EXHIBIT 10.1
STOCK AND WARRANT PURCHASE AGREEMENT
THIS STOCK AND WARRANT PURCHASE AGREEMENT (this "AGREEMENT") is made as of
the date of the signature of the Company set forth on the signature pages
hereof, by and among AMERICAN ORIENTAL BIOENGINEERING, INC., a Nevada
corporation, with its principal offices at Xx. 000 Xxxxx Xxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx, Xxxxx 150086 (including its Subsidiaries as defined below, the
"COMPANY"), and each person identified as an Investor on the signature pages
hereto (collectively, the "INVESTORS").
WHEREAS, the Company desires to sell on a "best efforts-no minimum" basis,
units (the "UNITS"), each Unit consisting of (i) one (1) share (each a "SHARE,"
collectively, the "SHARES") of the Company's common stock, par value $0.001 per
share (the "COMMON STOCK"), and (ii) three-tenths of one warrant to acquire one
share of the Common Stock, subject to adjustment, at an exercise price of $6.50
per share (each, a "WARRANT," and collectively, the "WARRANTS"), in a private
placement (the "OFFERING") to be conducted by the Company, the terms of which
are set forth in an Offering Memorandum dated November 22, 2005, including all
exhibits and attachments thereto or incorporated by reference therein (the
"MEMORANDUM");
WHEREAS, the Company is offering the Units pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), to "accredited investors" only, as such term is defined in
Rule 501(a) of said Regulation D; and
WHEREAS, all capitalized terms used herein and not otherwise defined herein
shall have the same meanings as in the Memorandum.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
SECTION 1
PURCHASE AND SALE OF UNITS
1.1 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
conditions set forth in this Agreement and in the Memorandum, each Investor,
severally and not jointly, agrees to purchase at the Closing (as defined below),
and the Company agrees to issue and sell to such Investor at the Closing, for
the purchase price set forth opposite such Investor's name on such Investor's
signature page that number of Units set forth opposite such Investor's name on
such Investor's signature page at a purchase price of $4.80 per Unit. Each
Investor hereby:
(a) tenders an executed copy of its signature page to this
Agreement;
(b) tenders an executed copy of the Investor Qualification
Questionnaire attached hereto as EXHIBIT A (the "QUESTIONNAIRE") and an
executed copy of the Registration Rights Agreement (as defined below); and
(c) tenders the purchase price set forth opposite such Investor's
name as set forth on such Investor's signature page to Signature Bank (the
"ESCROW AGENT") by (i) check made payable to "Signature Bank as Escrow
Agent for American Oriental Bioengineering, Inc." or (ii) wire transfer of
immediately available funds to the Escrow Account (as defined below)
designated on the signature pages hereto (the "Proceeds"). The Offering is
on a "best efforts - no minimum" basis". The Company and the Investors
agree that the Proceeds will be deposited in an escrow account (the "ESCROW
ACCOUNT") maintained by the Escrow Agent, pending a determination to close
on such Proceeds (except as otherwise provided in Section 1.2) or a
termination of the Offering pursuant to Section 5 hereof. There is no
minimum number of Units that must be sold in order to conduct the Closing.
1.2 CLOSING; ESCROW OF EXCESS PROCEEDS. The closing of the purchase and
sale of the Units pursuant to Section 1.1 (the "CLOSING") will take place on the
earlier of (A) such date as the Company may determine in its discretion in
consultation with CRT Capital Group LLC and Westminster Securities Corp. (the
"PLACEMENT AGENTS"), and (B) December 15, 2005 for any amount of Proceeds at the
offices of DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx Xxx Xxxx 00000, or at such other place or time as may be mutually agreed
upon by the Company and the Placement Agents (the "CLOSING DATE"). Upon the
Closing Date, subject to the fulfillment of the conditions set forth in Section
3 hereof, the Company shall issue and deliver to such Investor (i) a stock
certificate or certificates representing that number of Shares set forth
opposite such Investor's name as set forth on such Investor's signature page, in
such denominations and registered in such names as such Investor may request and
(ii) Warrants to purchase that number of shares of Common Stock set forth
opposite such Investor's name as set forth on such Investor's signature page
registered in such names as such Investor may request. Notwithstanding the
foregoing, in the event that all Investors participating in the Offering tender,
in the aggregate, signature pages, Questionnaires and Proceeds for more than
6,973,400 Units (the "MAXIMUM INITIAL CLOSING UNITS"), then the gross Proceeds
of the Offering in excess of $33,472,320 ("EXCESS PROCEEDS") shall remain in
escrow until such time as the Company has obtained the Requisite Shareholder
Approval (as defined below) and the Charter Amendment (as defined below) has
been filed with the Secretary of State of the State of Nevada, whereupon the
Excess Proceeds shall be released to the Company in exchange for delivery to
Investors of the Shares and Warrants issuable in respect of the Units
represented by the Excess Proceeds. The Investor understands and agrees that in
the event there are Excess Proceeds, then the portion of the Proceeds tendered
by each Investor that will remain in escrow as described in the preceding
sentence shall be determined by multiplying (A) the total Proceeds so tendered
by such Investor by (B) a fraction, the numerator of which shall be the number
of Maximum Initial Closing Units multiplied by 1.391 and the denominator of
which shall be the total number of Shares, Warrant Shares (as defined below) and
shares of Common Stock underlying the warrants to be issued to the Placement
Agents as described in Section 2.1(u) which would have been issued to all
Investors and the Placement Agents in the Offering had there been no escrow for
Excess Proceeds. If by the sixtieth (60th) day following the Closing Date, the
Requisite Shareholder Approval has not been obtained or the Charter Amendment
has not been filed with the Secretary of State of the State of Nevada, then the
Company shall return the Excess Proceeds to the Investors.
1.3 INDEPENDENT NATURE OF INVESTORS' OBLIGATIONS AND RIGHTS. The
obligations of each Investor under any Transaction Document (as defined below)
are several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. The decision of each
Investor to purchase Securities pursuant to this Agreement has been made by such
Investor independently of any other Investor and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of any Subsidiary which
may have been made or given by any other Investor or by any agent or employee of
any other Investor, and no Investor or any of its agents or employees shall have
any liability to any other Investor (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Investor
pursuant thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Investor acknowledges that no other Investor has
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acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder. Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose.
SECTION 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 INVESTOR REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Investor hereby acknowledges, represents, warrants or covenants, as the case may
be, to the Company as follows:
(a) The Investor is and on each date on which it exercise Warrants
will be, an "accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act, as indicated by his
response set forth in the Investor Questionnaire attached hereto, and that
he is able to bear economic risk of an investment in the Units.
(b) The Investor has prior investment experience, including
investment in non-listed and non-registered securities, or he has employed
the services of an investment advisor, attorney or accountant to read all
of the documents furnished or made available by the Company both to him and
to all other prospective investors in the Units, including the documents
filed with the Securities and Exchange Commission ("SEC") pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and to
evaluate the merits and risks of such an investment on his behalf, and that
he recognizes the highly speculative nature of this investment.
(c) The Investor acknowledges receipt and careful review of the
Memorandum, including, but not limited to, the attachments and exhibits
thereto, and each report, schedule, effective registration statement and
definitive proxy statement filed by the Company with the SEC since December
31, 2003 (the "SEC Documents") pursuant to the Securities Act or the
Exchange Act, as amended, and hereby represents that he has been furnished
by the Company during the course of this transaction with all other
information regarding the Company which he had requested or desired to
know, that all documents which could be reasonably provided have been made
available for his inspection and review, that he has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering, and any additional information which he had
requested and in the Memorandum. Notwithstanding the foregoing, it is
understood that Investor is purchasing the Units without being furnished a
prospectus setting forth all of the information that would be required to
be furnished in a prospectus under the Securities Act.
(d) The Investor understands and recognizes that the purchase of
the Units is highly speculative and involves a high degree of risk and that
only investors who can afford the loss of their entire investment should
consider investing in the Company. The Investor has also reviewed the risk
factors in the SEC Documents and in the Memorandum.
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(e) The Investor acknowledges that the Offering will be conducted
on a "best efforts-no minimum" basis, and that there is no minimum amount
of Units which must be purchased in order to close any purchase. The
Closing will be held at such time as determined by the Company in
consultation with the Placement Agents and the determination as to the
timing of Closing shall bear no relation to the aggregate amount of funds
and could be with respect to one or more Investor purchases. The Investor
acknowledges that the Company may find it necessary to raise additional
capital in the future.
(f) The Investor acknowledges the Memorandum has not been reviewed
by the SEC or any state securities regulators. The Investor represents that
the Units are being purchased for his own account, for investment and not
for distribution or resale to others. The Investor agrees that he will not
sell or otherwise transfer such securities unless they are registered under
the Securities Act or unless an exemption from such registration is
available. The Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to
such person or to any third person, with respect to the Units.
(g) The Investor understands that he may never be able to
liquidate his investment in the Company. Although the Company has
undertaken to register under the Securities Act the Common Stock comprising
Units and the shares of Common Stock issuable upon the exercise of the
Warrants (the "WARRANT SHARES" and collectively with the Common Stock
included in the Units, the "SECURITIES") pursuant to a registration rights
agreement of even date herewith (the "REGISTRATION RIGHTS AGREEMENT"),
there can be no assurance that such registration will ever be effective or
remain effective, or that there will be any liquidity with respect to the
sale of such securities, if and when registered. Investor represents that
he has sufficient liquid assets so that the illiquidity associated with
this investment will not cause any undue financial difficulties or affect
the Investor's ability to provide for its current needs and possible
financial contingencies, and that the Investor's commitment to all high
risk investments (including this one if this purchase is agreed to and
accepted by the Company) is reasonable in relation to the Investor's net
worth and/or annual income.
(h) The Investor understands that pending an effective
registration under the Securities Act, if any, the Common Stock, the
Warrants and the Warrant Shares will be restricted securities as such term
is defined under Rule 144 ("RULE 144") promulgated under the Securities Act
and cannot be sold except pursuant to such registration or an exemption
therefrom. The Investor further understands that the Company has no
obligation to register the Warrants for resale under the Securities Act.
(i) The Investor understands that the Company is relying on the
Investor's representations herein and the information provided by the
Investor in the Questionnaire. Any information which the Investor has
heretofore furnished to the Company in the Investor Qualification
Questionnaire or otherwise, including, without limitation, information with
respect to its financial position and business experience is correct and
complete as of the date of this Agreement, and if there should be any
material change in such information prior to the Closing the Investor will
immediately furnish such revised or corrected information to the Placement
Agents and Company.
(j) The Investor understands the tax consequences of this
investment and that the contents of the Memorandum do not contain tax
advice or information. The Investor confirms that it is not relying on any
statements or representations of the Company or any of its agents with
respect to the tax and other economic considerations of an investment in
the Units. The Investor has had the opportunity to consult with the
Investor's own legal, accounting, tax, investment and other advisors, who
are unaffiliated with the Company or any affiliate or selling agent of the
Company, with respect to the tax treatment of an investment by the Investor
in the Units. The Investor also acknowledges that it is solely responsible
for any of its own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
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(k) If the Investor is an entity, it is a corporation, limited
liability company, trust or partnership or other similar entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction. The Investor has full power and authority (corporate or
otherwise) to execute, deliver and enter into this Agreement and to
purchase the Units. The execution and delivery by the Investor of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate or other action on the part
of the Investor. If the Investor is an individual, the Investor has the
legal capacity to enter into this Agreement and is a bona fide resident of
the state shown in the address set forth on the signature pages hereto.
(l) The Investor consents to the placement of a legend on any
certificate or other documents evidencing the Shares, the Warrants and the
Warrant Shares substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS SECURITY MAY BE RESOLD OR OTHERWISE TRANSFERRED ONLY
PURSUANT TO AN EXEMPTION FROM REGISTRATION (IF AVAILABLE) UNDER
THE SECURITIES ACT, OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES."
(m) The address of the Investor furnished by him on the signature
pages hereto is the undersigned's principal residence if he is an
individual or its principal business address if it is a corporation or
other entity.
(n) Except as set forth herein, no representations or warranties
have been made to the Investor by the Company or any agent, employee or
affiliate of the Company and in entering into this transaction, the
Investor is not relying on any information, other than that contained
herein and the results of independent investigation by the Investor. The
Investor acknowledges that no representations or warranties have been made
to the Investor by the Placement Agents or any agent, employee or affiliate
of the Placement Agents.
(o) Investor either (i) has a pre-existing personal or business
relationship with the Company or any of its partners, officers, directors
or controlling persons, or (ii) by reason of such Investor's business or
financial experience or the business or financial experience of such
Investor's professional advisors (which professional advisors are
unaffiliated with and are not compensated by the Company, or any affiliate
or selling agent of the Company, directly or indirectly) such Investor
could be reasonably assumed to have the capacity to protect such Investor's
own interests in connection with the transaction.
(p) This Agreement constitutes the legal, valid and binding
agreement of the Investor, enforceable against the Investor in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and by general equitable
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principles, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies, and
(iii) to the extent any indemnification provisions contained in this
Agreement may be limited by applicable federal or state securities laws.
(q) If the Investor is not a United States person, it has
satisfied itself as to the full observance of the laws of its jurisdiction
in connection with any invitation to purchase the Units or any use of this
Agreement, including (i) the legal requirements within its jurisdiction for
the purchase of the Securities, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that
may need to be obtained and (iv) the income tax and other tax consequences,
if any, that may be relevant to the purchase, holding, redemption, sale or
transfer of the Securities. Such Investor's payment for, and his or her
continued beneficial ownership of the Securities, will not violate any
applicable securities or other laws of the Investor's jurisdiction.
(r) The Investor also understands and agrees that, although the
Company will use its best efforts to keep confidential the information
provided herein, the Company may present the information provided herein to
such parties as it deems advisable (a) if called upon to establish either
the availability under any Federal or state securities laws of an exemption
from registration of the Offering or compliance with any other legal
requirement, or (b) if the contents hereof are relevant to any issue in any
action, investigation, suit or proceeding to which the Company is a party,
is subject, or by which it is or may be bound. Further, the Investor
understands that the Offering may be reported to the SEC pursuant to the
requirements of applicable Federal law and to various state securities or
blue sky commissioners pursuant to applicable laws.
(s) No court or governmental injunction, order or decree affecting
the Investor and prohibiting the execution and delivery by the Investor of
this Agreement and the consummation of the transactions contemplated hereby
is in effect, and the terms of this Agreement do not conflict with any
provision of the Certificate or Articles of Incorporation or By-laws (or
comparable charter, partnership or other organizational documents) of the
Investor, or conflict with, or result in a material breach or violation of,
any of the terms or provisions of, or constitute (with due notice or lapse
of time or both) a material default under, any material lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which the Investor is a party.
(t) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, remains to be obtained or is
otherwise required to be obtained by the Investor in connection with the
authorization, execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, including, without limitation the
purchase and sale of the Units.
(u) The Investor acknowledges that pursuant to the terms of the
Placement Agency Agreement among the Placement Agents and the Company (the
"PLACEMENT AGENCY AGREEMENT"), the Placement Agents are being paid the
following compensation from the Company for their services in connection
with the Offering: (i) cash equal to five percent (5%) of the aggregate
gross proceeds of the Offering and (ii) warrants representing seven percent
(7%) of the total number of Shares sold to all Investors in the Offering
(including the Warrant Shares for which all Warrants issued to all
Investors in the Offering are exercisable) as compensation for services
rendered to the Company in connection with the Offering. The Investor
further acknowledges that pursuant to the terms of the Placement Agency
Agreement, the Company is reimbursing the Placement Agents for certain
expenses incurred by the Placement Agents in connection with the Offering.
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(v) Other than the Placement Agents (as placement agents on behalf
of the Company), and any subagents they may appoint, no finder, broker,
agent, financial person or other intermediary has acted on behalf of the
Investor in connection with the Investor's purchase of the Units, the
consummation of this Agreement or any of the transactions contemplated
hereby. The Investor has not had any direct or indirect contact with any
other investment banking firm (or similar firm) with respect to the offer
of the Units by the Company to the Investor or the Investor's purchase of
the Units.
(w) Other than the Memorandum and the exhibits attached thereto,
the Investors did not (i) receive or review any advertisement, article,
notice or other communication published in a newspaper or magazine or
similar media or broadcast over television or radio, whether closed
circuit, or generally available, with respect to the Units or (ii) attend
any seminar, meeting or investor or other conference whose attendees were,
to the Investor's knowledge, invited by any general solicitation or general
advertising with respect to the Units.
(x) The foregoing acknowledgments, representations, warranties and
covenants shall survive the Closing.
2.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby acknowledges, represents, warrants or covenants, as the case may
be, to the Investor as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. The Company has
full corporate power and authority to own and hold its properties and to
conduct its business. The Company is duly licensed or qualified to do
business, and in good standing, in each jurisdiction in which the nature of
its business requires licensing, qualification or good standing, except for
any failure to be so licensed or qualified or in good standing that would
not have a material adverse effect on (i) the Company and each Subsidiary
(as defined below) taken as a whole, (ii) its consolidated results of
operations, assets, or financial condition, (iii) its ability to perform
its obligations under this Agreement, the Warrants and the Registration
Rights Agreement or (iv) the Securities (a "MATERIAL ADVERSE EFFECT").
(b) SCHEDULE 2.2(B) sets forth, with respect to each subsidiary of
the Company (each a "SUBSIDIARY" and collectively, the "SUBSIDIARIES"), its
type of entity and the jurisdiction of its organization. All of the
outstanding shares of capital stock of each of the Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and owned by the
Company or another Subsidiary, and, except as set forth on SCHEDULE 2.2(B),
are free and clear of all liens, claims, encumbrances, options, pledges and
security interests (collectively, "LIENS") and were not issued in violation
of, nor subject to, any preemptive, subscription or similar rights. There
are no outstanding warrants, options, subscriptions, calls, rights,
agreements, convertible or exchangeable securities or other commitments or
arrangements relating to the issuance, sale, purchase, return or
redemption, voting or transfer of any shares, whether issued or unissued,
of any capital stock, equity interest or other securities of any
Subsidiary. The Company and the Subsidiaries do not own any equity
interests in any person, other than the Subsidiaries. Each Subsidiary is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority
to own, lease and operate its properties and to conduct its business.
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(c) SCHEDULE 2.2(C) sets forth (a) the authorized capital stock of
the Company; (b) the number of shares of capital stock issued and
outstanding; (c) the number of shares of capital stock issuable pursuant to
the Company's stock plans; and (d) the number of shares of capital stock
issuable and reserved for issuance pursuant to securities exercisable for,
or convertible into or exchangeable for any shares of capital stock of the
Company. All of the issued and outstanding shares of the Company's capital
stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable law and any rights of third parties. No person
is entitled to pre-emptive or similar statutory or contractual rights with
respect to any securities of the Company. Except as described on SCHEDULE
2.2(C), there are no outstanding warrants, options, convertible securities
or other rights, agreements or arrangements of any character under which
the Company or any of its Subsidiaries is or may be obligated to issue any
equity securities of any kind and except as contemplated by this Agreement,
neither the Company nor any of its Subsidiaries is currently in
negotiations for the issuance of any equity securities of any kind. Except
as described on SCHEDULE 2.2(C), there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other
agreements of any kind among the Company and any of the securityholders of
the Company relating to the securities of the Company held by them. Except
as described on SCHEDULE 2.2(C) the Company has not granted any person the
right to require the Company to register any securities of the Company
under the Securities Act, whether on a demand basis or in connection with
the registration of securities of the Company for its own account or for
the account of any other person. Except as described on SCHEDULE 2.2(C),
the Company does not have outstanding stockholder purchase rights or any
similar arrangement in effect giving any person the right to purchase any
equity interest in the Company upon the occurrence of certain events.
(d) The Company has full corporate power and authority to execute,
deliver and enter into this Agreement, the Registration Rights Agreement,
the Warrants and the Escrow Agreement, each (other than the Escrow
Agreement) dated as of the date hereof, by and among the Company, the
Placement Agents and the Escrow Agent (collectively, the "TRANSACTION
DOCUMENTS") and to consummate the transactions contemplated hereby and
thereby, subject only to obtaining the Requisite Shareholder Approval and
the filing of the Charter Amendment (as defined below). For purposes of
this Agreement, "REQUISITE SHAREHOLDER APPROVAL" means the affirmative vote
taken at a meeting of shareholders or written consent in lieu of a meeting
of the holders of a majority of the voting power of the Company's Common
Stock and preferred stock voting together, in either case, approving (i)
the transactions contemplated by the Transaction Documents and the
Placement Agency Agreement and (ii) an amendment to the Company's
certificate of incorporation increasing the number of shares of Common
Stock which the Company is authorized to issue to not less than 70,000,000
(the "CHARTER AMENDMENT"). Xxxxxx Xxx, Jun Min, Xxxxxxx Xx and Bingsheng Li
have executed valid written consents approving the corporation actions
described in the preceding sentence in accordance with Nevada law and such
consents, taken together, constitute the Requisite Shareholder Approval and
no further corporate action is required by the Company or its shareholders
to perform its obligations pursuant to the Transaction Documents. All
action on the part of the Company, its directors or stockholders necessary
for the authorization, execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company, the
authorization, sale, issuance and delivery of the Securities and the
performance of the Company's obligations hereunder and thereunder has been
taken, subject only to obtaining the Requisite Shareholder Approval and the
filing of the Charter Amendment. The Securities have been duly authorized
and, when issued and paid for in accordance with this Agreement, will be
validly issued, fully paid and non-assessable and will be free and clear of
all Liens imposed by or through the Company other than restrictions imposed
by this Agreement and applicable securities laws, subject only to obtaining
the Requisite Shareholder Approval and the filing of the Charter Amendment.
This Agreement and the other Transaction Documents have been duly executed
and delivered by the Company, and each such agreement constitutes a legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
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(e) (i) Included in the Company's Form 10-KSB for the fiscal year
ended December 31, 2004, as amended (the "FORM 10-KSB"), are true and
complete copies of the audited consolidated balance sheets (the "BALANCE
SHEETS") of the Company and its Subsidiaries at December 31, 2004 and 2003,
and the related audited consolidated statements of income, changes in
shareholders' equity and consolidated statements of cash flows for the
years ended December 31, 2004 and 2003 , accompanied by the report of
Xxxxxxxx & Company, P.A., and, included in the Company's Forms 10-QSB filed
for quarterly periods ending subsequent to December 31, 2004, are true and
complete copies of the unaudited condensed consolidated balance sheets of
the Company and its Subsidiaries and the related unaudited condensed
consolidated statements of income, changes in shareholders' equity and
consolidated statements of cash flows for the interim periods ending after
December 31, 2004 (the "FINANCIAL STATEMENTS"). The Financial Statements
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP"), applied consistently with the past
practices of the Company (except as may be indicated in the notes thereto,
and, in the case of quarterly financial statements, as permitted by Form
10-QSB under the Exchange Act, and as of their respective dates, fairly
present the consolidated financial position of the Company and the results
of its operations and cash flows for the periods indicated therein. The
Financial Statements have been prepared and are in accordance with the
accounting books and records of the Company. The books and records of the
Company are kept in accordance with the provisions of the Exchange Act.
(ii) A copy of each report, registration statement or other
document filed by the Company with the SEC since December 31, 2003, has
been made available to the Investors either by physical delivery or via the
SEC's XXXXX System. Except as set forth on SCHEDULE 2.2(E)(II), all reports
or other documents required to be filed by the Company under the Securities
Act or the Exchange Act since December 31, 2003 have been filed. As of
their respective filing dates, each SEC Document complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the SEC thereunder
applicable to the SEC Documents, and no SEC Document contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein, in 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 then applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto.
(iii) The Company confirms that neither it nor any person acting
on its behalf has provided any of the Investors or their agents or counsel
with any information that the Company believes constitutes material,
non-public information. The Company understands and confirms that the
Investors will rely on the foregoing representations in effecting
transactions in securities of the Company subsequent to the Closing or
Termination of the Offering. All written disclosures provided to the
Investors regarding the Company, its business and the transactions
contemplated hereby, furnished by or on behalf of the Company (including
the Company's representations and warranties set forth in this Agreement
and the schedules to this Agreement and the information contained or
incorporated by reference in the Memorandum) are true and correct in all
material respects and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. 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.
-9-
(iv) Since December 31, 2004, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature,
whether or not accrued, absolute, contingent or otherwise, other than
liabilities (A) disclosed in the SEC Documents filed prior to the date of
this Agreement, (B) adequately provided for in the Balance Sheets or
disclosed in any related notes thereto, (C) not required under GAAP to be
reflected in the Balance Sheets, or disclosed in any related notes thereto
or (D) incurred in connection with this Agreement.
(v) Since December 31, 2004, there has not been any material
adverse change in the business, financial condition or operating results of
the Company and its Subsidiaries. (f) Except as contemplated by this
Agreement or disclosed in the SEC Documents or as set forth on SCHEDULE
2.2
(f), since December 31, 2004 through the date immediately
preceding the Closing Date, neither the Company nor any of its Subsidiaries
has (i) issued any stock, options, bonds or other securities, (ii) borrowed
any amount or incurred or became subject to any liabilities (absolute,
accrued or contingent), other than current liabilities incurred in the
ordinary course of business and liabilities under contracts entered into in
the ordinary course of business, (iii) discharged or satisfied any lien or
adverse claim or paid any obligation or liability (absolute, accrued or
contingent), other than current liabilities shown on the Balance Sheets and
current liabilities incurred in the ordinary course of business, (iv)
declared or made any payment or distribution of cash or other property to
the stockholders of the Company or purchased or redeemed any securities of
the Company, (v) mortgaged, pledged or subjected to any lien or adverse
claim any of its properties or assets, except for liens for taxes not yet
due and payable or otherwise in the ordinary course of business, (vi) sold,
assigned or transferred any of its assets, tangible or intangible, except
in the ordinary course of business or in an amount less than $250,000,
(vii) suffered any extraordinary losses or waived any rights of material
value other than in the ordinary course of business, (viii) made any
capital expenditures or commitments therefor other than in the ordinary
course of business or in an amount less than $250,000, (ix) entered into
any other transaction other than in the ordinary course of business in an
amount less than $250,000 or entered into any material transaction, whether
or not in the ordinary course of business, (x) made any charitable
contributions or pledges, (xi) suffered any damages, destruction or
casualty loss, whether or not covered by insurance, affecting any of the
properties or assets of the Company or any other properties or assets of
the Company which could, individually or in the aggregate, have or result
in a Material Adverse Effect, (xii) made any material change in the nature
or operations of the business of the Company or (xiii) entered into any
agreement or commitment to do any of the foregoing.
(g) (i) The execution and delivery by the Company of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby will not (A) result in the violation of
any provision of the Certificate of Incorporation or By-laws of the
Company, (B) result in any violation of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Company or any of its Subsidiaries is bound or
(C) conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute (with due notice or lapse of time or both)
a default under, any lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement to which the Company or any of its
Subsidiaries is a party or by which it is bound or to which any of its
properties or assets is subject, nor result in the creation or imposition
of any Lien upon any of the properties or assets of the Company or any of
its Subsidiaries, in the cases of clauses (B) and (C) above, only to the
extent such conflict, breach, violation, default or Lien reasonably could,
individually or in the aggregate, have or result in a Material Adverse
Effect.
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(ii) No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority remains to be obtained
or is otherwise required to be obtained by the Company in connection with
the authorization, execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation the issue and sale of the Units, except filings as may be
required to be made by the Company with (A) the SEC, (B) the American Stock
Exchange and the Archipelago Exchange and (C) state "blue sky" or other
securities regulatory authorities.
(h) The Company and its Subsidiaries have all licenses, permits
and other governmental authorizations currently required for the conduct of
its current business and the ownership of its properties and is in all
respects complying therewith, except where the failure to have such
licenses, permits and other governmental authorizations would not have a
Material Adverse Effect.
(i) Except as disclosed in the SEC Documents, there are no claims,
actions, suits, investigations or proceedings pending or, to the Company's
knowledge, threatened against the Company and its Subsidiaries or their
respective assets, or any director or officer of the Company or any of its
Subsidiaries, in such person's capacity as an officer or director of the
Company or any of its Subsidiaries, at law or in equity, by or before any
governmental authority, or by or on behalf of any third party.
(j) The Company is not, and following the Closing of the Offering
will not be, an "investment company" within the meaning of that term under
the Investment Company Act of 1940, as amended, and the rules and
regulations of the SEC thereunder.
(k) Neither the Company nor any of its Subsidiaries is (i) in
default under or in violation of any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party of by which it or
any of its properties is bound or (ii) in violation of any order, decree or
judgment of any court, arbitrator or governmental body, the default under
or violation of which could, individually or in the aggregate, have or
result in a Material Adverse Effect.
(l) Assuming that after the date hereof the Company files in a
timely manner all reports required to be filed pursuant to Sections 13, 14
and 15(d) of the Exchange Act, the Company will be eligible to use Form S-3
to register the resale by the Investors and the Placement Agents of the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) no later than July 1, 2006.
(m) Except as disclosed on SCHEDULE 2.2(M), the Company has since
December 31, 2004 been in compliance with the continuing listing or
maintenance requirements of the American Stock Exchange or any other stock
exchange or market on which the Common Stock is or has been listed (or on
which it has been quoted). The Company shall use its best efforts to comply
with the continuing listing and maintenance requirements of the American
Stock Exchange or any other stock exchange or market on which the Common
Stock is listed (or on which it is quoted) as soon as reasonably
practicable.
(n) The Company or its Subsidiaries have all trademarks,
registered copyrights, service marks or trade names, permits, grants and
licenses and all other intangible assets, properties and rights that are
material and necessary to conduct of the business of the Company, and there
are no other patents, trademarks, copyrights, service marks, trade names or
other intangible assets, properties or rights that are material to or that
are necessary for the conduct of the business of the Company (the
"INTELLECTUAL PROPERTY"). The Company and its Subsidiaries, as the case may
-11-
be, own all right, title and interest, or possesses adequate rights, in and
to the Intellectual Property necessary to conduct the business of the
Company and the Intellectual Property do not infringe on or conflict with
the rights or intellectual property of third parties, and neither the
Company, nor any of its Subsidiaries has received any notice contesting its
right to use any such Intellectual Property. The Intellectual Property has
not been and are not the subject of any pending or threatened litigation or
claim of infringement, and the transactions contemplated hereby and by the
other Transaction Documents will not adversely affect the right, title and
interest of the Company in and to the Intellectual Property.
(o) The Company and its Subsidiaries have obtained all permits,
licenses and other authorizations which are required under Chinese and
United States federal, state, provincial and local laws relating to
pollution or protection of the environment, including laws related to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic material or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or pollutants, contaminants or hazardous or toxic
materials or wastes ("ENVIRONMENTAL LAWS"), except where the failure to
obtain such permits, license or authorizations would not, individually or
in the aggregate, have or result in a Material Adverse Effect. The Company
and its Subsidiaries are in compliance with all terms and conditions of the
required permits, licenses and authorizations and are also in full
compliance with all other limitations, restrictions, conditions and
requirements contained in the Environmental Laws or contained in any plan,
except where the failure to so comply would not have a Material Adverse
Effect. The Company is not aware of, nor has the Company received notice
of, any events, conditions, circumstances, actions or plans which may
interfere with or prevent continued compliance or which would give rise to
any liability under any Environmental Laws.
(p) All material agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound and which are
required to be filed by the Company pursuant to the Securities Act, the
Exchange Act and the rules and regulations thereunder have been filed by
the Company with the SEC. As of the date hereof, except as disclosed in the
SEC Documents, and except for those agreements that by their terms are no
longer in effect, each such agreement is in full force and effect and is
binding on the Company and, to the Company's knowledge, is binding upon
such other parties, in each case in accordance with its terms, and neither
the Company nor, to the Company's knowledge, any other party thereto is in
material breach of or material default under any such agreement. Except as
disclosed in the SEC Documents, the Company has not received any written
notice regarding the termination of any such agreements.
(q) The Company has good title to all the properties and assets
reflected as owned by it in the Financial Statements, subject to no Lien
except (i) those, if any, reflected in such Financial Statements or (ii)
those which are not material in amount and do not adversely affect the use
made and intended to be made of such property by the Company. The Company
holds its leased properties under valid and binding leases. Except as
disclosed in the SEC Documents, the Company owns or leases all such
properties as are necessary to its operations as now conducted.
(r) The Company and its Subsidiaries maintain insurance of the
types, against such losses and in the amounts and with such insurers as are
customary in the Company's industry and otherwise reasonably prudent,
including, but not limited to, insurance covering all real and personal
property owned or leased by the Company against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect.
-12-
(s) The Company and its Subsidiaries are in compliance in all
material respects with all applicable laws and all orders of, and
agreements with, any governmental authority applicable to the Company, any
Subsidiary or any of their respective assets. The Company and the
Subsidiaries have all permits, certificates, licenses, approvals and other
authorizations required under applicable laws or necessary in connection
with the conduct of their businesses, except where the failure to have such
permits, certificates, licenses, approvals and other authorizations would
not have a Material Adverse Effect.
(t) Except as set forth on SCHEDULE 2.2(t), the Company and its
Subsidiaries have filed or obtained extensions of all material United
States federal, Chinese, British Virgin Islands, provincial, state, local
and foreign income, excise, franchise, real estate, sales and use and other
tax returns which it or they are required to file. All material federal,
state, county, local, foreign or other income taxes which have become due
or payable by the Company or any of its Subsidiaries (collectively,
"TAXES"), have been paid in full or are adequately provided for in
accordance with GAAP on the financial statements of the applicable person.
No Liens arising from or in connection with Taxes have been filed and are
currently in effect against the Company or any of its Subsidiaries, except
for Liens for Taxes which are not yet due or which would not have a
Material Adverse Effect. No audits or investigations are pending or, to the
knowledge of the Company, threatened with respect to any tax returns or
Taxes of the Company or any of its Subsidiaries.
(u) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any material liability; the Company
has not incurred and does not expect to incur any material liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue
Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "pension plan" for which
the Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
(v) The Company is not involved in any material labor dispute with
its employees nor is any such dispute, to the Company's knowledge,
threatened or imminent.
(w) Assuming the truth of the Investor's representations and
acknowledgments contained in Section 2.1 hereof, neither the Company nor
any person acting on its behalf (other than Placement Agent, as to whom the
Company makes no representations) has offered or sold the Securities by
means of any general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act. The Company has not sold the
Securities to anyone other than the Investors designated on the signature
pages hereto. Each Share and Warrant Share certificate shall bear
substantially the same legend set forth in Section 2.1(l) hereof for at
least so long as required by the Securities Act.
(x) Neither the Company nor any of its Subsidiaries, nor, to the
knowledge of the Company, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
Subsidiaries, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense 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; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
-13-
(y) Other than the Placement Agents and any subagents they may
appoint, no finder, broker, agent, financial person or other intermediary
has acted on behalf of the Company in connection with the sale of the Units
by the Company or the consummation of this Agreement or any of the
transactions contemplated hereby. The Company has not had any direct or
indirect contact with any other placement agent (or similar firm) with
respect to the offer of the Units by the Company to the Investor or the
Investor's purchase of the Units.
(z) The Company is in material compliance with the Xxxxxxxx-Xxxxx
Act of 2002 and all requirements under the Exchange Act, including the U.S.
Foreign Corrupt Practices Act of 1977. Since the date of the Company's most
recent quarterly report on Form 10-QSB, there have been no changes in
internal controls over financial reporting or disclosure controls and
procedures.
SECTION 3
CONDITIONS FOR CLOSING
3.1 CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of
each Investor under this Agreement are subject to the Company's fulfillment on
or before Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Company contained in this Agreement which are
qualified as to materiality must be true and correct in all respects and
each of the representations and warranties of the Company contained in this
Agreement which are not qualified as to materiality must be true and
correct in all material respects as of the Closing Date, in each case, as
if made on such date.
(b) PERFORMANCE. The Company shall have performed and complied in
all material respects with all agreements, covenants and conditions
required to be performed and complied with by it under the Transaction
Documents at or before the Closing.
(c) NO SUSPENSION. No order suspending the use of the Transaction
Documents or the SEC Documents or enjoining the offering or sale of the
Securities shall have been issued, and no proceedings for that purpose or a
similar purpose shall have been initiated or pending, or, to the best of
the Company's knowledge, are contemplated or threatened nor has any order
been issued halting the trading of the Company's Common Stock on the
American Stock Exchange.
(d) CAPITALIZATION. Immediately prior to the consummation of the
Closing, the Company will have an authorized capitalization as set forth on
SCHEDULE 2.2(C).
(e) OFFICERS' CERTIFICATE. The Investors shall have received
certificates of the Chief Executive Officer and Chief Financial Officer of
the Company, dated as of the Closing Date, certifying in their capacity as
officers of the Company, as to the fulfillment of the conditions set forth
in subparagraphs (a), (b), (c) and (d) above.
(f) NO MATERIAL ADVERSE CHANGE. At Closing, the Chief Executive
Officer and the Chief Financial Officer of the Company shall have provided
a certificate to the Placement Agents confirming that there have been no
material adverse changes in the condition (financial or otherwise) or
prospects of the Company from the date of the financial statements included
in the Transaction Documents or the SEC Documents other than as set forth
or contemplated in the Transaction Documents and the Purchase Agreement.
-14-
(g) OPINION OF COUNSEL TO THE COMPANY. The Company shall have
delivered to the Investor an opinion dated as of the Closing Date and
addressed to the Investors from (A) Loeb & Loeb LLP, U.S. counsel for the
Company, in substantially the form attached hereto as EXHIBIT B-1; (B)
People's Republic of China counsel for the Company, in substantially the
form attached hereto as EXHIBIT B-2; (C) British Virgin Islands counsel for
the Company, in substantially the form attached hereto as EXHIBIT B-3; and
(D) Xxxxxxx Xxxxxxxxx Chtd., Nevada counsel for the Company, in
substantially the form attached hereto as EXHIBIT B-4.
(h) REGISTRATION RIGHTS AGREEMENT. The Company shall have executed
and delivered to the Investor the Registration Rights Agreement, in
substantially the form attached as EXHIBIT C executed by the Company.
(i) WARRANTS. Subject to the proration provisions of Section 1.2,
the Company shall have executed and delivered to the Investor Warrants to
purchase that number of shares of Common Stock equal to the number of Units
purchased by such Investor multiplied by 0.3, pursuant to a Warrant dated
the Closing Date, in substantially the form attached as EXHIBIT D (the
"WARRANT"), executed by the Company.
(j) STOCK CERTIFICATES. Subject to the proration provisions of
Section 1.2, the Company shall have delivered to the Investor certificates
representing that number of Shares equal to the number of Units purchased
by such Investor.
(k) NO INJUNCTIONS; ETC. No court or governmental injunction,
order or decree prohibiting the purchase and sale of the Units will be in
effect. There will not be in effect any law, rule or regulation prohibiting
or restricting the sale or requiring any consent or approval of any person
that has not been obtained to issue and sell the Units to the Investor.
(l) WAIVERS AND CONSENTS. The Company shall have obtained, subject
only to obtaining the Requisite Shareholder Approval and the filing of the
Charter Amendment, .all consents and waivers necessary to execute and
deliver this Agreement and the other Transaction Documents and to issue and
deliver the Shares, the Warrants, and the Warrant Shares issuable thereon,
and all consents and waivers shall be in full force and effect.
3.2 CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company with respect to each Investor under this Agreement are subject to
such Investor's fulfillment on or before the Closing of each of the following
conditions by the Investor:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 2.1 shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing Date.
(b) PAYMENT OF PURCHASE PRICE. The Investor shall have delivered
the purchase price and other documents required pursuant hereto.
(c) REGISTRATION RIGHTS AGREEMENT. The Company shall have received
from the Investor the Registration Rights Agreement, executed by the
Investor.
(d) INVESTOR QUALIFICATION QUESTIONNAIRE. The Company shall have
received from the Investor a completed Questionnaire, executed by the
Investor.
-15-
(e) NO INJUNCTIONS; ETC. No court or governmental injunction,
order or decree prohibiting the purchase and sale of the Units shall be in
effect. There shall not be in effect any law, rule or regulation
prohibiting or restricting the sale or requiring any consent or approval of
any person that has not been obtained to issue and sell the Units to the
Investor.
SECTION 4
AFFIRMATIVE COVENANTS OF THE COMPANY
4.1 The Company hereby covenants and agrees with the Investors as
follows:
(a) CONDUCT OF THE COMPANY. Between the date hereof and the
Closing Date, the Company shall, and shall cause each Subsidiary to:
(i) preserve and maintain in full force and effect its existence
and good standing under the laws of its jurisdiction of formation or
organization;
(ii) preserve and maintain in full force and effect all material
rights, privileges, qualifications, applications, licenses and franchises
necessary for the Company and the Subsidiaries to operate in the normal
conduct of their respective businesses as presently and as proposed to be
conducted;
(iii) use its best efforts to preserve intact its business
organization;
(iv) conduct its business in the ordinary course in accordance
with sound business practices, and keep its properties in good working
order and condition (normal wear and tear excepted);
(v) take all reasonable actions to protect and maintain the
Company Intellectual Property, including, without limitation, prosecuting
all pending applications for patents or for the registration of trademarks
and copyrights and maintaining, to the extent permitted by law, each patent
or registration owned by the Company or any Subsidiary;
(vi) (A) comply in all material respects with all applicable laws,
rules and regulations and with the directions of any governmental
authority, and (B) not take any action designed to or that might reasonably
be expected to cause or result in unlawful manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares, the Warrants
or the Warrant Shares in violation of applicable law;
(vii) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a
governmental authority;
(viii) conduct its business in a manner such that the
representations and warranties of the Company contained in Section 2.2
shall continue to be true and correct on and as of the Closing;
(ix) use its best efforts to cause the conditions contained in
Section 3.1 to be satisfied on or before the Closing Date; and
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(x) not issue, deliver, sell or authorize, or propose the
issuance, delivery, sale or purchase of, any additional shares of capital
stock, stock equivalents or any other security of the Company or any
Subsidiary, other than (A) the issuance of Common Stock pursuant to the
exercise of any warrants or options outstanding as of the date hereof and
(B) the issuance of shares of Common Stock pursuant to the Company's option
plans.
4.2 DISCLOSURE. The Company covenants and agrees that neither it nor
any other person acting on its behalf will provide any Investor or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Investor shall have executed a
written agreement regarding the confidentiality and use of such information. The
Company understands and confirms that each Investor shall be relying on the
foregoing covenant in effecting transactions in securities of the Company
subsequent to Closing or Termination of the Offering. In the event of a breach
of the foregoing covenant by the Company or any person acting on its or their
behalf, the Company shall, upon written notice of such breach, make public
disclosure of such material non-public information.
4.3 RESERVATION OF COMMON STOCK; SHAREHOLDER APPROVAL AND CHARTER
AMENDMENT. The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock the maximum number of Shares and Warrant
Shares that may be issuable or deliverable hereunder and under all the Warrants.
The Company will take all action required to be taken under the Nevada General
Corporation Law and the Exchange Act, including the preparation, filing and
mailing of an information statement complying with Regulation 14C or a proxy
statement under Regulation 14A, to cause the Required Shareholder Approval to be
obtained and to file the Charter Amendment as promptly as practicable after the
date hereof. The Company will (i) as promptly as practicable, either convene a
meeting of shareholders for the purpose of obtaining the Requisite Shareholder
Approval and, in connection therewith, prepare, file with the SEC and distribute
to shareholders a proxy statement complying with Regulation 14A under the
Exchange Act or in lieu of a meeting, obtain the Requisite Shareholder Approval
through written consent in lieu of a meeting and, in connection therewith,
prepare, file with the SEC and distribute to shareholders an information
statement complying with Regulation 14C under the Exchange Act and (ii) file the
Charter Amendment with the Secretary of State of the State of Nevada within one
(1) business day after obtaining the Requisite Shareholder Approval.
4.4 LISTING OF UNDERLYING SHARES AND RELATED MATTERS. Promptly
following the date hereof, the Company shall take all necessary action to cause
the Shares and the Warrant Shares to be listed on the American Stock Exchange
and the Archipelago Exchange no later than the Closing Date. Further, if the
Company applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it shall include in such application the
Shares and the Warrant Shares and will take such other action as is necessary to
cause such Common Stock to be so listed. The Company will use commercially
reasonable efforts to continue the listing and trading of its Common Stock on
the American Stock Exchange and the Archipelago Exchange and, in accordance,
therewith, will use commercially reasonable efforts to comply in all respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of such market or exchange, as applicable.
4.5 SECURITIES LAW FILINGS. For so long as the Investors and their
respective Affiliates in the aggregate hold any of the Shares, the Warrants or
the Warrant Shares, the Company agrees to file with the SEC in a timely manner
all reports and other documents required to be filed by the Company under the
Securities Act and Exchange Act.
4.6 LEGENDS. The Company agrees that at such time as such legend
specified in Section 2.2(l) is no longer required to be printed on certificates
evidencing the Shares, the Warrants or the Warrant Shares (or any securities
issued in exchange therefor in connection with any merger, recapitalization,
reclassification or other similar transaction), the Company shall cause its
-17-
counsel to promptly issue a legal opinion addressed to the Company's transfer
agent if required by such transfer agent to effect the removal of such legend as
and when any Investor so requests, subject to the Investor providing any
documentation reasonably requested by the Company or its counsel. The Company
further agrees that at such time, it will, promptly following, and in any event
within ten (10) business days of, the delivery by a Investor to the Company or
the Company's transfer agent of a certificate representing Shares or Warrant
Shares issued with a restrictive legend, deliver or cause to be delivered to
such Investor a certificate representing such Shares or Warrant Shares that is
free from all restrictive and other legends.
4.7 USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Units for acquisitions and general working capital purposes.
4.8 SECURITIES LAWS DISCLOSURE; PUBLICITY. By 8:30 a.m. the day
following the Closing Date, the Company will issue a press release disclosing
the material terms of the transactions contemplated hereby in accordance with
the applicable SEC rules and regulations.
SECTION 5
TERMINATION
5.1 TERMINATION. This Agreement may be terminated prior to the Closing
as follows:
(i) with respect to any individual Investor, in whole or in part,
at any time on or prior to the Closing Date, by written notice given by the
Company to Investor prior to Closing, provided that the Company returns to
such Investor, without interest or deduction, all Proceeds paid by such
Investor (for such terminated portion of Proceeds thereof);
(ii) at the election of the Company or the Investor by written
notice to the other parties hereto after 5:00 p.m., New York time, on
December 31, 2005, if the Closing shall not have occurred on or prior to
such date, unless such date is extended by the mutual written consent of
the Company and the Investor; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 5.1(ii) shall not be available
(A) to any party whose breach of any representation, warranty, covenant or
agreement under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date or (B) if the
Closing has not occurred solely because any party hereto has not yet
obtained a necessary approval from any governmental authority; or
(iii) by either the Company or the Investor by written notice to
the other parties hereto if any governmental authority shall have issued
any injunction or other order prohibiting the consummation of the Closing
and such injunction or order shall not be subject to appeal or shall have
become final and nonappeable.
5.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 5.1, this Agreement shall become void and of no further force and effect
and none of the parties hereto shall have any liability in respect of such
termination; PROVIDED, HOWEVER, that such termination shall not relieve the
Company or any Investor of any liability for any breach or non-performance of,
or non-compliance with, this Agreement.
SECTION 6
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS; INDEMNIFICATION
-18-
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until twenty-four (24) months following the Closing
Date, except for (a) Sections 2.2(a), 2.2(b), 2.2(c) and 2.2(d) which
representations and warranties shall survive the execution and delivery of this
Agreement and the Closing hereunder for the period of any applicable statute of
limitations or indefinitely if no statute of limitation applies, (b) 2.2(e),
2.2(u) and 2.2(w), which representations and warranties shall survive until the
third anniversary of the Closing Date, and (c) Section 2.2(s), which shall
survive until the later to occur of (i) the lapse of the statute of limitations
with respect to the assessment of any tax to which such representation and
warranty relates (including any extensions or waivers thereof) and (ii) sixty
(60) days after the final administrative or judicial determination of the taxes
to which such representation and warranty relates, and no claim with respect to
Section 2.2(s) may be asserted thereafter with the exception of claims arising
out of any fact, circumstance, action or proceeding to which the party asserting
such claim shall have given notice to the other parties to this Agreement prior
to the termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom. Except as otherwise provided in this Agreement,
all such representations, warranties, covenants and agreements shall inure to
the benefit of the parties (subject to Section 6.2 below) and their respective
successors and assigns.
6.2 INDEMNIFICATION.
(i) The Company agrees to indemnify and hold harmless each
Investor and its affiliates and its and their stockholders, directors,
officers, employees and agents and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the "INVESTOR INDEMNIFIED PARTIES" and each a
"INVESTOR INDEMNIFIED PARTY"), and will reimburse such Investor Indemnified
Party, from and against any and all loss, damage, liability, cost and
expense to which such Investor Indemnified Party may become subject under
the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses that are in any manner based upon, relating
to or arising out of in any manner based upon or relating to (A) any untrue
representation, misstatement, omission, breach of warranty or failure to
perform any covenants or agreement by the Company contained herein or in
any of the other Transaction Documents or (B) any action instituted against
any Investor Indemnified Party by any holder of any securities of the
Company that is not an affiliate of such Investor Indemnified Party with
respect to any of the transactions contemplated by this agreement or the
Transaction Documents. The Company will also advance expenses to an
Investor Indemnified Party as incurred to the fullest extent permitted
under applicable law; PROVIDED, HOWEVER, that the Investor Indemnified
Party agrees to repay such advances to the Company if it is ultimately
determined that such Investor Indemnified Party is not entitled to
indemnification.
(ii) The Investor agrees to indemnify and hold harmless the
Company and its affiliates and its and their stockholders, directors,
officers, employees and agents and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the "COMPANY INDEMNIFIED PARTIES" and each a
"COMPANY INDEMNIFIED PARTY"), and will reimburse such Company Indemnified
Party, from and against any and all loss, damage, liability, cost and
expense to which such Company Indemnified Party may become subject under
the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses that are in any manner based upon, relating
to or arising out of in any manner based upon or relating to any untrue
representation, misstatement, omission, breach of warranty or failure to
-19-
perform any covenants or agreement by the Investor contained herein or in
any of the other Transaction Documents. The Investor will also advance
expenses to a Company Indemnified Party as incurred to the fullest extent
permitted under applicable law; PROVIDED, HOWEVER, that the Company
Indemnified Party agrees to repay such advances to the Investor if it is
ultimately determined that such Company Indemnified Party is not entitled
to indemnification. Notwithstanding any other provisions of this Section
6.2(ii), no Investor shall be required to indemnify any party in excess of
the gross proceeds paid by such Investor for Units purchased pursuant to
its respective Agreement.
(iii) Promptly after receipt by the Company or the Investor, as
the case may be (an "INDEMNIFIED PARTY") under this Section 6.2 of a notice
of the commencement of any action (including any governmental action) such
Indemnified Party will, if a claim in respect thereof is to be made against
any indemnifying party hereunder, deliver to the indemnifying party a
written notice of the commencement thereof. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of
any liability to the Indemnified Party under this Section 6.2 only to the
extent prejudicial to its ability to defend such action, but the omission
so to deliver written notice to the indemnifying party will not relieve it
of any liability that it may have to an Indemnified Party otherwise than
under this Agreement. The indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
parties; PROVIDED, HOWEVER, that an Indemnified Party shall have the right
to retain its own counsel, with the reasonable fees and expenses to be paid
by the indemnifying party, if in the reasonable determination of counsel
for the Indemnified Party, representation of such Indemnified Party by the
counsel obtained by the indemnifying party would be inappropriate due to
actual or potential conflicting interests between such Indemnified Party
and any other party represented by such counsel in such proceeding. After
notice from the indemnifying party to such Indemnified Party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such Indemnified Party pursuant to the provisions of paragraph
6.2(i) above for any legal or other expense subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation, unless (A) the Indemnified Party shall
have employed counsel in accordance with the provisions of the preceding
sentence, (B) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the
commencement of the action or (C) the indemnifying party has authorized in
writing the employment of counsel for the Indemnified Party at the expense
of the indemnifying party.
SECTION 7
MISCELLANEOUS
7.1 MODIFICATION. Neither this Agreement nor any provisions hereof
should be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
-20-
7.2 NOTICES. All notices and other communications required or permitted
hereunder must be in writing and, except as otherwise noted herein, must be
addressed as follows:
if to the Company, to:
American Oriental Bioengineering, Inc.
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Yanchun (Lily) Li
Facsimile: (000) 000-0000
and
American Oriental Bioengineering, Inc.
Xx. 00 Xxxxxx Xxxx
Xxxxxxx Xxxxxxxx
Xxxxxx, Xxxxx
C1
15008
Attn: Yanchun (Lily) Li
with a copy to:
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
if to any Investor, to the address shown on such Investor's signature
page, marked for attention as there indicated,
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance with the provisions of
this Section 7.2. Any such notice or communication will be deemed to have been
received: (A) in the case of facsimile or personal delivery, on the date of such
delivery; and (B) in the case of nationally-recognized overnight courier, on the
next business day after the date sent. 7.3 EXECUTION. By the execution of the
signature page attached hereto, the parties hereby agree to be bound by all of
the terms and conditions of this Agreement. Any signature delivered by facsimile
transmission shall create a valid and binding obligation of the so party
executing with the same force and effect as if such facsimile signature page
were an original thereof.
7.4 COUNTERPARTS. This Agreement may by executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwithstanding that all parties are not signatories to the same
counterpart.
7.5 BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs
executors, administrators, successors, legal representatives and assigns. The
obligation of the Investors shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and his heirs, executors,
administrators and successors.
-21-
7.6 ENTIRE AGREEMENT. This instrument, together with the schedules and
exhibits hereto, contains the entire agreement of the parties, and there are no
representations, covenants or other agreements except as stated or referred to
herein.
7.7 ASSIGNABILITY. This Agreement is not transferable or assignable by
the Investor.
7.8 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by
and construed under the internal laws of the State of New York without regard to
conflict of law rules. The parties hereby submit to the exclusive jurisdiction
of the courts of the State of New York located in New York County and the
Federal courts located in the Southern District of New York, with respect to any
action or legal proceeding commenced by either party with respect to this
Agreement or the Units. Each party irrevocably waives any objection it now has
or hereafter may have respecting the venue of any such action or proceeding or
the inconvenience of such forum, and each party consents to the service of
process in any such action or proceeding in the manner set forth for the
delivery of notices herein.
7.9 WAIVER OF JURY TRIAL. The parties hereby waive their rights to a
trial by jury in any action or proceeding involving any matter arising out of or
relating to this Agreement or to the Units.
7.10 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of
Investor and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach or
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate
7.11 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions shall not in any way be affected or impaired
thereby and the parties will be attempt to agree upon a valid and enforceable
provision that is a reasonable substitute therefore, and upon so agreeing, shall
incorporate such substitute provision into this Agreement.
7.12 EQUAL TREATMENT OF INVESTORS. The Company shall not pay or offer
to pay any Investor to amend to consent to a waiver or modification of any
provision of the Transaction Documents unless the same consideration is paid to
all Investors. For avoidance of doubt, this provision constitutes a separate
right granted to each Investor and shall not in any way be construed as action
in concert or action as a group by such Investor with any other Investor with
respect to the purchase, disposition or voting of the Shares, Warrants or
Warrant Shares.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
acceptance date by the Company indicated below:
[SIGNATURES ON FOLLOWING PAGE]
-22-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx Xxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Blue Sky Securities Limited
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
208,334
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,000,003 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-23-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxxxx X. Xxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Cranshire Capital, L.P.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
200,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$960,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-24-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxxx X. Xxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
C.S.L. Associates L.P.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
210,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,008,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-25-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx Xxxxxx & Xxxx Xxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Palisades Master Fund, L.P
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
400,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,920,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-26-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx Xxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Alpha Capital AG
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
250,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,200,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-27-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx Xxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Millennium Partners, L.P
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
210,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,008,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-28-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx X. Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Nite Capital LP
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
208,333
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,000,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-29-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx Xxxxxxx St. Xxxxxx & Xxxxx Xxxxxxx Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
SovGem Limited
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
250,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,200,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-30-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx Xxxxxxx /s/ Xxxxxxx Marseille
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Xxxxx Xxxxxxx Xxxxxxx Marseille
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
320,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,536,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-31-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx X. Xxxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Advocates Rx Inc. Profit Sharing Plan
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
200,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$960,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-32-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxxx Xxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Xxxxxxx Xxxxxx
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
100,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$480,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-33-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxx Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Brasso Private Opportunity Holding
Fund Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
50,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$240,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-34-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxx Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Brasso Fund Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
50,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$240,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-35-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx X. Xxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
RES Limited
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
100,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$480,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-36-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxx Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Castlerigg Master Investments Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
1,091,667
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$5,000,002 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-37-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxx Xxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Xxxxxx Bay Fund LP
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
310,500
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,500,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-38-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx Xxxxxx & Xxxx Xxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Double U Master Fund
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
104,167
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$500,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-39-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Merced Partners Limited Partnership
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
100,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$480,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-40-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Tamarack International, Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
100,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$480,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-41-
STOCK AND WARRANT PURCHASEAGREEMENT SIGNATURE PAGE
/s/ Xxxxxx X. Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Gemini Master Fund, Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
100,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$480,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-42-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx X. Xxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Smithfield Fiduciary LLC
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
400,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,920,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-43-
STOCK AND WARRANT PURCHASEAGREEMENT SIGNATURE PAGE
/s/ Xxxxxx Xxxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Iroquois Master Fund Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
600,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$3,168,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-44-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxxxx Xxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
JMG Triton Offshore Fund, Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
410,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,968,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-45-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxxxx Xxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
JMG Capital Partners, LP
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
410,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,968,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-46-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx Xxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Xxxxxx Xxxxxxx & Co., Inc.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
4,020,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$19,296,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-47-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Lars Lehonius
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Xxxxxx Xxxxxxx & Co. International
Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
300,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,440,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-48-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx Xxxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Omnicom Master Trust
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
250,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,200,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-49-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx X. Xxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
Pike Capital Partners, LP
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
400,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$1,920,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-50-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxx X. Xxxxxxxx
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
SF Capital Partners Ltd.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
430,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$2,064,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-51-
STOCK AND WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
/s/ Xxxxxx X. Stahlelcker
------------------------------------- --------------------------------------
Signature of Investor Signature of Co-Investor
RG Capital Management, L.P.
------------------------------------- --------------------------------------
Name of Investor Name of Co-Investor
------------------------------------- --------------------------------------
Address of Investor Address of Co-Investor
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Investor Identification Number of Co-Investor
200,000
-------------------------------------
Number of Units Purchased American Oriental Bioengineering, Inc.
at $4.80 per Unit
/s/Xxxxxxx Xx
--------------------------------------
Name: Xxxxxxx Xx
$960,000 Title: Chief Operating Officer
------------------------------------- Date: November 28, 2005
Total Purchase Price Amount
-52-
EXHIBIT A
INVESTOR QUALIFICATION QUESTIONNAIRE
-INTENTIONALLY OMITTED -
-53-
EXHIBIT X-0, X-0, X-0 AND B-4
OPINION OF LOEB & LOEB LLP, CHINESE COUNSEL, BVI- COUNSEL AND NEVADA COUNSEL
- INTENTIONALLY OMITTED -
-54-
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
- ATTACHED AS EXHIBIT 10.1 TO THIS FORM 8-K OF WHICH THIS
EXHIBIT C FORMS A PART -
-55-
EXHIBIT D
FORM OF WARRANT
- ATTACHED AS EXHIBIT 4.1 TO THIS FORM 8-K OF WHICH THIS EXHIBIT D FORMS A PART-
-56-
