided to the Investor any information that, according
to
applicable law, rule or regulation, should have been disclosed publicly prior
to
the date hereof by the Company, but which has not been so disclosed. As of
their
respective dates, the SEC Documents complied in all material respects with
the
requirements of the 1934 Act, and rules and regulations of the SEC promulgated
thereunder and the SEC Documents did not 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 light of the circumstances
under which they were made, not misleading.
4.10 Litigation.
To the
knowledge of the Company, no litigation, claim, or other proceeding before
any
court or governmental agency is pending or to the knowledge of the Company,
threatened against the Company, the prosecution or outcome of which may have
a
Material Adverse Effect.
4.11 Employment
Agreements.
Except
as disclosed in the Company’s Form 10-KSB for the year ended July 31, 2006 or as
otherwise disclosed pursuant to this Agreement, the Company does not have any
agreement or understanding with any officer or director, and there has been
no
material change in the compensation of any officer and director from that shown
in said Form 10-KSB.
4.12 Exemption
from Registration.
Subject
to the accuracy of the Investor’ representations in Article V of this Agreement,
except as required pursuant to the Registration Rights Agreement, the sale
of
the Note by the Company to the Investor or the issuance of Series A Preferred
Stock or Common Stock and Warrants will not require registration under the
1933
Act. When issued upon conversion of the Notes or the Series A Preferred Stock,
as the case may be, or upon exercise of the Warrants in accordance with their
terms, the Shares underlying the Preferred Stock and the Warrants will be duly
and validly authorized and issued, fully paid, and non-assessable. The Company
is issuing Notes, and upon conversion of the Notes, the Preferred Stock and
the
Warrants in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D as promulgated
by the SEC under the 1933 Act, and/or Section 4(2) of the 1933 Act.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 12
4.13 No
General Solicitation or Advertising in Regard to this
Transaction.
Neither
the Company nor any of its Affiliates nor, to the knowledge of the Company,
any
Person acting on its or their behalf (i) has conducted or will conduct any
general solicitation (as that term is used in Rule 502(c) of Regulation D as
promulgated by the SEC under the 0000 Xxx) or general advertising with respect
to the sale of the Preferred Stock or Warrants, or (ii) made any offers or
sales
of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Notes, Series A Preferred
Stock, Common Stock or Warrants, under the 1933 Act, except as required
herein.
4.14 No
Material Adverse Effect.
Since
July 31, 2007, no event or circumstance resulting in a Material Adverse Effect
has occurred or exists with respect to the Company, any Subsidiary or any
Related Party. No material supplier or customer has given notice, oral or
written, that it intends to cease or reduce the volume of its business with
the
Company, any Subsidiary or any Related Party from historical levels. Since
July
31, 2007, no event or circumstance has occurred or exists with respect to the
Company, any Subsidiary or any Related Party, that, under any applicable law,
rule or regulation, requires or would require, public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in writing to the Investor.
4.15 Material
Non-Public Information.
The
Company has not disclosed to the Investor any material non-public information
that (i) if disclosed, would reasonably be expected to have a material effect
on
the price of the Common Stock or (ii) according to applicable law, rule or
regulation, should have been disclosed publicly by the Company prior to the
date
hereof but which has not been so disclosed.
4.16 Internal
Controls And Procedures.
The
Company and its Subsidiaries and each of the Related Parties maintain books
and
records and internal accounting controls which provide reasonable assurance
that
(i) all transactions to which the Company or any Subsidiary or any Related
Party
is a party or by which their respective properties are bound are executed with
management’s authorization; (ii) the recorded accounting of the Company’s, any
Subsidiary’s or any Related Party’s consolidated assets is compared with
existing assets at regular intervals; (iii) access to the Company’s, any
Subsidiary’s or any Related Party’s consolidated assets is permitted only in
accordance with management’s authorization; and (iv) all transactions to which
the Company or any Subsidiary or any Related Party is a party or by which any
of
their respective properties are bound are recorded as necessary to permit
preparation of the financial statements of the Company and the Related Companies
individually (unless the financial condition and results of operations and
cash
flows are consolidated with those of the Company under GAAP) in accordance
with
GAAP.
4.17 Full
Disclosure.
No
representation or warranty made by the
Company in
this
Agreement and no certificate or document furnished or to be furnished to the
Investor pursuant to this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 13
Article
5
REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR
Each
Investor severally and not jointly represents and warrants to the Company
that:
5.1 Concerning
the Investor.
The
state in which any offer to purchase shares hereunder was made or accepted
by
such Investor is the state shown as such Investor’s address. The Investor was
not formed for the purpose of investing solely in the Securities.
5.2 Authorization
and Power.
The
Investor has the requisite power and authority to enter into and perform this
Agreement and to purchase the securities being sold to it hereunder. The
execution, delivery and performance of this Agreement by the Investor and the
consummation by the Investor of the transactions contemplated hereby have been
duly authorized by all necessary partnership action where appropriate. This
Agreement, the Registration Rights Agreement and the Closing Escrow Agreement
have been duly executed and delivered by such Investor and at the Closing shall
constitute valid and binding obligations of such Investor enforceable against
the Investor in accordance with their terms, except as such enforceability
may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
5.3 No
Conflicts.
The
execution, delivery and performance of this Agreement and the consummation
by
such Investor of the transactions contemplated hereby or relating hereto do
not
and will not (i) result in a violation of such Investor’s charter documents or
bylaws where appropriate 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 such Investor
is
a party, or result in a violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency applicable to such
Investor or its properties (except for such conflicts, defaults and violations
as would not, individually or in the aggregate, have a Material Adverse Effect
on such Investor). The Investor is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or
governmental agency in order for it to execute, deliver or perform any of such
Investor’s obligations under this Agreement or to purchase the securities from
the Company in accordance with the terms hereof, provided that for purposes
of
the representation made in this sentence, the Investor is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.
5.4 Financial
Risks.
Such
Investor acknowledges that such Investor is able to bear the financial risks
associated with an investment in the securities being purchased by such Investor
from the Company and that it has been given full access to such records of
the
Company and its Subsidiaries and to the officers of the Company and its
Subsidiaries as it has deemed necessary or appropriate to conduct its due
diligence investigation. Such Investor is capable of evaluating the risks and
merits of an investment in the securities being purchased by the Investor from
the Company by virtue of its experience as an investor and its knowledge,
experience, and sophistication in financial and business matters and the
Investor is capable of bearing the entire loss of its investment in the
securities being purchased by the Investor from the Company.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 14
5.5 Accredited
Investor.
The
Investor is (i) an “accredited investor” as that term is defined in Rule 501 of
Regulation D promulgated under the 1933 Act by reason of Rule 501(a)(3) and
(6),
(ii) experienced in making investments of the kind described in this Agreement
and the related documents, (iii) able, by reason of the business and financial
experience of its officers (if an entity) and professional advisors (who are
not
affiliated with or compensated in any way by the Company or any of its
affiliates or selling agents), to protect its own interests in connection with
the transactions described in this Agreement, and the related documents, and
(iv) able to afford the entire loss of its investment in the securities being
purchased by the Investor from the Company.
5.6 Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or Commission in connection with the transactions contemplated by
this
Agreement based upon arrangements made by or on behalf of such Investor. Such
Investor understands that any obligations under agreements or arrangements
with
brokers disclosed in Schedule 4.8 are obligations of the Company.
5.7 Knowledge
of Company.
Such
Investor and such Investor’s advisors, if any, have been, upon request,
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the securities
being purchased by such Investor from the Company. Such Investor and such
Investor’s advisors, if any, have been afforded the opportunity to ask questions
of the Company and have received complete and satisfactory answers to any such
inquiries.
5.8 Risk
Factors.
Each
Investor understands that such Investor’s investment in the securities being
purchased by such Investor from the Company involves a high degree of risk.
Such
Investor 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 being purchased by the Investor from the Company.
Such Investor warrants that such Investor is able to bear the complete loss
of
such Investor’s investment in the securities being purchased by the Investor
from the Company.
5.9 Full
Disclosure.
No
representation or warranty made by such Investor in this Agreement and no
certificate or document furnished or to be furnished to the Company pursuant
to
this Agreement contains or will contain any untrue statement of a material
fact,
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading. Except as set forth or referred
to
in this Agreement, Investor does not have any agreement or understanding with
any person relating to acquiring, holding, voting or disposing of any equity
securities of the Company.
Article
6
COVENANTS
OF THE COMPANY
6.1 Registration
Rights.
The
Company shall cause the Registration Rights Agreement to remain in full force
and effect according to the provisions of the Registration Rights Agreement
and
the Company shall comply in all material respects with the terms thereof. The
Company does not have any agreement or obligation which would enable any Person
to include securities in any registration statement required to be filed on
behalf of the Investor pursuant to the Registration Rights Agreement and will
not take any action which will give any Person any right to include securities
in any such registration statement. Except as contemplated by the Registration
Rights Agreement, no Person has any demand or piggyback registration right
with
respect to any securities of the Company.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 15
6.2 Reservation
of Common Stock.
As of
the date hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights, the maximum
number of shares of Common Stock for the purpose of enabling the Company to
issue the shares of Common Stock underlying the Notes, Series A Preferred Stock
and Warrants.
6.3 Compliance
with Laws.
The
Company hereby agrees to comply and to cause each Subsidiary and each Related
Party to comply in all respects with the Company’s reporting, filing and other
obligations under the Laws.
6.4 Exchange
Act Registration.
The
Company will continue its obligation to report to the SEC under Section 12
of
the 1934 Act and will use its best efforts to comply in all respects with its
reporting and filing obligations under the 1934 Act, and will not take any
action or file any document (whether or not permitted by the 1934 Act or the
rules thereunder) to terminate or suspend any such registration or to terminate
or suspend its reporting and filing obligations under the 1934 until the
Investor have disposed of all of their Shares.
6.5 Corporate
Existence; No Conflicting Agreements.
The
Company will take all steps necessary to preserve and continue the corporate
existence of the Company. The Company shall not enter into any agreement, the
terms of which agreement would restrict or impair the right or ability of the
Company to perform any of its obligations under this Agreement or any of the
other agreements attached as exhibits hereto.
6.6 Listing,
Securities Exchange Act of 1934 and Rule 144
Requirements.
6.6.1 The
Company shall not take any action which would cause its Common Stock not to
be
traded on the OTC Bulletin Board, except that the Company may list the Common
Stock on the Nasdaq Stock Market or the American or New York Stock Exchange
if
it meets the applicable listing requirements. If, for any time after the
Closing, the Company is no longer in compliance with this Section 6.6.1, then
the Company shall pay to the Investor as liquidated damages and not as a
penalty, an amount equal to twelve percent (12%) per annum, based on the lesser
of (a) the Purchase Price or (b) that percentage of the Purchase Price which
the
Unsold Shares bears to the number of shares of Common Stock initially issuable
upon conversion of the Series A Preferred Stock sold pursuant to this Agreement.
The Unsold Shares shall mean shares of Series A Preferred Stock with respect
to
which both (i) the Series A Preferred Stock has not been converted and (ii)
the
underlying shares of Common Stock have not been sold or otherwise transferred
pursuant to a registration statement or Rule 144. Such
damages shall be payable quarterly on the tenth (10th)
day of
the following calendar quarter, and shall cease at the time the Company begins
complying with the provisions of this Section 6.6.1.
6.6.2 Liquidated
damages payable pursuant to Sections 6.6.1 shall be payable in shares of Series
A Preferred Stock or cash, as the Investor may request. In no event shall the
total liquidated damages payable pursuant to Sections 6.6.1, whether in cash
or
Series A Preferred Stock, exceed in the aggregate twelve percent (12%) of the
Purchase Price of the Unsold Shares that are outstanding as of the date on
which
a computation is being made.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE 16
6.7 Independent
Directors.
6.7.1 The
Company shall have caused the appointment of the majority of the board of
directors, which shall not consist of more than seven members, to be independent
directors, as defined by the rules
of
the Nasdaq Stock Market, not later than the ninety (90) days after the Closing
Date.
6.7.2 If,
at
any time subsequent to ninety (90) days after the Closing Date until the earlier
of (a) three years from the Closing or (b) the Restriction Termination Date
at
90%, the board of directors shall not be composed of a majority of independent
directors:
6.7.2.1 for
a
reason other than for an Excused Reason, the Company shall have 60 days to
take
such steps as are necessary so that a majority of the Company’s directors are
independent directors, and
6.7.2.2 for
an
Excused Reason, the Company shall have 75 days from the date that the Company
becomes aware of the event (or the last event if there are more than one such
event) giving rise to the Excused Reason, to take such steps as are necessary
so
that a majority of the Company’s directors are independent
directors.
6.7.3 The
term
“Excused Reason” shall mean the death or resignation of an independent director
or the occurrence of an event whereby an independent director ceases to be
independent.
6.7.4 From
and
after the Closing Date, the Company shall have a chief financial officer who
speaks and understands both English and Chinese and is familiar with GAAP (a
“qualified CFO”), who may serve on a part time basis until three months after
the Closing Date, by which time the Company shall have a full-time qualified
CFO. In the event that at any time subsequent to the Closing Date the Company
fails to have a qualified CFO, the Company shall, within 60 days from the date
that the Company ceases to have a qualified CFO, hire a qualified CFO. If the
Company shall not be able to hire a qualified CFO promptly upon the resignation
or termination of employment of the former chief financial officer, the Company
may engage an accountant or accounting firm to perform the duties of the chief
financial officer until a qualified CFO can be hired. In no event shall the
Company either (i) fail to file an annual, quarter or other report in a timely
manner because of the absence of a qualified CFO, or (ii) not have a person
who
can make the statements and sign the certifications required to be filed in
an
annual or quarterly report under the 0000 Xxx.
6.8 Independent
Directors; Committees. No
later
than ninety (90) days after the Closing Date, the Company will have an audit
committee comprised solely of not less than three independent directors and
a
compensation committee comprised of not less than three directors, a majority
of
whom are independent directors. Further, if the Company shall form an executive
or nominating committee or any other committee, a majority of the members of
such committee shall be independent directors. If at any time subsequent to
the
Closing Date during the period when the Company is required to have a majority
of independent directors pursuant to Section 6.10 of this Agreement, independent
directors do not comprise all of the members of the audit committee and a
majority of the members of the compensation committee or any other committee
within the grace periods provided in Section 6.10, the Company shall pay to
the
Investor, as liquidated damages and not as a penalty, an amount equal to twelve
percent (12%) per annum of the Purchase Price of the then outstanding Series
A
Preferred Stock payable in the manner and at the time provided in Section 6.10,
such payment shall be based on the number of days that such condition exists.
The parties agree that the only damages payable for a violation of the terms
of
this Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Notwithstanding the foregoing, no liquidated
damages shall be payable pursuant to this Section 6.11 during any period for
which liquidated damages are payable pursuant to Section 6.10.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
17
6.9 Right
of First Refusal.
6.9.1 Until
the
earlier of (i) three years from the date of this Agreement or (ii) such time
as
the Investor, as a group, cease to own at least five percent (5%) of the total
number of shares of Common Stock that were issued or are issuable upon
conversion of Series A Preferred Stock that were initially issued to the
Investor, in the event that the Company seeks to raise additional funds through
a
private
placement of its securities (a “Proposed
Financing”),
other
than Exempt Issuances, each Investor shall have the right to participate in
any
subsequent funding by the Company of the offering price on a pro rata basis,
based on the percentage that (a) the number of such Investor’s Percentage
Shares, without regard to the 4.9% Limitation but excluding shares of Common
Stock issuable upon exercise of Warrants, bears to (b) the total number of
shares of Common Stock outstanding plus the number of Shares issuable upon
conversion of the Series A Preferred Stock and any other series of convertible
preferred stock or debt securities, without regard to the 4.9% Limitations
any
other limitations on exercise such other convertible preferred stock or debt
securities. This Section 6.13 shall apply to each such offering based on the
total purchase price of the securities being offered by the Company. This right
is personal to the Investor and is not transferable, whether in connection
with
the sale of stock or otherwise.
6.9.2 The
terms
on which the Investor shall purchase securities pursuant to Proposed Financing
shall be the same as such securities are purchased by other Investor. The
Company shall give the Investor the opportunity to participate in the offering
by giving the Investor not less than ten (10) days notice setting forth the
terms of the Proposed Financing. In the event that the terms of the Proposed
Financing are changed in a manner which is more favorable to the potential
investor, the Company shall provide the Investor, at the same time as the notice
is provided to the other potential Investor, with a new ten (10) day notice
setting forth the revised terms that are provided to the other potential
Investor.
6.9.3 In
the
event that the Investor does not exercise its right to participate in the
Proposed Financing within the time limits set forth in Section 6.13.2 of this
Agreement, the Company may sell the securities in the Proposed Financing at
a
price and on terms which are no more favorable to the Investor than the terms
provided to the Investor. If the Company subsequently changes the price or
terms
so that the price is more favorable to the Investor or so the terms are more
favorable to the Investor, the Company shall provide the Investor with the
opportunity to purchase the securities on the revised terms in the manner set
forth in Section 6.13.2
of this
Agreement.
6.10 Price
Adjustment.
From
the
Closing Date until such time as the Restriction Termination Date, except
for Exempt Issuances, as to which this Section
6.10 does not apply, if the Company closes on the sale or issuance of Common
Stock at a price, or warrants, options, convertible
debt or
equity securities with a exercise price per share or exercise price per share
which is less than the Conversion Price, as defined in the Note and the
Certificate of Designation, then in effect (such lower sales price, conversion
or exercise price, as the case may be, being referred to as the “Lower Price”),
the Conversion Price in effect from and after the date of such transaction
shall
be reduced on a formula basis as follows: The
Conversion Price shall be adjusted by multiplying the Conversion Price in effect
immediately prior to such issuance by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding immediately
prior
to the issuance of such additional shares plus the number of shares of Common
Stock which the aggregate consideration received or receivable for the issuance
of such additional shares would purchase at the Conversion Price then in effect,
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after the issuance of such additional shares (including
the exercise or conversion of all options, warrants and other convertible
securities). For
purpose of determining the exercise price of warrants issued by the Company,
the
price, if any, paid per share for the warrants shall be added to the exercise
price of the warrants. A similar provision shall be included in the
Warrants..
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
18
6.11 Restated
Certificate. The
Company’s board of directors has approved the Restated Certificate. The Company
shall promptly, but not later than thirty (30) days after the Closing Date,
file
the Proxy Statement with the SEC, and shall mail the Proxy Statement to
stockholders within five (5) business days after the SEC has completed its
review of the Proxy Statement, of, if the SEC does not review the Proxy
Statement, within fifteen (15) business days after the Proxy Statement is filed
with the SEC.
The
Company shall schedule an annual or special meeting of stockholders as soon
as
possible, but not later than twenty five (25) days after the Proxy Statement
is
mailed to stockholders. The Company shall file the Restated Certificate with
the
Secretary of State of the State of Nevada promptly, but not later than three
(3)
business days after the meeting of stockholders at which the Restated
Certificate is approved. [names] each agree to vote in favor of the Restated
Certificate.
6.12 No
Outside Interests.
Until
the Restriction Termination Date, the Company’s chairman and chief executive
officer will devote their full time and attention to the business of the Company
and shall not have any business interests or activities other than
as chairman or chief executive officer, as the case may be, except that
he or she may devote time, which shall not be material and which shall not
interfere with his or her duties as the Company’s chairman or chief
executive officer, as the case may be, to personal passive investments and
charitable and community activities. Furthermore, none of the PRC Company
Stockholders shall have any interests or engage in any business which is
directly or indirectly competitive with that of the Company or any Related
Party.
Article
7
COVENANTS
OF THE INVESTOR
Each
Investor, severally and not jointly, covenants and agrees with the Company
as
follows:
7.1 Compliance
with Law.
Each
Investor’s trading activities with respect to shares of the Company’s Common
Stock will be in compliance with all applicable state and federal securities
laws, rules and regulations and rules and regulations of any public market
on
which the Company’s Common Stock is listed.
7.2 Transfer
Restrictions. The
Investor’s acknowledge that (a) the Preferred Stock, Warrants and Shares
underlying the Preferred Stock and Warrants have not been registered under
the
provisions of the 1933 Act, and may not be transferred unless (i) subsequently
registered thereunder or (ii) the Investor shall have delivered to the Company
an opinion of counsel, reasonably satisfactory in form, scope and substance
to
the Company, to the effect that the Preferred Stock, Warrants and Shares
underlying the Notes and Warrants to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and (b) any sale
of
the Shares underlying the Preferred Stock and Warrants made in reliance on
Rule
144 promulgated under the 1933 Act may be made only in accordance with the
terms
of said Rule and further, if said Rule is not applicable, any resale of such
securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used
in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder. Each Investor agrees
that until the Restriction Termination Date it will not sell the Common Stock
short or effect any sales based upon market-based metrics.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
19
7.3 Restrictive
Legend. Each
Investor acknowledges and agrees that the Securities and the Shares shall bear
a
restrictive legend and a stop-transfer order may be placed against transfer
of
any such Securities except that the requirement for a restrictive legend shall
not apply to Shares sold pursuant to a current and effective registration
statement or a sale pursuant Rule 144 or any successor rule.
Article
8
CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS
The
obligation of the Company to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to Closing Date, of the
following conditions:
8.1 No
Termination.
This
Agreement shall not have been terminated pursuant to Article 10
hereof.
8.2 Representations
True and Correct.
The
representations and warranties of the Investor contained in this Agreement
shall
be true and correct in all material respects on and as of the Closing Date
with
the same force and effect as if made on as of the Closing Date.
8.3 Compliance
with Covenants.
The
Investor shall have performed and complied in all material respects with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied by it prior to or at the Closing Date.
8.4 No
Adverse Proceedings.
On the
Closing Date, no action or proceeding shall be pending by any public authority
or individual or entity before any court or administrative body to restrain,
enjoin, or otherwise prevent the consummation of this Agreement or the
transactions contemplated hereby or to recover any damages or obtain other
relief as a result of the transactions proposed hereby.
Article
9
CONDITIONS
PRECEDENT TO INVESTOR’S OBLIGATIONS
The
obligation of the Investor to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to Closing Date unless
specified otherwise, of the following conditions:
9.1 No
Termination.
This
Agreement shall not have been terminated pursuant to Article 10
hereof.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
20
9.2 Representations
True and Correct.
The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date
with
the same force and effect as if made on as of the Closing Date.
9.3 Compliance
with Covenants .
The
Company shall have performed and complied in all material respects with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied by it prior to or at the Closing Date.
9.4 No
Adverse Proceedings.
On the
Closing Date, no action or proceeding shall be pending by any public authority
or individual or entity before any court or administrative body to restrain,
enjoin, or otherwise prevent the consummation of this Agreement or the
transactions contemplated hereby or to recover any damages or obtain other
relief as a result of the transactions proposed hereby.
Article
10
TERMINATION,
AMENDMENT AND WAIVER
10.1 Termination.
This
Agreement may be terminated at any time prior to the Closing Date
10.1.1 by
mutual
written consent of the Investor and the Company;
10.1.2 by
the
Company upon a material breach of any representation, warranty, covenant or
agreement on the part of any Investor set forth in this Agreement, or any
Investor upon a material breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company or the Investor, respectively, shall
have become untrue, in either case such that any of the conditions set forth
in
Article 8 or Article 9 hereof would not be satisfied (a “Terminating
Breach”),
and
such breach shall, if capable of cure, not have been cured within five (5)
business days after receipt by the party in breach of a notice from the
non-breaching party setting forth in detail the nature of such
breach.
10.2 Effect
of Termination.
Except
as otherwise provided herein, in the event of the termination of this Agreement
pursuant to Section 10.1 hereof, there shall be no liability on the part of
the
Company or any Investor or any of their respective officers, directors, agents
or other representatives and all rights and obligations of any party hereto
shall cease.
10.3 Amendment
and Waiver.
10.3.1 This
Agreement may be amended by the parties hereto any time prior to the Closing
Date by an instrument in writing signed by the parties hereto, subject to the
provisions of Section 10.3.3; provided, however that the 4.9% Limitation may
not
be amended or waived.
10.3.2 At
any
time prior to the Closing Date, the Company or the Investor, as appropriate,
may: (a) extend the time for the performance of any of the obligations or other
acts of other party or; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto which
have been made to it or them; or (c) waive compliance with any of the agreements
or conditions contained herein for its or their benefit other than the 4.9%
Limitation which may not be waived. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party or parties
to
be bound thereby, subject to Section 10.3.3 of this Agreement.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
21
10.3.3 Any
amendment or waiver signed by the holders of 75% of the principal amount of
the
Note or, after the issuance of the Series A Preferred Stock, 75% of the holders
of the then outstanding shares of Series A Preferred Stock, or, after the
conversion of all shares of Series A Preferred Stock, the holders of Warrant
to
purchase a majority of the shares of Common Stock then issuable upon exercise
of
the Warrants, shall be deemed to be approval of the Investor; provided, that
any
amendment or waiver which changes the conversion rate or conversion price of
the
Notes or Series A Preferred Stock or the exercise price of the Warrants shall
require the approval of all of the holders of the Warrants.
Article
11
GENERAL
PROVISIONS
11.1 Transaction
Costs
Except
as otherwise provided herein, each of the parties shall pay all of his or its
costs and expenses (including attorney fees and other legal costs and expenses
and accountants’ fees and other accounting costs and expenses) incurred by that
party in connection with this Agreement.
11.2 Indemnification.
The
Investor agrees to indemnify, defend and hold the Company (following the Closing
Date) and its officers and directors harmless against and in respect of any
and
all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney’s fees, that it
shall incur or suffer, which arise out of or result from any breach of this
Agreement by the Investor or failure by the Investor to perform with respect
to
the representations, warranties or covenants contained in this Agreement or
in
any exhibit or other instrument furnished or to be furnished under this
Agreement. The Company agrees to indemnify, defend and hold the Investor
(following the Closing Date) harmless against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities or damages,
including interest, penalties and reasonable attorney’s fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of
this
Agreement or failure by the Company to perform with respect to the
representations, warranties or covenants contained in this Agreement or in
any
exhibit or other instrument furnished or to be furnished under this Agreement.
In no event shall the Company or the Investor be entitled to recover
consequential or punitive damages resulting from a breach or violation of this
Agreement nor shall any party have any liability hereunder in the event of
gross
negligence or willful misconduct of the indemnified party. In the event of
the
failure of the Company to issue the Series A Preferred Stock and Warrants in
violation of the provisions of this Agreement, the Investor, as their sole
remedy, shall be entitled to pursue a remedy of specific performance upon tender
into the Court an amount equal to the Purchase Price hereunder. The
indemnification by the Investor shall be limited to $50,000.00. This Section
11.2 shall not relate to indemnification under the Registration Rights
Agreement.
11.3 Headings.
The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of
this Agreement.
11.4 Entire
Agreement.
This
Agreement (together with the Schedule, Exhibits, Warrants and documents referred
to herein) constitute the entire agreement of the parties and supersede all
prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
22
11.5 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given (i) on the date they are delivered if delivered in
person; (ii) on the date initially received if delivered by facsimile
transmission followed by registered or certified mail confirmation; (iii) on
the
date delivered by an overnight courier service; or (iv) on the third business
day after it is mailed by registered or certified mail, return receipt requested
with postage and other fees prepaid as follows:
|
If
to the Company:
|
|
Achievers
Magazine Inc.
|
|
c/o
Xinghe
Xingyong Carbon Co., Ltd.
|
|
000
Xxxxxxx Xxx
|
|
Xxxxxxxxxxxxx
|
|
Xxxxxx
Xxxxxx
|
|
Inner
Mongolia, China
|
|
Attention:
Dengyong
Jin, CEO
|
|
Fax:
00-0000-0000000
|
|
With
a copy to:
|
|
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
|
|
00
Xxxxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Attention:
Xxxxx X. Xxxxxxxx PC
|
|
E-mail:
xxxxxxxxx@xxxx.xxx
|
|
Fax:
(000) 000-0000
|
|
If
to Investor:
|
|
XingGuang
Investment Corporation Limited
|
|
#413
2731 Long Xxxxx Xxxx
|
|
Xxxxxxxx
000000
|
|
E-mail:
xxxxxxxxxxx@xxxxx.xxx
|
|
Fax:
00-00-0000-0000
|
11.6 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any such term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
23
11.7 Binding
Effect.
All the
terms and provisions of this Agreement whether so expressed or not, shall be
binding upon, inure to the benefit of, and be enforceable by the parties and
their respective administrators, executors, legal representatives, heirs,
successors and assignees.
11.8 Preparation
of Agreement.
This
Agreement shall not be construed more strongly against any party regardless
of
who is responsible for its preparation. The parties acknowledge each contributed
and is equally responsible for its preparation. In
resolving any dispute regarding, or construing any provision in, this Agreement,
there shall be no presumption made or inference drawn because of the drafting
history of the Agreement, or because of the inclusion of a provision not
contained in a prior draft or the deletion or modification of a provision
contained in a prior draft.
11.9 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York, without giving effect to applicable principles of
conflicts of law.
11.10 Jurisdiction;
Waiver of Jury Trial.
If
any action is brought among the parties with respect to this Agreement or
otherwise, by way of a claim or counterclaim, the parties agree that in any
such
action, and on all issues, the parties irrevocably waive their right to a trial
by jury.
Exclusive jurisdiction and venue for any such action shall be the federal and
state courts situated in the City, County and State of New York. In the event
suit or action is brought by any party under this Agreement to enforce any
of
its terms, or in any appeal therefrom, it is agreed that the prevailing party
shall be entitled to reasonable attorneys fees to be fixed by the arbitrator,
trial court, and/or appellate court if such party prevails on substantially
all
issues in dispute.
11.11
Preparation
and Filing of Securities and Exchange Commission
filings.
The
Investor shall reasonably assist and cooperate with the Company in the
preparation of all filings with the SEC after the Closing Date due after the
Closing Date.
11.12 Further
Assurances, Cooperation.
Each
party shall, upon reasonable request by the other party, execute and deliver
any
additional documents necessary or desirable to complete the transactions herein
pursuant to and in the manner contemplated by this Agreement. The parties hereto
agree to cooperate and use their respective best efforts to consummate the
transactions contemplated by this Agreement.
11.13 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
the Closing of the transaction contemplated hereby.
11.14 Third
Parties.
Except
as disclosed in this Agreement, nothing in this Agreement, whether express
or
implied, is intended to confer any rights or remedies under or by reason of
this
Agreement on any persons other than the parties hereto and their respective
administrators, executors, legal representatives, heirs, successors and
assignees. Nothing in this Agreement is intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement,
nor
shall any provision give any third persons any right of subrogation or action
over or against any party to this Agreement.
11.15 Failure
or Indulgence Not Waiver; Remedies Cumulative.
No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall nay single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and
remedies existing under this Agreement are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
24
11.16 Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall
be
deemed to be an original, but all of which taken together shall constitute
one
and the same agreement. A facsimile transmission of this signed Agreement shall
be legal and binding on all parties hereto.
[SIGNATURES
ON FOLLOWING PAGE]
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
25
IN
WITNESS WHEREOF,
the
Investor and the Company have as of the date first written above executed this
Agreement.
|
THE
COMPANY:
|
|
ACHIEVERS
MAGAZINE INC.
|
|
/s/
Dengyong Jin
|
|
Dengyong
Jin, CEO
|
|
INVESTOR:
|
|
XINGGUANG
INVESTMENT CORPORATION LIMITED
|
|
By:
/s/ Xiangxin Sun
|
|
Name:
Xiangxin Sun
|
|
Title:
President
|
SECURITIES
PURCHASE AGREEMENT BETWEEN
ACHIEVERS
MAGAZINE INC. AND XINGGUANG INVESTMENT CORPORATION
LIMITED
PAGE
26
Schedule
A
Schedule
4.3.1
[Note
to
Vintage: Insert Excell spreadsheet here]
Exhibit
A
[See
Exhibit 99.11]
Exhibit
B
[See
Exhibit 4.1]
Exhibit
C
[See
Exhibit 99.2]
Exhibit
D
[See
Exhibit 99.12]
Exhibit
E-1
[See
Exhibit 99.13]
Exhibit
E-2
[See
Exhibit 99.14]
