SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of October 26, 2007, among Fushi International, Inc., a Nevada
corporation (the “Company”),
and
the investors listed on the Schedule of Buyers attached hereto as Annex
A
and
identified on the signature pages hereto (each, an “Investor”
and
collectively, the “Investors”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act (as defined below) and Regulation D
promulgated thereunder, the Company desires to issue and sell to each Investor,
and each Investor, severally and not jointly, desires to purchase from the
Company certain securities of the Company, as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Investors agree as
follows:
ARTICLE
1.
DEFINITIONS
1.1. Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes
of this Agreement, the following terms shall have the meanings indicated in
this
Section 1.1:
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local
or
foreign), stock market, stock exchange or trading facility.
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144.
“Applicable
Law”
has the
meaning set forth in Section 3.1(h).
“Business
Day”
means
any day except Saturday, Sunday and any day which is a federal legal holiday
or
a day on which banking institutions in the State of New York are authorized
or
required by law or other governmental action to close.
“Buy-In”
has
the
meaning set forth in Section 4.1(c).
“Charter
Documents”
has the
meaning set forth in Section 3.1(h).
“Closing”
means
the closing of the purchase and sale of the Shares pursuant to Article
II.
“Closing
Date”
means
the Business Day on which all of the conditions set forth in Sections 5.1 and
5.2 hereof are satisfied, or such other date as the parties may
agree.
"Closing
Escrow Agreement"
means
the Closing Escrow Agreement, dated as of the date hereof, between the Company,
Xxxx Capital Partners, LLC and the escrow agent (the “Escrow
Agent”)
identified therein, in the form of Exhibit
B
hereto.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.006 per share, and any securities
into which such common stock may hereafter be reclassified.
“Common
Stock Equivalents”
means
any securities of the Company or any Subsidiary which entitle the holder thereof
to acquire Common Stock at any time, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any
time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder
to
receive, directly or indirectly, Common Stock.
“Company
Deliverables”
has the
meaning set forth in Section 2.2(a).
“Dalian
Fushi”
means
Dalian Fushi Bimetallic Manufacturing Co., Ltd., a limited liability company
organized under the laws of the PRC.
“Disclosure
Materials”
means
the SEC
Reports, together with the Disclosure Schedules attached as Exhibit
C
to this
Agreement.
“Disclosure
Schedules”
means
the disclosure schedules attached hereto as Exhibit
C.
“Effective
Date”
means
the date that the initial Registration Statement required by Section 2(a) of
the
Registration Rights Agreement is first declared effective by the
Commission.
“Environmental
Laws”
has the
meaning set forth in Section 3.1(x).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“FHI”
means
Fushi Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of
the
Company.
“Financial
Statements”
has the
meaning set forth in Section 3.1(r)(i).
“FCPA”
has the
meaning set forth in Section 3.1(z).
“GAAP”
means
U.S. generally accepted accounting principles.
“Governmental
Authority”
has the
meaning set forth in Section 3.1(h).
2
“Group
Companies”
means,
collectively, the Company and its Subsidiaries (including FHI, the WFOE and
Dalian Fushi).
“Intellectual
Property”
has the
meaning set forth in Section 3.1(p).
“Investment
Amount”
means,
with respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to this Agreement.
“Investor
Deliverables”
has the
meaning set forth in Section 2.2(b).
“Investor
Party”
has the
meaning set forth in Section 4.7.
“Lien”
means
any lien, charge, encumbrance, security interest, right of first refusal or
other restrictions of any kind.
“Material
Adverse Change”
has the
meaning set forth in Section 3.1(r)(ii).
“Material
Adverse Effect” has
the
meaning set forth in Section 3.1(c).
“Money
Laundering Laws”
has the
meaning set forth in Section 3.1(ee).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“OFAC”
has the
meaning set forth in Section 3.1(dd).
“Outside
Date”
means
the thirtieth calendar day following the date of this Agreement.
“PFIC”
has the
meaning set forth in Section 3.1(cc).
“Permits”
has the
meaning set forth in Section 3.1(l).
“Per
Share Purchase Price”
equals
$14.
“Person”
means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“PRC”
means
the People’s Republic of China, not including Taiwan, Hong Kong and
Macau.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement,
among
the Company and the Investors, in the form of Exhibit
A
hereto.
“Registration
Statement”
means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Investors of the
Shares.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
has the
meaning set forth in Section 3.1(a).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Share
Delivery Date”
has
the
meaning set forth in Section 4.1(c).
“Shares”
means
the shares of Common Stock issued or issuable to the Investors pursuant to
this
Agreement.
“Short
Sales”
include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect
stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
“Subsidiary”
means
any “significant subsidiary” as defined in Rule 1.02 of Regulation S-X
promulgated by the Commission under the Exchange Act.
“Tax”
has the
meaning set forth in Section 3.1(o).
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market (other than
the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock
is
traded in the over-the-counter market, as reported by the OTC Bulletin Board,
or
(iii) if the Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.
“Transaction
Documents”
means
this Agreement, the Registration Rights Agreement, the Closing Escrow Agreement
and any other documents or agreements executed in connection with the
transactions contemplated hereunder.
“WFOE” means
Fushi International (Dalian) Bimetallic Cable Co., Ltd., a wholly-owned
subsidiary of FHI, incorporated under the laws of the PRC.
ARTICLE
2.
PURCHASE
AND SALE
2.1. Closing.
Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, the Shares representing
such Investor’s Investment Amount. The Closing shall take place at the offices
of Xxxxx Xxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 on the
Closing Date or at such other location or time as the parties may
agree.
2.2.
Closing
Deliveries.
(a) At
the Closing, the Company shall deliver or cause to be delivered to each Investor
the following (the “Company
Deliverables”):
(i) a
certificate evidencing a number of Shares equal to such Investor’s Investment
Amount divided by the Per Share Purchase Price, registered in the name of such
Investor;
(ii) the
legal
opinion of Guzov Ofsink, LLC, Company counsel, in agreed form, addressed to
the
Investors;
(iii) the
Registration Rights Agreement, duly executed by the Company; and
(iv) the
Closing Escrow Agreement, and each other Transaction Document to be executed
prior to Closing, duly executed by all parties thereto.
(b) At
the
Closing, each Investor shall deliver or cause to be delivered the following
(the
“Investor
Deliverables”):
(i) Unless
otherwise agreed to by the Company and Xxxx Capital Partners, LLC, to the Escrow
Agent, for deposit and disbursement in accordance with the Closing Escrow
Agreement, its Investment Amount, in immediately available funds, by wire
transfer to an account designated in writing by the Escrow Agent for such
purpose; and
(ii) to
the
Company, the Registration Rights Agreement and
each
other Transaction Document to be executed by such Investor at or prior to
Closing,
duly
executed by such Investor.
ARTICLE
3.
REPRESENTATIONS
AND WARRANTIES
3.1. Representations
and Warranties of the Company. The Company represents and warrants to the
Investors that, except as set forth in the Disclosure Schedules attached hereto
as Exhibit C which exceptions shall be deemed to part of the
representations and warranties made hereunder, the following representations
and
warranties are true and correct as of the date hereof.
(a) SEC
Reports; Financial Statements.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a), 13(c) or 15(d) thereof (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
the date of filing, in the case of SEC Reports filed pursuant to the Exchange
Act (and to the extent such SEC Report was amended, then as of the date of
filing of such amendment), and as of the date of effectiveness in the case
of
SEC Reports filed pursuant to the Securities Act (and to the extent such SEC
Report was amended, then as of the date of effectiveness of such amendment),
the
SEC Reports complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act and the rules and regulations of
the
Commission promulgated thereunder, as applicable, and none of the SEC Reports,
as of the date of filing, in the case of SEC Reports filed pursuant to the
Exchange Act (and to the extent such SEC Report was amended, then as to the
date
of filing of such amendment), and as of the date of effectiveness in the case
of
SEC Reports filed pursuant to the Securities Act (and to the extent such SEC
Report was amended, then as of the date of effectiveness of such amendment),
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except as disclosed in Schedule
3.1(a)
of the
Disclosure Schedule, the financial statements of the Company included in the
SEC
Reports have been prepared in accordance with the applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been
prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements, the notes thereto or in Schedule
3.1(a)
of the
Disclosure Schedule, and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject,
in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
(b) Ownership
of Shares of Subsidiaries; Affiliates.
Except
as set forth in Schedule
3.1(b),
the Company has no direct or indirect Subsidiaries other than as specified
in
the SEC Reports. Except as disclosed in the SEC Reports or in Schedule
3.1 (b),
the Company owns,
directly or indirectly, all
of the capital
stock
of each Subsidiary free and clear of any and all Liens, and all the issued
and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar
rights.
(c) Organization.
Each of
the Group Companies (i) has been duly organized, is validly existing and is
in
good standing under the laws of its jurisdiction of organization, (ii) has
all
requisite power and authority to carry on its business and to own, lease and
operate its properties and assets, and (iii) is duly qualified or licensed
to do
business and is in good standing as a foreign corporation or limited liability
company, as the case may be, authorized to do business in each jurisdiction
in
which the nature of such business or the ownership or leasing of such properties
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a material adverse effect on (A)
the
properties, business, prospects, operations, earnings, assets, liabilities
or
condition (financial or otherwise) of the Group Companies, taken as a whole,
(B)
the ability of the Group Companies to perform their respective obligations
under
any Transaction Document or (C) the validity of any of the Transaction Documents
or the consummation of any of the transactions contemplated therein (each,
a
“Material
Adverse Effect”).
(d) Capitalization
and Voting Rights.
(i) Capital
Stock.
The
authorized capital of the Company consists, immediately prior to the Closing,
of
(i) One Hundred Million (100,000,000) shares of Common Stock, of which
22,382,225
shares
are issued and outstanding immediately prior to the Closing, and (ii) Five
Million (5,000,000) shares of preferred stock with no shares of preferred stock
outstanding.
(ii) Issued
Shares.
As at
the date hereof and immediately prior to the Closing, the aggregate number
of
shares of Common Stock issued and which are issuable pursuant to any exercise,
conversion, exchange, subscription or otherwise in connection with any warrants,
options (including pursuant to the Company’s stock option plan), convertible
securities or any agreement to sell or issue Common Stock or securities which
may be exercised, converted or exchanged for Common Stock (collectively,
“Fully-Diluted”)
is set
forth on Schedule
3.1(d)(ii).
All of
the issued and outstanding shares of each of the Group Company’s shares as of
the Closing are duly authorized, validly issued, fully paid and non-assessable,
were issued in accordance with the registration or qualification provisions
of
the Securities Act and any relevant blue sky laws of the United States of
America or pursuant to valid exemptions therefrom and were issued in compliance
with other applicable laws (including, without limitation, applicable PRC laws,
rules and regulations) and are not subject to any rescission right or put right
on the part of the holder thereof nor does any holder thereof have the right
to
require the Company to repurchase such share capital.
(iii) Voting
and other Agreements.
Except
as set forth in the SEC Reports or on Schedule
3.1(d)(iii)
of the
Disclosure Schedule, there are no outstanding (A) options, warrants or other
rights to purchase from any Group Company, (B) agreements, contracts,
arrangements or other obligations of any Group Company to issue, or (C) other
rights to convert any obligation into or exchange any securities for, in the
case of each of clauses (A) through (C), shares of capital stock of, or other
ownership or equity interests in, any Group Company. The Company is not a party
or subject to any agreement or understanding, and, to the Company’s knowledge
after due inquiry, there is no agreement or understanding with any Person that
affects or relates to (i) the voting or giving of written consents with respect
to any security of the Company (including, without limitation, any voting
agreements, voting trust agreements, shareholder agreements or similar
agreements) or the voting by a director of the Company or (ii) the sale,
transfer or other disposition with respect to any security of the
Company.
(iv) The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has
not,
in the 12 months preceding the date hereof, received notice from the Trading
Market to the effect that the Company is not in compliance with the requirements
of the Trading Market. The Company is, and expects to be, in compliance with
all
of the listing requirements of the Trading Market in the foreseeable
future.
(e) No
Registration Rights.
Except
as set forth on Schedule
3.1(e),
no
holder of securities of any of the Group Companies is or will be entitled to
have any registration rights with respect to such securities.
(f) Authorization.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, its Board or Directors or its stockholders
in
connection therewith. Each Transaction Document has been (or upon delivery
will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except
as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
(g) Valid
Issuance of Shares.
The
Shares have been duly and validly authorized for issuance by the Company, and
when issued pursuant to the terms of this Agreement, will be validly issued,
fully paid and non-assessable, not subject to any preemptive or similar rights,
free from all taxes, Liens, charges and security interests with respect to
the
issuance thereof and free of restrictions on transfer other than as expressly
contemplated by the Transaction Documents. The Company’s stockholders have no
preemptive rights with respect to the Shares and except as set forth on
Schedule
3.1(g)
the
issuance of the Shares is not subject to any rights of first refusal.
(h) Compliance
with Instruments.
None of
the Group Companies is in violation of its respective certificate of
incorporation, by-laws or other organizational documents (the “Charter
Documents”).
None
of the Group Companies is, nor does any condition exist (with the passage of
time or otherwise) that could reasonably be expected to cause any of the Group
Companies to be, (i) in violation of any statute, rule, regulation, law or
ordinance, or any judgment, decree or order applicable to any of the Group
Companies or any of their properties (collectively, “Applicable
Law”)
of any
United States federal, state, PRC national, provincial, local or other
governmental authority, governmental or regulatory agency or body, court,
arbitrator or self-regulatory organization of applicable jurisdictions, domestic
or foreign (each, a “Governmental
Authority”),
or
(ii) in breach of or in default under any bond, debenture, note or other
evidence of indebtedness, indenture, mortgage, deed of trust, lease or any
other
agreement or instrument to which any of them is a party or by which any of
them
or their respective property is bound (collectively, “Applicable
Agreements”),
other
than in each of clause (i) and (ii) such violations, breaches or defaults that
(a) are disclosed in the SEC Reports or in Schedule
3.1(h)
of the
Disclosure Schedule or (b) could not, individually or in the aggregate, result
in a Material Adverse Effect.
(i) No
Conflicts.
Neither
the execution, delivery or performance of any of the Transaction Documents
nor
the consummation of any of the transactions contemplated therein will conflict
with, violate, constitute a breach of or a default (with the passage of time
or
otherwise) under, require the consent of any person or a Governmental Authority
(other than consents already obtained) or result in the imposition of a Lien
(other than a Lien arising under the transactions contemplated by this
Agreement) on any assets of any of the Group Companies under or pursuant to
(i)
the Charter Documents, (ii) any Applicable Agreement, or (iii) any Applicable
Law, other than in each of clause (ii) and (iii) such violations, breaches
or
defaults that would not, individually or in aggregate, have a Material Adverse
Effect.
(j) Governmental
Consents.
No
filing with, consent, approval, authorization or order of, any Governmental
Authority is required for the consummation of the transactions contemplated
by
the Transaction Documents, except (i) as have been obtained or will have been
obtained on or before the Closing Date and (ii) as may be required under the
Securities Act or state securities laws or “Blue Sky” laws.
(k) Proceedings.
Except
as set forth in Schedule
3.1(k),
there
is no Proceeding or other action, investigation or inquiry, whether formal
or
informal by or before any regulatory or self-regulatory authority pending or,
to
the knowledge of the Company, threatened, that seeks to restrain, enjoin,
prevent the consummation of, or otherwise challenges any of the Transaction
Documents or could result in a Material Adverse Effect. Except as disclosed
in
the SEC Reports, none of the Group Companies is subject to any judgment, order
or decree of which the Company has knowledge and which could, individually
or in
the aggregate, result in a Material Adverse Effect. There has not been, and
to
the knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving any of the Group Companies.
(l) Permits.
Each of
the Group Companies possesses all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made all declarations
and filings with, all Governmental Authorities, presently required or necessary
to own or lease, as the case may be, and to operate their respective properties
and to carry on their respective businesses as now conducted (“Permits”),
except where the failure to possess such Permits could not, individually or
in
the aggregate, have or reasonably be expected to result in, a Material Adverse
Effect. Each of the Group Companies has fulfilled and performed all of its
respective obligations with respect to such Permits and no event has occurred
which allows, or after notice or lapse of time could allow, revocation or
termination thereof or result in any other material impairment of the rights
of
the holder of any such Permit. None of the Group Companies has received actual
notice of any Proceeding relating to revocation or modification of any such
Permit.
(m) Title
to Property.
Each of
the Group Companies has good and marketable title to all real property and
personal property owned by it, in each case free and clear of any Liens as
of
the Closing Date, except as disclosed in the SEC Reports or in Schedule
3.1(m),
or
except for such Liens as do not materially interfere with the use made and
proposed to be made of such property. For the real property not owned by any
of
the Group Companies and currently used or planned to be used for the business
operations of the Group Companies, each of such Group Companies has good and
marketable title to all leasehold estates in real and personal property being
leased by it and, in each case free and clear of all Liens as of the Closing
Date except as disclosed in the SEC Reports or in Schedule
3.1(m),
or
except for such Liens as do not materially interfere with the use made and
proposed to be made of such property.
9
(n) Insurance.
Except
as disclosed in Schedule
3.1(n),
each of
the Group Companies maintains reasonable adequate insurance covering its
material properties, operations, personnel and business, and is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
it
is engaged. All policies of insurance insuring the Group Companies and their
respective businesses, assets, employees, officers and directors are in full
force and effect. Each of the Group Companies is in compliance with the terms
of
such policies and instruments in all material respects, and there are no claims
by any of the Group Companies under any such policy or instrument as to which
any insurance company is denying liability or defending under a reservation
of
rights clause. None of the Group Companies has been refused any insurance
coverage sought or applied for, and none of the Group Companies has any reason
to believe that it will not be able to renew its existing insurance coverage
as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that could
not,
individually or in the aggregate, have a Material Adverse Effect.
(o) Taxes.
All Tax
returns required to be filed by each of the Group Companies have been filed,
and
all such returns are true, complete and correct in all material respects. All
material Taxes that are due from each of the Group Companies have been paid
other than those (i) currently payable without penalty or interest or (ii)
being
diligently contested in good faith and by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP. To the
knowledge of the Company after due inquiry, there are no proposed Tax
assessments against any of the Group Companies. The accruals and reserves on
the
books and records of each of the Group Companies in respect of any Tax liability
for any Taxable period not finally determined are adequate to meet any
assessments of Tax for any such period. For purposes of this Agreement, the
term
“Tax”
and
“Taxes”
shall
mean all Federal, state, PRC national, provincial, local and foreign taxes,
and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
(p) Intellectual
Property.
(i)
The
Company or its Subsidiaries own or have valid rights to use all patent,
copyright, trade secret, trademark or other proprietary rights that are used
in
the business of the Company and are material to the Company and its Subsidiaries
taken as a whole (collectively, “Intellectual
Property”).
Schedule
3.1 (p)
sets
forth a list of all of the Intellectual Property used by the Company and its
Subsidiaries.
(ii)
All
material licenses or other material agreements under which (i) the Company
or any Subsidiary is granted rights in Intellectual Property and (ii) the
Company or any Subsidiary has granted rights to others in Intellectual Property
owned or licensed by the Company or any Subsidiary, are in full force and effect
and there is no material default by the Company or any Subsidiary
thereto.
(iii)
No
proceedings have been instituted or are pending which challenge in a material
manner the rights of the Company or any Subsidiary in respect to the Company
or
any Subsidiary’s right to the use of the Intellectual Property. The Company and
each Subsidiary has the right to use, free and clear of material claims or
rights of other persons, all of its customer lists, designs, computer software,
systems, data compilations, and other information that are required for its
products or its business as presently conducted.
(iv)
The
Company believes it and each Subsidiary has taken such reasonable steps as
are
required in accordance with sound business practice and business judgment to
establish and preserve its ownership of all material copyright, trade secret
and
other proprietary rights with respect to its products and
technology.
(v)
To
the knowledge of the Company, the present business, activities and products
of
the Company and each Subsidiary do not infringe any intellectual property of
any
other person, except where such infringement would not have a Material Adverse
Effect. No material proceeding charging the Company or any Subsidiary with
infringement of any adversely held Intellectual Property has been filed. The
Company has not received notice of or is not otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interests of the Company or any
Subsidiary, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or
in the aggregate, would result in a Material Adverse Effect. To the Company’s
knowledge, there exists no third party unexpired patent or patent application
which includes claims that would be infringed by, or otherwise have a Material
Adverse Effect on the Company. To the knowledge of the Company, the Company
is
not making unauthorized use of any material confidential information or trade
secrets of any third party. To the Company’s knowledge, the activities of the
Company or any Subsidiary or any employee on behalf of the Company or any
Subsidiary do not violate any material agreements or arrangements known to
the
Company which any such employees have with other persons, if any.
(q) Internal
Controls.
Except
as set forth on Schedule
3.1(q)
each of
the Group Companies maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any material differences. Each of the Group Companies
is in material compliance with the provisions of the Xxxxxxxx-Xxxxx Act of
2002
which are applicable to it. During the past 12 months prior to the date hereof
none of the Group Companies has received any notice of correspondence from
any
accountant relating to any potential material weakness in any part of the system
of internal accounting controls of any Group Company.
11
(r) Financial
Statements.
(i) The
Company maintains disclosure controls and procedures (as such term is defined
in
Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it
files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the
Commission, including, without limitation, controls and procedures designed
in
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required disclosure. Except
as
disclosed in Schedule
3.1(r)(i)
of the
Disclosure Schedule, the audited consolidated financial statements and related
notes of the Company contained in the Form 10-KSB for the three years ended
December 31, 2006 and the unaudited consolidated financial statements and
related notes in the Form 10-QSB for the six months ended June 30, 2007
(collectively, the “Financial
Statements”)
present fairly in all material respects the financial position, results of
operations and cash flows of the Company and its consolidated Subsidiaries,
as
of the respective dates and for the respective periods to which they apply
and
have been prepared in accordance with GAAP and comply as to form with the
applicable requirements of Regulation S-X of the Securities Act. All other
financial, statistical, and market and industry-related data included in the
SEC
Reports are based on or derived from sources that the Company reasonably
believes to be reliable and accurate.
(ii)
Subsequent to the date of the Company’s audited financial statements filed for
the year ended December 31, 2006, except as disclosed therein or in any
subsequent SEC Report, (i) there has not been any material decrease in the
capital stock or any material increase in long-term indebtedness or any material
increase in short-term indebtedness of the Group Companies, or any payment
of or
declaration to pay any dividends or any other distribution with respect to
the
Group Companies, and (ii) there has not been any material adverse change in
the
properties, business, prospects, operations, earnings, assets, liabilities
or
condition (financial or otherwise) of the Group Companies taken as a whole;
excluding any changes caused by (x) the condition of the industry of the Company
that do not disproportionately affect the Company, (y) the failure of the
Company to meet its financial projections or (z) the execution and delivery
of
this Agreement and consummation of the transactions contemplated hereby (each
of
clauses (i), (ii) and (iii), a “Material
Adverse Change”).
To
the knowledge of the Company, there is no event that is reasonably likely to
occur in the foreseeable future, which if it were to occur, could, individually
or in the aggregate, have a Material Adverse Change. Since the date of the
latest audited financial statements included within the SEC Reports, except
as
specifically disclosed in a subsequent SEC Report, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected
by
the Company to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent
with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv)
the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock and (v) the Company has
not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.
12
(s) Solvency.
Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all
of its assets, after taking into account all anticipated uses of the cash,
would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond
its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(t) No
Stabilization.
None of
the Group Companies has and, to each of its knowledge after due inquiry, no
one
acting on their behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the
price of any security of any of the Group Companies to facilitate the sale
or
resale of any of the Shares, (ii) sold, bid for, purchased, or paid anyone
any
compensation for soliciting purchases of, the Shares, or (iii) paid or agreed
to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company or its Subsidiaries.
(u) No
Registration.
Assuming the accuracy of the Investors’ representations and warranties set forth
in Section 3.2, no registration under the Securities Act of the Shares is
required for the offer, sale and delivery of the Shares in the manner
contemplated herein.
(v) Labor
Matters.
None of
the Group Companies is bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union
has
requested or, to the knowledge of the Company, has sought to represent any
of
the employees, representatives or agents of the Group Companies. There is no
strike or other labor dispute involving any of the Group Companies pending
or
threatened, which could have a Material Adverse Effect. There is no employment
related charge, complaint, grievance, investigation, unfair labor practice
claim
or inquiry of any kind, pending against any of the Group Companies that could,
individually or in the aggregate, have a Material Adverse Effect.
(w) Brokers
and Finders.
The
Company has not engaged any broker, finder, commission agent or other similar
person (other than Xxxx Capital Partners, LLC) in connection with the
transactions contemplated under the Transaction Documents, and the Company
is
not under any obligation to pay any broker’s fee or commission in connection
with such transactions (other than commissions or fees to Xxxx Capital Partners,
LLC). No Holder shall have any obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions
contemplated by this Agreement or any agreement relating thereto as a result
of
any action taken by any Group Company.
(x) Environmental
Matters.
Each of
the Group Companies (i) is in compliance with any and all applicable foreign,
federal, state, PRC national, provincial, and local laws and regulations
relating to the protection of the environment or hazardous or toxic substances
or wastes, pollutants or contaminants (“Environmental
Laws”),
(ii)
has received and is in compliance with all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its business,
(iii) has not received actual notice of any actual or potential liability for
the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, (iv) has no knowledge
of
any facts which would give rise to any claim, public or private, of violation
of
Environmental Laws emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to other
assets or their use, except, in each case, such as would not reasonably be
expected to result in a Material Adverse Effect; and (v) has stored no hazardous
materials on real properties now or formerly owned, leased or operated by any
of
them and has not disposed of any hazardous materials in a manner contrary to
any
Environmental Laws; except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or liability
would not, individually or in the aggregate, have a Material Adverse Effect.
(y) Certificate.
Each
certificate signed by any officer of any of the Group Companies and delivered
to
the Investors shall be deemed a representation and warranty by such company
(and
not individually by such officer) to the Investors with respect to the matters
covered thereby.
(z) Foreign
Corrupt Practices Act.
None of
the Group Companies, nor to the knowledge of the Company, any person authorized
to act on behalf of any of the Group Companies, directly or indirectly, (i)
has
used any funds or will use such funds or any proceeds from the sale of the
Shares for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or
to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Group Companies
(or
made by any person acting on its behalf of which the Company is aware) which
is
in violation of law, or (iv) violated in any material respect any provision
of
the Foreign Corrupt Practices Act of 1977, as amended and the rules and
regulations thereunder (the “FCPA”).
(aa) Related
Party Transactions.
Except
as set forth in the SEC Reports or otherwise disclosed in Schedule
3.1(aa)
of the
Disclosure Schedule, no material relationship, direct or indirect, exists
between or among any of the Group Company or its Subsidiaries or any Affiliate
of the Group Companies or its subsidiaries, on the one hand, and any former
or
current director, officer, stockholder, customer or supplier of any of them
(including his or her spouse, child, sibling, any company or undertaking in
which he or she holds any equity interest, or any person related by marriage
or
consanguinity), on the other hand.
(bb) Investment
Company.
None of
the Group Companies is, and as a result of the offer and sale of the Shares
contemplated herein will not be, required to register as an “investment company”
under, and as such term is defined in, the U.S. Investment Company Act of 1940,
as amended, in connection with or as a result of the offer and sale of the
Shares.
(cc) PFIC.
None of
the Group Companies is or intends to become a “passive foreign investment
company” (a “PFIC”)
within
the meaning of Section 1297 of the U.S. Internal Revenue Code.
(dd) OFAC.
None of
the Group Companies, to the knowledge of the Company, any director, officer,
agent, employee, Affiliate or Person acting on behalf of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”);
and
the Company will not directly or indirectly use the proceeds of the offering,
or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(ee) Money
Laundering Laws.
The
operations of each of the Group Companies are and have been conducted at all
times in compliance with the money laundering statutes of applicable
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
applicable governmental agency (collectively, the “Money
Laundering Laws”)
and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving any of the Group Companies with
respect to the Money Laundering Laws is pending or, to the best knowledge of
the
Company, threatened.
(ff) No
Integrated Offering.
Assuming
the accuracy of the Investors' representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers
or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Shares to be integrated
with
prior offerings by the Company for purposes of the Securities Act or any
applicable shareholder approval provisions of any Trading Market on which any
of
the securities of the Company are listed or designated.
(gg)
No
General Solicitation.
Neither
the Company nor any person acting on behalf of the Company has offered or sold
any of the Shares by any form of general solicitation or general advertising.
The Company has offered the Shares for sale only to the Investors and certain
other "accredited investors" within the meaning of Rule 501 under the Securities
Act.
(hh) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed
or
that otherwise would be reasonably likely to have a Material Adverse
Effect.
(ii) No
Undisclosed Events, Liabilities, Developments or Circumstances.
Except
for the transactions contemplated by this Agreement and the pending acquisition,
no event, liability, development or circumstance has occurred or exists with
respect to the Company or its business, properties, prospects, operations or
financial condition, that is required to be, and has not been, disclosed, by
the
Company under applicable securities laws on a Current Report on Form 8-K filed
with the Commission.
(jj) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has taken,
directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Shares.
(kk) Material,
Non-Public Information.
The
Company confirms that neither it nor, to its knowledge, any of its officers
or
directors nor any other Person acting on its or their behalf has provided,
and
it has not authorized any placement agent to provide, any Investor or its
respective agents or counsel with any information that it believes constitutes
or could reasonably be expected to constitute material, non-public information
except insofar as the existence, provisions and terms of the Transaction
Documents and the proposed transactions hereunder may constitute such
information, all of which will be disclosed by the Company in the press release
and Current Report on Form 8-K as contemplated by Section 4.4 hereof. The
Company understands and confirms that the Investors will rely on the foregoing
representations in effecting transactions in securities of the Company. 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, 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 (assuming for this purpose that the Company’s
reports filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act), except
for the announcement of this Agreement and related transactions.
(ll) Acknowledgment
Regarding Investors’ Purchase of Securities.
The
Company acknowledges and agrees that each of the Investors is acting solely
in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that no Investor is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by any Investor or any of their respective representatives or agents
in
connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Investors’ purchase of the
Shares.
(mm) Other
Representations and Warranties Relating to Dalian Fushi and the
WFOE.
(i) The
constitutional documents and certificates and related material contracts of
each
of Dalian Fushi and the WFOE are valid and have been duly approved or registered
(as applicable) by competent PRC Governmental Authorities.
(ii) All
material consents, approvals, authorizations or licenses requisite under PRC
law
for the due and proper establishment and operation of each of Dalian Fushi
and
the WFOE have been duly obtained from the relevant PRC Governmental Authorities
and are in full force and effect.
(iii) All
filings and registrations with the PRC Governmental Authorities required in
respect of each of Dalian Fushi and the WFOE and its operations including,
without limitation, the registrations with the Ministry of Commerce, the State
Administration of Industry and Commerce, the State Administration for Foreign
Exchange, tax bureau and customs authorities have been duly completed in
accordance with the relevant PRC rules and regulations, except
where the failure to complete such filings and registrations does not, and
could
not, individually or in the aggregate, have or result in a Material Adverse
Effect.
(iv)
Each of
Dalian Fushi and the WFOE has complied with all relevant PRC laws and
regulations regarding the contribution and payment of its registered share
capital, the payment schedule of which has been approved by the relevant PRC
Government Authorities. There are no outstanding rights of, or commitments
made
by the Company or any Subsidiary to sell any equity interest in the WFOE, or
by
Dalian Fushi’s shareholders to sell any equity interest in Dalian Fushi.
(v)
Neither
Dalian Fushi nor the WFOE is in receipt of any letter or notice from any
relevant PRC Governmental Authority notifying it of revocation of any licenses
or qualifications issued to it or any subsidy granted to it by any PRC
Governmental Authority for non-compliance with the terms thereof or with
applicable PRC laws, or the need for compliance or remedial actions in respect
of the activities carried out by Dalian Fushi or the WFOE, except such
revocation as does not, and could
not, individually or in the aggregate, have or result in a Material Adverse
Effect.
(vi)
Each of
Dalian Fushi and the WFOE has conducted its business activities within the
permitted scope of business or has otherwise operated its business in compliance
with all relevant legal requirements and with all requisite licenses and
approvals granted by competent PRC Governmental Authorities.
(vii)
As to
licenses, approvals and government grants and concessions requisite or useful
for the conduct of any part of either Dalian Fushi’s or the WFOE’s business
which are subject to periodic renewal, the Company has no knowledge of any
grounds on which such requisite renewals will not be granted by the relevant
PRC
Governmental Authorities.
(viii)
With
regard to employment and staff or labor, each of Dalian Fushi or the WFOE has
complied with all applicable PRC laws and regulations in all material respects,
including without limitation, laws and regulations pertaining to welfare funds,
social benefits, medical benefits, insurance, retirement benefits, pensions
or
the like.
(nn) Full
Disclosure.
All
disclosure furnished by or on behalf of the Company to the Investors regarding
any of the Group Companies, their respective businesses and the transactions
contemplated under the Transaction Documents, including the Disclosure Schedules
to this Agreement, with respect to the representations and warranties made
herein are true and correct with respect to such representations and warranties
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. The Company
acknowledges and agrees that the Investors do not make any representations
or
warranties with respect to the transactions contemplated hereby other than
those
specifically set forth in Section 3.2 hereof.
3.2. Representations
and Warranties of the Investors.
Each
Investor hereby, for itself and for no other Investor, represents and warrants
to the Company as follows:
(a) Organization;
Authority.
Such
Investor is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate, partnership, or other power and authority to enter into and to
consummate the transactions contemplated by the applicable Transaction Documents
and otherwise to carry out its obligations thereunder. The execution, delivery
and performance by such Investor of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate or, if such
Investor is not a corporation, such partnership, limited liability company
or
other applicable like action, on the part of such Investor. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Investor, and when delivered by such Investor in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Investor, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
(b) Investment
Intent.
Such
Investor is acquiring the Shares as principal for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Shares or any part thereof, without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Shares
in
compliance with applicable federal and state securities laws. Subject to the
immediately preceding sentence, nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares for any period
of
time. Such Investor is acquiring the Shares hereunder in the ordinary course
of
its business. Such Investor does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Shares.
(c) Investor
Status.
At the
time such Investor was offered the Shares, it was, and as of the date hereof
it
is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.
Such Investor also has such sophistication, knowledge and skill as to be able
to
fully evaluate the risks of investing in the Company.
(d) General
Solicitation.
Such
Investor is not purchasing the Shares as a result of any advertisement, article,
notice or other communication regarding the Shares published in any newspaper,
magazine or similar media or broadcast over television or radio or presented
at
any seminar or any other general solicitation or general
advertisement.
(e) Access
to Information.
Such
Investor acknowledges that it has reviewed the Disclosure Materials and has
been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning
the
terms and conditions of the offering of the Shares and the merits and risks
of
investing in the Shares; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with
respect to the investment. Neither such inquiries nor any other investigation
conducted by or on behalf of such Investor or its representatives or counsel
shall modify, amend or affect such Investor’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction
Documents.
(f) Certain
Trading Activities.
Such
Investor has not directly or indirectly, nor has any Person acting on behalf
of
or pursuant to any understanding with such Investor, engaged in any transactions
in the securities of the Company (including, without limitations, any Short
Sales involving the Company’s securities) since the time that such Investor was
first contacted by the Company or Xxxx Capital Partners, LLC regarding the
investment in the Company contemplated by this Agreement. Such Investor
covenants that neither it nor any Person acting on its behalf or pursuant to
any
understanding with it will engage in any transactions in the securities of
the
Company (including Short Sales) prior to the time that the transactions
contemplated by this Agreement are publicly disclosed. Notwithstanding the
foregoing, in the case of Xxxxxx Xxxxxxx & Co. Incorporated, this section
3.2(f) shall apply only with respect to activity by the Principal Strategies
Group that made the investment decision to purchase the Shares. Employees of
Xxxxxx Xxxxxxx & Co. Incorporated who manage other activities will have no
direct knowledge of the investment decision by the Principal Strategies Group
to
purchase the Shares and may continue ordinary trading activities in the ordinary
course of business.
(g) Limited
Ownership.
The
purchase by such Investor of the Shares issuable to it at the Closing will
not
result in such Investor (individually or together with other Person with whom
such Investor has identified, or will have identified, itself as part of a
“group” in a public filing made with the Commission involving the Company’s
securities) acquiring, or obtaining the right to acquire, in excess of 19.999%
of the outstanding shares of Common Stock or the voting power of the Company
on
a post transaction basis that assumes that the Closing shall have occurred.
Such
Investor does not presently intend to, alone or together with others, make
a
public filing with the Commission to disclose that it has (or that it together
with such other Persons have) acquired, or obtained the right to acquire, as
a
result of the Closing (when added to any other securities of the Company that
it
or they then own or have the right to acquire), in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a
post
transaction basis that assumes that the Closing shall have
occurred.
(h) Independent
Investment Decision.
Such
Investor has independently evaluated the merits of its decision to purchase
Shares pursuant to the Transaction Documents, and such Investor confirms that
it
has not relied on the advice of any other Investor’s business and/or legal
counsel in making such decision. Such Investor has not relied on the business
or
legal advice of Xxxx Capital Partners, LLC or any of its agents, counsel or
Affiliates in making its investment decision hereunder, and confirms that none
of such Persons has made any representations or warranties to such Investor
in
connection with the transactions contemplated by the Transaction
Documents.
The
Company acknowledges and agrees that no Investor has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE
4.
OTHER
AGREEMENTS OF THE PARTIES
4.1.
(a) Shares
may only be disposed of by the Investors in compliance with state and federal
securities laws. In connection with any transfer of the Shares other than
pursuant to an effective registration statement, to the Company, to an Affiliate
of an Investor or in connection with a pledge as contemplated in Section 4.1(b),
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that
such
transfer does not require registration of such transferred Shares under the
Securities Act.
(b) Certificates
evidencing the Shares will contain the following legend, until such time as
they
are not required under Section 4.1(c):
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that an Investor may from time to time pledge,
and/or grant a security interest in some or all of the Shares pursuant to a
bona
fide margin agreement in connection with a bona fide margin account and, if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Shares to the pledgees or secured parties. Such
a
pledge or transfer would not be subject to approval or consent of the Company
and no legal opinion of legal counsel to the pledgee, secured party or pledgor
shall be required in connection with the pledge, but such legal opinion may
be
required in connection with a subsequent transfer following default by the
Investor transferee of the pledge. No notice shall be required of such pledge.
At the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Except
as otherwise provided in Section 4.1(c), any Shares subject to a pledge or
security interest as contemplated by this Section 4.1(b) shall continue to
bear
the legend set forth in this Section 4.1(b) and be subject to the restrictions
on transfer set forth in Section 4.1(a).
(c) Certificates
evidencing Shares shall not contain any legend (including the legend set forth
in Section 4.1(b)): (i) following a sale or transfer of such Shares pursuant
to
an effective registration statement (including a Registration Statement), or
(ii) following a sale or transfer of such Shares pursuant to Rule 144 (assuming
the transferee is not an Affiliate of the Company), or (iii) while such Shares
are eligible for sale under Rule 144(k). If an Investor shall make a sale or
transfer of Shares either (x) pursuant to Rule 144 or (y) pursuant to a
registration statement and in each case shall have delivered to the Company
or
the Company’s transfer agent the certificate representing Shares containing a
restrictive legend which are the subject of such sale or transfer
and a representation letter in customary form (the
date of such sale or transfer and Share delivery being the “Share
Delivery Date”)
and (1) the Company shall fail to deliver or cause to be delivered to such
Investor a certificate representing such Shares that is free from all
restrictive or other legends by the third Trading Day following the Share
Delivery Date and (2) following such third Trading Day after the Share Delivery
Date and prior to the time such Shares are received free from restrictive
legends, the Investor, or any third party on behalf of such Investor, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Investor of such Shares (a "Buy-In"),
then the Company shall pay in cash to the Investor (for costs incurred either
directly by such Investor or on behalf of a third party) the amount by which
the
total purchase price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceed the proceeds received by such Investor
as
a result of the sale to which such Buy-In relates. The Investor shall provide
the Company written notice indicating the amounts payable to the Investor in
respect of the Buy-In.
(d) Notwithstanding
the foregoing, while a registration statement (including a Registration
Statement) covering such Shares is then effective, an Investor who holds any
such Shares may request the removal of the legend set forth in Section 4.1(b)
from the stock certificate representing such Shares by delivering to the Company
a written request for the removal of such legend, together with (i) a
certification to the Company that such Investor will only sell or otherwise
dispose of such Shares pursuant to a Registration Statement or Rule 144 in
accordance with applicable law and (ii) an agreement of such Investor, in a
form
reasonably satisfactory to the Company, to indemnify the Company for any losses
or expenses the Company may reasonably incur as a result of any breach by such
Investor of the certification referred to in this Section 4.1(d)(i). Upon
receipt of any such written request from an Investor, the Company shall promptly
authorize and direct the transfer agent of the Company to promptly reissue
to
such Investor upon receipt from such Investor of a certificate or certificates
representing such Shares containing a restrictive legend which are the subject
of such written request, a new stock certificate for the same number of such
Shares which does not contain any restrictive legend.
4.2. Furnishing
of Information.
As long
as any Investor owns the Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by the Company after the date hereof pursuant
to
the Exchange Act. As long as any Investor owns Shares, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish
to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule
144.
The Company further covenants that it will take such further action as any
holder of Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule
144.
4.3. Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the sale of
the
Shares to the Investors, or that would be integrated with the offer or sale
of
the Shares for purposes of the rules and regulations of any Trading Market
in a
manner that would require stockholder approval of the sale of the securities
to
the Investors.
4.4. Subsequent
Registrations. Other than pursuant to Schedule 4.4, the Company may
not file any registration statement (other than on Form S-8) with the Commission
with respect to any securities of the Company prior to the time that all Shares
are registered pursuant to one or more effective Registration Statement(s),
and
the prospectuses forming a portion of such Registration Statement(s) is
available for the resale of all Shares.
4.5. Securities
Laws Disclosure; Publicity.
By 9:00
a.m. (New York time) on the Trading Day following the execution of this
Agreement, and by 9:00 a.m. (New York time) on the Trading Day following the
Closing Date, the Company shall issue press releases disclosing the transactions
contemplated hereby and the Closing. On the Trading Day following the execution
of this Agreement the Company will file a Current Report on Form 8-K disclosing
the material terms of the Transaction Documents (and attach as exhibits thereto
the Transaction Documents or the agreed forms thereof if such Transaction
Document is an exhibit to this Agreement), and on the Trading Day following
the
Closing Date the Company will file an additional Current Report on Form 8-K
to
disclose the Closing. In addition, the Company will make such other filings
and
notices in the manner and time required by the Commission and the Trading Market
on which the Common Stock is listed. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Investor, or include the name of
any
Investor in any filing with the Commission (other than the Registration
Statement and any exhibits to filings made in respect of this transaction in
accordance with periodic filing requirements under the Exchange Act) or any
regulatory agency or Trading Market, without the prior written consent of such
Investor, except to the extent such disclosure is required by law or Trading
Market regulations.
4.6. Limitation
on Issuance of Future Priced Securities.
During
the six months following the Closing Date, the Company shall not issue any
“Future Priced Securities” as such term is described by NASD
IM-4350-1.
4.7. Indemnification
of Investors.
In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investors and their directors, officers,
shareholders, partners, employees and agents (each, an “Investor
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”)
that
any such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. Except as otherwise
set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 4.7 shall be the same as those set forth in
Section 5 of the Registration Rights Agreement.
4.8. Non-Public
Information.
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 representations
in
effecting transactions in securities of the Company.
4.9. Listing
of Shares.
The
Company agrees, (i) to have the Shares listed on the current Trading Market
as
promptly as possible, (ii) if the Company applies to have the Common Stock
listed on another Trading Market, it will include in such application the
Shares, and will take such other action as is necessary or desirable to cause
the Shares to be listed on such other Trading Market as promptly as possible,
and (iii) it will take all action reasonably necessary to continue the listing
and trading of its Common Stock on a Trading Market and will comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.
4.10. Use
of
Proceeds.
The
Company will use the net proceeds from the sale of the Shares hereunder for
working capital purposes and not for the satisfaction of any portion of the
Company’s debt (other than payment of trade payables and accrued expenses in the
ordinary course of the Company’s business and consistent with prior practices),
or to redeem any Common Stock or Common Stock Equivalents.
ARTICLE
5.
CONDITIONS
PRECEDENT TO CLOSING
5.1. Conditions
Precedent to the Obligations of the Investors to Purchase Shares.
The
obligation of each Investor to acquire Shares at the Closing is subject to
the
satisfaction or waiver by such Investor, at or before the Closing, of each
of
the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects as of the date when made and as of the Closing
as though made on and as of such date;
(b) Performance.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to
the
Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably could have or result in a Material Adverse
Effect;
(e) No
Suspensions of Trading in Common Stock; Listing.
Trading
in the Common Stock shall not have been suspended by the Commission or any
Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding
the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for trading
on
a Trading Market;
(f) Nasdaq
Listing.
If
applicable, the
Nasdaq Stock Market shall have waived application of the 15 day prior notice
contained in NASD Marketplace Rule 4310(c)(17)(D) or such timeframe shall have
expired without objection;
(g) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with Section
2.2(a); and
(h) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5.
5.2. Conditions
Precedent to the Obligations of the Company to sell Shares.
The
obligation of the Company to sell Shares at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of
the
following conditions:
(a) Representations
and Warranties.
The
representations and warranties of each Investor contained herein shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made on and as of such date;
(b) Performance.
Each
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or
prior to the Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
24
(d) Nasdaq
Listing.
If
applicable, the
Nasdaq Stock Market shall have waived application of the 15 day prior notice
contained in NASD Marketplace Rule 4310(c)(17)(D) or such timeframe shall have
expired without objection;
(e) Investors
Deliverables.
Each
Investor shall have delivered its Investors Deliverables in accordance with
Section 2.2(b); and
(f) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5.
ARTICLE
6.
MISCELLANEOUS
6.1. Fees
and Expenses.
Each
party shall pay the fees and expenses of its advisers, counsel, accountants
and
other experts, if any, and all other expenses incurred by such party incident
to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Shares.
6.2. Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.
6.3. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:30 p.m. (New York City time)
on
any Trading Day, (c) the Trading Day following the date of mailing, if sent
by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If
to the Company:
|
Fushi
International, Inc.
|
|
1
Shuang Qiang Road
|
||
Jinzhou,
Dalian 116100
|
||
|
People's
Republic of China
|
|
Facsimile:
[ ]
|
||
Attention:
President
|
25
With
a copy to:
|
Weil,
Gotshal & Xxxxxx XXX
|
|
Xxxxx
00, Xxxxx 0, 00xx Xxxxx
|
||
1366
Xxxxxxx Xxxx Xxxx
|
||
Xxxxxxxx
000000
|
||
Xxxxxx'x
Xxxxxxxx of China
|
||
Facsimile:
x00 0000 0000
|
||
Attn.:
Xxxxx Xxxxxxxx, Esq.
|
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
6.4. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Investors holding a majority of the
Shares. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either
party
to exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any Investor to amend or
consent to a waiver or modification of any provision of any Transaction Document
unless the same consideration is also offered to all Investors who then hold
Shares.
6.5. Termination.
This
Agreement may be terminated prior to Closing:
(a) by
written agreement of the Investors and the Company; and
(b) by
the
Company or an Investor (as to itself but no other Investor) upon written notice
to the other, if the Closing shall not have taken place by 6:30 p.m. Eastern
time on the Outside Date; provided,
that
the right to terminate this Agreement under this Section 6.5(b) shall not
be available to any Person whose failure to comply with its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such time.
In
the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Investors. Upon a termination in accordance with
this
Section 6.5, the Company and the terminating Investor(s) shall not have any
further obligation or liability (including as arising from such termination)
to
the other and no Investor will have any liability to any other Investor under
the Transaction Documents as a result therefrom.
6.6. Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
6.7. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Investors. Any Investor may assign any or all of its rights
under
this Agreement to any Person to whom such Investor assigns or transfers any
Shares, provided such transferee agrees in writing to be bound, with respect
to
the transferred Shares, by the provisions hereof that apply to the
“Investors.”
6.8. No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Section 4.7 (as to each Investor Party).
6.9. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of
a Transaction Document, then the prevailing party in such Proceeding shall
be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.
6.10. Survival.
The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.
6.11. Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
6.12. 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
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.13. Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Investor
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Investor may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
6.14. Replacement
of Shares.
If any
certificate or instrument evidencing any Shares is mutilated, lost, stolen
or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares.
If a
replacement certificate or instrument evidencing any Shares is requested due
to
a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
6.15. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Investors 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 of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
6.16. Payment
Set Aside.
To the
extent that the Company makes a payment or payments to any Investor pursuant
to
any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation,
any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
28
6.17. Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under any Transaction Document 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 Shares pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. 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 Documents.
Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. 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. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.
6.18. Limitation
of Liability.
Notwithstanding anything herein to the contrary, the Company acknowledges and
agrees that the liability of an Investor arising directly or indirectly, under
any Transaction Document of any and every nature whatsoever shall be satisfied
solely out of the assets of such Investor, and that no trustee, officer, other
investment vehicle or any other Affiliate of such Investor or any investor,
shareholder or holder of shares of beneficial interest of such a Investor shall
be personally liable for any liabilities of such Investor.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
FUSHI INTERNATIONAL, INC. | ||
|
|
|
By: | /s/ Li Fu | |
Name: Li Fu |
||
Title: Chief Executive Officer |
FUSHI HOLDINGS, INC. | ||
|
|
|
By: | /s/ Li Fu | |
Name: Li Fu |
||
Title: Chief Executive Officer |
FUSHI INTERNATIONAL (DALIAN)
BIMETALLIC CABLE CO.,
LTD.
|
||
|
|
|
By: | /s/ Li Fu | |
Name: Li Fu |
||
Title: Chief Executive Officer |
DALIAN FUSHI BIMETALLIC
MANUFACTURING CO.,
LTD.
|
||
|
|
|
By: | /s/ Li Fu | |
Name: Li Fu |
||
Title: Chief Executive Officer |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOR INVESTORS FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
AMTRUST INTERNATIONAL
INSURANCE, LTD
By:
/s/ Xxx
Xxxx
Name: Xxx Xxxx
Name: Xxx Xxxx
Title:
Portfolio Manager
Investment
Amount:
$1,265,600
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
ARDSLEY
PARTNERS FUND, II, LP
By:
/s/ Xxxxxx
Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
CFO
Investment
Amount:
$865,200
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
ARDSLEY
OFFSHORE FUND, LTD
By:
/s/ Xxxxxx
X.
Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
CFO
Investment
Amount: $602,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
ARDSLEY
PARTNERS INSTITUTIONAL FUND L.P.
By:
/s/ Xxxxxx
X.
Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
CFO / Partner
Investment
Amount: $539,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
ANCORA
GREATER CHINA FUND, LP
By:
/s/ Xxxx
X.
Xxxxxxxxxx
Name:
Xxxx X. Xxxxxxxxxx
Title:
Sr. PM
Investment
Amount: $245,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
BLACK
RIVER COMMODITY SELECT FUND LTD
By:
/s/ G.
Schmidt_________________________
Name:
X.
Xxxxxxx
Title:
Principal
Investment
Amount: $2,555,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
ENABLE
GROWTH PARTNERS LP
By:
/s/ Brendan
O' Neil____________________
Name:
Xxxxxxx X' Xxxx
Title:
Principal Portfolio Manager
Investment
Amount: $1,130,500
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
ENABLE OPPORTUNITY
PARTNERS LP
By:
/s/ Brendan
O' Neil_____________________
Name:
Xxxxxxx X' Xxxx
Title:
Principal and Portfolio Manager
Investment
Amount: $133,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
XXXXXXX
SACHS CREDIT PARTNERS L.P.
By:
/s/ Xxxxxxx
X. Hickey_____________________
Name:
Xxxxxxx X. Xxxxxx
Title:
Authorized Signatory
Investment
Amount: $4,060,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
GUERRILLA
PARTNERS, LP
By:
/s/ Xxxxx
X. Curry_____________________
Name:
Xxxxx X. Xxxxx
Title:
MD
Investment
Amount: $1,050,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
HUA
- MEI
21 ST
CENTURY
PARTNERS, LP
By:
/s/ Xxxxx X. Curry_________________________
Name:
Xxxxx
Xxxxx
Title:
Investment
Amount: $700,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
JANUS
INVESTMENT FUNDS (ON BEHALF OF ITS SERIES JANUS VENTURE FUND)
By:
/s/ Xxxxxxx X.
Bales_________________________
Name:
Xxxxxxx
X. Xxxxx
Title:
Portfolio
Manager
Investment
Amount: $8,722,847
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
JANUS CAPITAL
FUNDS PLC (ON BEHALF OF ITS SERIES JANUS US VENTURE FUND)
By:
/s/ Xxxxxxx X.
Bales_________________________
Name:
Xxxxxxx X. Xxxxx
Title:
Portfolio Manager
Investment
Amount: $937,737
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXX XXXXXXX
TRUST EMERGING GROWTH TRUST
By:
/s/ Ismail
Gunes_________________________
Name:
Xxxxxx
Xxxxx
Title:
V.P
Investment
Amount: $112,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXX XXXXXXX FUNDS
II EMERGING GROWTH FUND
By:
/s/ Ismail Gunes_________________________
Name:
Xxxxxx
Xxxxx
Title:
V.P
Investment
Amount: $826,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
XXXX
XXXXXXX SMALLCAP EQUITY FUND
By:
/s/ Xxxxxx
Xxxxx
Name:
Xxxxxx
Xxxxx
Title: VP
Investment
Amount: $3,122,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
CAPITAL INVESTMENTS, LLC
By:
/s/ Xxxxxx
X.
Xxxxxx
Name:
Xxxxxx
X.
Xxxxxx
Title: CEO
Investment
Amount: $1,050,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
BAY OVERSEAS FUND LTD
By:
/s/
Xxxx
Xxxx
Name:
Xxxx Xxxx
Title: Principal
Investment
Amount: $319,200
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
48
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
BAY FUND LP
By:
/s/
Xxxx
Xxxx
Name:
Xxxx Xxxx
Title: Principal
and Portfolio Manager
Investment
Amount: $240,800
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
49
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
LEAP
TIDE
PARTNERS LP
By:
/s/ Xxx
Xxxx
Name:
Xxx
Xxxx
Title: MEMBER
OF G.P.
Investment
Amount: $343,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
50
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
LEAPTIDE
OFFSHORE, LTD
By:
/s/ Jan Loeb_____________________________
Name:
Xxx
Xxxx
Title:
Director
Investment
Amount: $141,400
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
XXXXXX
By:
/s/ Xxxxxx Napoli_________________________
Name:
Xxxxxx
Xxxxxx
Title:
CFO
/ Partner
Investment
Amount: $23,800
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
XXXXXXX & CO. INCORPORATION
By:
/s/ Xxxxxx X.
Fipa_________________________
Name:
Xxxxxx X.
Fipa
Title:
Manager
Director
Investment
Amount: $4,060,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
OUTPOINT
OFFSHORE FUND, LTD
By:
/s/ Xxxxxx Grayson________________________
Name:
Xxxxxx
Xxxxxxx
Title:
Director
Investment
Amount: $490,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
OHIO
NATIONAL FUND, INC. (ON BEHALF OF ITS SERIES OHIO NATIONAL SMALL CAP GROWTH
PORTFOLIO)
By:
/s/ Xxxxxxx Bales_________________________
Name:
Xxxxxxx
Xxxxx
Title:
Portfolio
Manager
Investment
Amount: $139,415
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
DIVERSIFIED STRATEGY MASTER FUND LLC
By:
/s/ Xxxxxxx
X'Xxxx
Name:
Xxxxxxx
X'Xxxx
Title: Principal &
Portfolio Manager
Investment
Amount: $66,500
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Fax:_______________________________________
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXX
INVESTMENTS LLC
By:
/s/ Xxxxxxx
X.
Xxxxx
Name:
Xxxxxxx X.
Xxxxx
Title:
Managing Member / President
Investment
Amount: $4,004,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:
Xxxx
Asset Management, LLC
Street:
0000 Xxxxxx Xxxxxx, Xxx. # 000
Xxxx/Xxxxx/Xxx:
Xxxxxxx, XX 00000
Attention:
Xxxxx Xxxxx
Tel:
000-000-0000
Fax:
000-000-0000
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:
SAME
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX
PARTNERS LP
By:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx
Xxxxxxx
Title:
CFO
Investment
Amount: $840,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:
Xxxxxx Asset Management
Street:
000 Xxxx Xxxxxx,00xx Xxxxx
Xxxx/Xxxxx/Xxx:
Xxx Xxxx, XX 00000
Attention:
XXXXX XXXXXXX
Tel:
000
000 0000
Fax:
000
000 0000
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
NAME
OF INVESTOR
XXXXXX-GEPT
PARTNERS LP
By:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx
Xxxxxxx
Title:
CFO
Investment
Amount: $420,000
Tax
ID
No.:_________________________________
ADDRESS
FOR NOTICE
c/o:
Xxxxxx Asset Management
Street:
000 Xxxx Xxxxxx,00xx Xxxxx
Xxxx/Xxxxx/Xxx:
Xxx Xxxx, XX 00000
Attention:
XXXXX XXXXXXX
Tel:
000
000 0000
Fax:
000
000 0000
DELIVERY
INSTRUCTIONS
(if
different from above)
c/o:_______________________________________
Street:_____________________________________
City/State/Zip:_______________________________
Attention:__________________________________
Tel:_______________________________________
Annex
A
SCHEDULE
OF BUYERS
(1)
|
Buyer
|
AMTRUST
INTERNATIONAL INSURANCE, LTD
|
ARDLEY
PARTNERS FUND, II, LP
|
ARDSLEY
OFFSHORE FUND, LTD
|
ARDSLEY
PARTNERS INSTITUTIONS FUND L.P.
|
ANCORA
GREATER CHINA FUND, LP
|
BLACK
RIVER COMMODITY SELECT FUND LTD
|
ENABLE
GROWTH PARTNERS LP
|
ENABLE
OPPORTUNITY PARTNERS XX
|
XXXXXXX
XXXXX GROWTH PARTNERS LP
|
GUERRILLA
PARTNERS XX
|
XXX-XXX
21ST CENTURY PARTNERS, XX
|
XXXXX
INVESTMENT FUNDS (ON BEHALF OF ITS SERIES JANUS VENTURE
FUND)
|
JANUS
CAPITAL FUNDS PLC (ON BEHALF OF ITS SERIES JANUS VENTURE
FUND)
|
XXXX
XXXXXXX TRUST EMERGING GROWTH TRUST
|
XXXX
XXXXXXX FUNDS II EMERGING GROWTH FUND
|
XXXX
XXXXXXX SMALL CAP EQUITY FUND
|
XXXXXX
CAPITAL INVESTMENTS, LLC
|
XXXXXX
BAY OVERSEAS FUND LTD
|
XXXXXX
BAY FUND LP
|
LEAP
TIDE PARTNERS, LP
|
LEAP
TIDE OFFSHORE, LTD
|
XXXXXX
XXXXXX
|
XXXXXX
XXXXXXX & CO. INCORPORATED
|
OUTPOINT
OFFSHORE FUND, LTD
|
OHIO
NATIONAL FUND, INC (ON BEHALF OF ITS SERIES OHIO NATIONAL SMALL
CAP GROWTH
PORTFOLIO)
|
XXXXXX
DIVERSIFIED STRATEGY MASTER FUND LLC
|
XXXX
INVESTMENTS LLC
|
XXXXXX
PARTNERS XX
|
XXXXXX-GEPT
PARTNERS LP
|
Disclosure
Schedules to the Securities Purchase Agreement, dated as of October 26,
2007 (the “Agreement”), by and between Fushi International, Inc., a Nevada
corporation (the “Company”), and the investors listed on the Schedule of Buyers
attached hereto as Annex
A
and identified on the signature pages hereto (each, an “Investor” and
collectively, the “Investors”).
All
capitalized terms used but not defined herein shall have the meanings as
defined
in the Agreement, unless otherwise provided herein.
This
Disclosure Schedule shall be construed with and be deemed as an integral
part of
the Agreement to the same extent as if the same had been set forth in their
entirety therein. This Disclosure Schedule is intended only to qualify and
limit
the representations and warranties of the Company in the Agreement and shall
not
be deemed to expand in any way the scope or effect of any such representations
and warranties.
The
Disclosure Schedule indicates the section and, if applicable, the subsection
of
the Agreement to which it relates, but shall also qualify such other sections
or
subsections in the Agreement provided the disclosure is in sufficient detail
to
enable a reasonable person to identify such other section or subsection to
which
such information is responsive.
Headings
have been inserted in the sections of this Disclosure Schedule for convenience
of reference only and shall to no extent have the effect of amending or changing
the express language of the corresponding sections in the
Agreement.
Where
the
terms of a contract, lease, or agreement have been summarized or described
in
this Disclosure Schedule, such summary or description does not purport to
be a
complete statement of the material terms of such contract, lease, agreement
or
other disclosure item but is a sufficient statement of the matters required
to
be disclosed in such description.
SCHEDULE
3.1(a)
1. As
disclosed in the Company’s quarterly report on Form 10-QSB for the quarter ended
September 30, 2006, the Company’s consolidated statement of income and other
comprehensive income for the three and nine months ending September 30, 2005
were restated due to an error with respect to the foreign exchange rate used
in
the calculation of foreign exchange translation gain (loss) as part of other
comprehensive income (loss). The Company is also in the process of reviewing
the
calculation of foreign exchange translation gain (loss) for the year ended
December 31, 2005. Once it has completed the review process, it may
need to restate the financial statements to the extent that it is necessary
and
material.
2. In
the
Company’s annual report on Form 10-KSB for the period ended December 12, 2005
and its Registration Statement on Form SB-2, which was declared effective
August
2, 2006, it disclosed that according to its internal market surveys based
on
information provided by its customers and information collected from its
competitors, it believed the estimated consumption of CCA in the U.S. has
averaged approximately 30,000 tons per year in recent years. This and certain
other market information may have been over-estimated and therefore,
inaccurate.
SCHEDULE
3.1 (b)
Ownership
of Shares of Subsidiaries; Affiliates
Set
forth
below is a complete and correct list of each Subsidiary:
![](https://www.sec.gov/Archives/edgar/data/710846/000114420407057255/graph.jpg)
On
January 24, 2007, Fushi International, Inc. (the "Company"), Fushi Holdings,
Inc., a wholly-owned subsidiary of the Company (“FHI”), Fushi International
(Dalian) Bimetallic Cable Co., Ltd., a wholly-owned subsidiary of FHI (“FID”),
Dalian Fushi Bimetallic Manufacturing Co., Ltd. (“DF”) and Citadel Equity Fund
Ltd. ("Citadel") entered into a Notes Purchase Agreement (the “Notes Purchase
Agreement”). Pursuant to the terms of the Notes Purchase Agreement, the Company
offered and sold and Citadel purchased (a) $40,000,000 of the Company’s
Guaranteed Senior Secured Floating Rate Notes due 2012 (the “HY Notes”) and (b)
$20,000,000 of the Company’s 3.0% Senior Secured Convertible Notes due 2012 (the
“Convertible Notes” and collectively with the HY Notes, the "Notes").
The
HY
Notes and the Convertible Notes were issued pursuant to indentures, each
dated
January 25, 2007 (the “HY Indenture” and “CB Indenture”, respectively, and
together, the "Indentures") among the Company, the FHI, as guarantor, and
The
Bank of New York, as trustee for the Notes. Pursuant to the Indentures, FHI
has
agreed, and all of the Company’s other existing and future domestic subsidiaries
are obligated, to guarantee, on a senior secured basis, to the holders of
the
Notes and the trustee the payment and performance of the Company’s obligations
thereunder.
As
security for the Notes, the Company and The Bank of New York, as collateral
agent, entered into a share pledge agreement, dated January 25, 2007 (the
"Share
Pledge Agreement"), to guarantee the Notes with all of the shares of common
stock of FHI held by the Company as collateral.
SCHEDULE
3.1(d)(ii)
25,895,452
SCHEDULE
3(d)(iii)
Voting
and Other Agreements
As
of September 30, 2007, the Company has
· |
outstanding
warrants to purchase 421,190 shares of the Company’s common stock with an
exercise price of $3.11 per share (which expire December
2011),
|
· |
vested
options granted to senior management to purchase 183,335 shares
of the
Company’s stock with a strike price of $12.3
|
· |
vested
options granted to independent directors to purchase 51,561 shares
of the
Company’s stock with a strike price of $11.75,
and
|
· |
$20
million principal amount 3% senior secured convertible notes outstanding,
which are convertible into 2,857,143 shares of the Company's common
stock
at an initial conversion price of $7.00 per share.
|
For
information relating to certain voting arrangements reference is made to
the
Investor Rights Agreements (the “Investor
Rights Agreement”)
dated
as of January 25,
2007
by and among (i) the Company, Fushi Holdings, Inc., a Delaware corporation
(“FHI”),
Dalian Fushi Bimetallic Manufacturing Company Limited, a limited liability
company organized and existing under the laws of the PRC (“Dalian
Fushi”),
Fushi International (Dalian) Bimetallic Cable Co., Ltd.(the “WFOE”,
and, together with the Company, FHI and Dalian Fushi, the “Group
Companies”),
Mr. Xx Xx (the “Controlling
Shareholder”),
and Mr. Xx Xx, Xx. Xxxxxx Xxxx Xxx, and Mr. Xxxxx Xxxx Wenbing (together
with
Mr. Xx Xx and Xx. Xxxxxx Xxxx Xxx, the “Senior
Management”)
and (ii) Citadel Equity Fund Ltd.
(“Citadel”).
SCHEDULE
3.1(e)
Registration
Rights
On
September 11, 2006, Xx. Xxxx Yue, a Director and President of the Company
entered into a stock purchase agreement to sell a total of 200,000 shares
of
Company common stock to Coronado Capital Partners, LP and SEI Private Trust
Co.
FAO the XX Xxxxxxx Co. Master Trust to sell a total of 200,000 shares of
Company
common stock. The transaction closed on September 15, 2006. The shares were
sold
in a private sale and with a restrictive legend. Each purchaser was assigned
Xx.
Xxxx’x piggyback registration rights.
On
September 13, 2006, Mr. Xx Xx, a Director, Chairman and CEO of the Company,
entered into two stock purchase agreements to sell a total of 800,000 shares
of
common stock of Fushi International, Inc. to Xxxx Investments LLC and Halter
Xxxx USX China Fund. The transaction closed on September 19, 2006. The shares
were sold in a private sale transaction and with a restrictive legend. Each
purchaser was assigned Mr. Fu’s piggyback registration rights.
Citadel
will be a party to the Registration Rights Agreement to be entered into by
the
Investors.
SCHEDULE
3.1(g)
Reference
is made to the Investor Rights Agreement for a description of rights of first
refusal and tag along rights granted to Citadel. Citadel is waving its rights
of
first refusal with respect to this financing.
SCHEDULE
3.1(h)
Compliance
with Instruments
According
to the Notice On Relevant Issues Concerning Foreign Exchange Administration
For
Domestic Residents To Engage In Financing And In Return Investment Via Overseas
Special-purpose Vehicles (the “SAFE Notice No.75”), which was promulgated by the
State Administration of Foreign Exchange (the “SAFE”) on October 21, 2005,
domestic residents who have set up or control overseas special purpose vehicles
and have completed the returning investment before the Notice was effective,
and
did not register for overseas investment according to the Notice, shall
post-register such investment with the local foreign exchange bureau before
March 31, 2006.
Fushi
International (Dalian) Bimetallic Cable Co., Ltd. and its former shareholders
who are PRC residents did not complete the
registration formalities at Dalian Jinzhou Provincial Exchange Bureau pursuant
to SAFE Notice No.75 by the deadline of March 31, 2006. Despite this, PRC
counsel has advised that Fushi
International (Dalian) Bimetallic Cable Co., Ltd. will
not be restricted from paying dividends out of profits or making other similar
distributions of profits to the Company or any of its Subsidiaries that own
outstanding shares of capital stock or similar equity interests of Fushi
International (Dalian) Bimetallic Cable Co., Ltd.
According
to the Company's PRC counsel, the Dalian Administrative Bureau of Foreign
Exchange (the "Bureau") has received the application documents for the
registration of SAFE Notice No. 75 and, based on oral communication from
the
Bureau, prior to the registration of SAFE Notice No. 75, Fushi
International (Dalian) Bimetallic Cable Co., Ltd. will
not
be subjected to any administrative punishment of any nature by the Bureau
on the
grounds of Fushi
International (Dalian) Bimetallic Cable Co., Ltd.’s and its former shareholders’
failure
to register with the Bureau by March 31, 2006 pursuant to SAFE Notice No.
75.
Dalian
Fushi Company Group Co., Ltd, a former shareholder of Dalian Fushi Bimetallic
Manufacturing Co., Ltd transferred all its shares and rights in Dalian Fushi
to
Li Fu pursuant to a Resolution of Shareholders dated December, 12, 2005,
which,
according to PRC counsel, is valid, binding and enforceable under the laws
of
the PRC.
SCHEDULE
3.1(k)
Legal
Proceedings
On
December 11, 2006 the Company received service of an action filed by Xxxxx
Brothers, Inc., Xxxxx Brothers Securities Corp., and Xxxxx Brothers & Co.,
Inc. against the Company in the United States District Court, District of
Connecticut filed on November 27, 2006 (the “Action”). The Action seeks
declaratory judgment concerning the interpretation and enforceability of
specific terms of the engagement letter agreement, dated May 27, 2005, by
and
between Xxxxx Brothers, Inc. and the Company, which the Company terminated
in
September 2006. The Action further asserts that the Company breached the
terms of the Agreement. The Company believes that the plaintiffs’ claims are
without merit and intends to vigorously defend the Action.
On
August
1, 2006, Dalian Fushi filed an action in Suzhou Intermediate People’s Court
against Suzhou Xinda Bimetallic Material Co. Ltd with respect to Dalian Fushi’s
patent Jointing Device Producing Copper Clad Aluminum Lead.
On
August
1, 2006, Dalian Fushi filed an action in Suzhou Intermediate People’s Court
against Wujiang Zhongxin Technologies Co. Ltd with respect to Dalian Fushi’s
patent Jointing Device Producing Copper Clad Aluminum Lead.
On
August
1, 2006, Dalian Fushi filed an action in Nanjin Intermediate People’s Court
against Changzhou Yingte Compound Metal Processing Co. Ltd with respect to
Dalian Fushi’s patent Jointing Device Producing Copper Clad Aluminum
Lead.
On
August
1, 2006, Dalian Fushi filed an action in Nanjin Intermediate People’s Court
against Changzhou Wujinhengtong Co. Ltd with respect to Dalian Fushi’s patent
Jointing Device Producing Copper Clad Aluminum Lead.
On
August
1, 2006, Dalian Fushi filed an action in Nanjin Intermediate People’s Court
against Changzhou Mingtong Co. Ltd with respect to Dalian Fushi’s patent
Jointing Device Producing Copper Clad Aluminum Lead.
On
August
1, 2006, Dalian Fushi filed an action in Nanjin Intermediate People’s Court
against Jiangsu Sanmu Group with respect to Dalian Fushi’s patent Jointing
Device Producing Copper Clad Aluminum Lead.
On
August
1, 2006, Dalian Fushi filed an action in Nanjin Intermediate People’s Court
against Wuxi Ruicheng Co. Ltd with respect to Dalian Fushi’s patent Jointing
Device Producing Copper Clad Aluminum Lead.
On
August
1, 2006, Dalian Fushi filed an action in Dalian Intermediate People’s Court
against Xx. Xxxxxx Xxx with respect to Dalian Fushi’s patent Jointing Device
Producing Copper Clad Aluminum Lead.
SCHEDULE
3.1(m)
Title
To Property
1.
On May
6, 2003, Dalian Fushi entered into a 60-month loan agreement (“ICBC Loan
Agreement”) with the Industrial and Commercial Bank of China Dalian branch
(“ICBC”) for the loan of RMB80 million from ICBC to Dalian Fushi. The security
provided by Dalian Fushi in consideration for the said loan includes land
use
rights, workshops and production lines.
The
following assets are collateral for the loan agreement between Dalian Fushi
and
ICBC in 2003.
List
of Collateral Assets
Assets
|
Space
(Square
metres)
|
Book
value(RMB)
|
Market
value(RMB)
|
Location
|
Owned
by
|
Land
Use Rights
|
60,000
|
23,199,000
|
429,00,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Workshop
|
4,000
|
5,169,750
|
12,400,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Workshop
|
4,800
|
6,203,700
|
14,880,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Workshop
|
4,800
|
6,203,700
|
14,880,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
5
Production lines
|
-
|
11,600,000
|
6,883,250
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Book
Value: the amount Dalian Fushi paid for the purchase of the assets.
Market
Value: current market value of the assets.
2.
On
August 24, 2006, Dalian Fushi entered into a Comprehensive Credit Extension
Agreement with the Bank of China Dalian Branch (“Bank of China”). Bank of China
agreed to grant Dalian Fushi a maximum credit line of RMB 89.80 million.
The
security provided in consideration of the credit line includes, without
limitation, Dalian Fushi’s land use rights, administration building, workshops
and accommodation buildings.
The
following assets are collateral for the credit extension agreement between
Dalian Fushi and Bank of China in 2006.
List
of Collateral Assets
Assets
|
Space
(Square
metres)
|
Book
value(RMB)
|
Market
value(RMB)
|
Location
|
Owned
by
|
Land
Use Rights
|
43,605
|
16,860,000
|
31,177,580
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Administration
building
|
26,584
|
126,365,920
|
151,528,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Workshop
|
8,720
|
35,652,700
|
41,854,510
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Workshop
|
4,800
|
6,203,700
|
14,880,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Workshop
|
4,000
|
5,169,750
|
12,400,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Accommodation
building
|
3,834
|
16,150,880
|
17,253,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Accommodation
building
|
3,834
|
16,150,880
|
17,253,000
|
0
Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx, Xxxxx 000000
|
Dalian
Fushi
|
Book
Value: the amount Dalian Fushi paid for the purchase of the assets.
Market
Value: current market value of the assets.
SCHEDULE
3.1 (n)
Insurance
The
Company does not presently maintain product liability insurance, and its
property and equipment insurance does not cover the full value of its property
and equipment, which
leaves the Company with exposure in the event of loss or damage to its
properties or
claims
filed against it.
It
currently does not carry any product liability or other similar insurance.
The
Company has purchased automobile insurance with third party liability coverage
for its vehicles. In addition, it has purchased property insurance from China
United Property Insurance Company to cover real property and plant of up
to
RMB43,350,000 (approximately US$5,344,652), and manufacturing machine and
equipment of up to RMB36,750,000 (approximately US$4,541,410). The total
coverage of its property and equipment is approximately US$9,886,062.
Except
for property and automobile insurance, the Company does not have other insurance
such as business liability or disruption insurance coverage for its operations
in
the
PRC.
Set
forth
below is a list of the Company’s insurance policies:
Insurance
Policy Number
|
Type
of Insurance
|
Property
|
Coverage
Period
|
Insurance
Coverage RMB
|
Name
of Insurance Company
|
Secured
Lender
|
||||
Property
Insurance
|
Buildings
|
20,000,000
|
China
Pacific Property Insurance Co., Ltd.
|
Industrial
and Commercial Bank of China
|
||||||
AP00AB01HQ
D2006B000012
|
Property
Insurance
|
Buildings
|
07/24/2007
to 07/23/2008
|
89,000,000
|
Yongan
Property Insurance Co., Ltd. Dalian Branch
|
Bank
of China
|
||||
Property
Insurance
|
Fixed
Assets
|
07/08/2007
to 07/07/2008
|
80,000,000
|
China
United Property Insurance Company
|
Industrial
and Commercial Bank of China
|
|||||
Property
Insurance
|
Fixed
Assets
|
07/03/2007
to 07/02/2008
|
60,000,000
|
China
United Property Insurance Company
|
Bank
of China
|
|||||
020684010805
0818000153
|
Property
Insurance/Third Party Liability Insurance
|
Auto
|
03/24/2007
to 03/23/2008
|
100,000
|
China
United Property Insurance Company
|
None
|
||||
Property
Insurance/Third Party Liability Insurance
|
Auto
|
03/24/2007
to 03/23/2008
|
100,000
|
China
United Property Insurance Company
|
None
|
|||||
AP00AB01DMC2006B000207
|
Third
Party Liability Insurance
|
Auto
|
Yongan
Property Insurance Company Limited
|
None
|
AP00AB01DMC2006B000208
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000209
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000210
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000211
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000212
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000213
|
Third
Party Liability Insurance Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000214
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB01DMC2006B000215
|
Third
Party Liability Insurance
|
Auto
|
|
|
Yongan
Property Insurance Company Limited
|
None
|
|
AP00AB010FA2006B000025
|
Third
Party
|
Auto
|
|
Loss
of Life or Limb
|
50,000
|
Yongan
Insurance Co., Ltd.
|
None
|
Hospitalization
|
8,000
|
||||||
Damage
of Property
|
2,000
|
||||||
Loss
of Life or Limb (No Fault)
|
10,000
|
||||||
Hospitalization
(No
Fault)
|
1,600
|
||||||
Damage
of Property
(No
Fault)
|
400
|
AP00AB010FA2006B000026
|
Third
Party Liability Insurance
|
Auto
|
|
Loss
of Life or Limb
Hospitalization
Damage
of Property
Loss
of Life or Limb (No Fault)
Hospitalization
(No Fault)
Damage
of
Property
(No Fault)
|
50,000
8,000
2,000
10,000
1,600
400
|
Yongan
Insurance Co., Ltd.
|
None
|
AP00AB010FA2006B000028
|
Third
Party Liability Insurance
|
Auto
|
|
Loss
of Life or Limb
|
50,000
|
Yongan
Insurance Co., Ltd.
|
None
|
Hospitalization
|
8,000
|
||||||
Damage
of Property
|
2,000
|
||||||
Loss
of Life or Limb (No Fault)
|
10,000
|
||||||
Hospitalization
(No Fault)
|
1,600
|
||||||
Damage
of Property
(No
Fault)
|
400
|
||||||
20590221020007011086
|
Third
Party Liability Insurance
|
Auto
|
06/21/2007
to 06/20/2008
|
100,000
|
Dubang
Insurance Co., Ltd.
|
None
|
|
20590221020007011093
|
Third
Party Liability Insurance
|
Auto
|
|
|
Dubang
Insurance Co., Ltd.
|
None
|
Schedule
3.1(p)
Intellectual
Property
Name
of IP
|
Type
of IP
|
ID
No.
|
Owned
by
|
Country
of Registration
|
Jointing
Device Producing Copper Clad Aluminum Lead
|
Patent
(expired)
|
ZL96238273.6
|
Fushi
International (Dalian) Bimetallic Cable Co., Ltd.
|
PRC
|
Aluminum
Bar Brushing Machine
|
Patent
|
ZL200320105379.X
|
Dalian
Fushi Bimetallic Manufacturing Co., Ltd.
|
PRC
|
Metallurgical
Rolling and Welding Device for CCA and CCS
|
Patent
|
ZL200420031104.0
|
Dalian
Fushi Bimetallic Manufacturing Co., Ltd.
|
PRC
|
Polyurethane(PU)
Roller
|
Patent
|
ZL200320105378.5
|
Dalian
Fushi Bimetallic Manufacturing Co., Ltd.
|
PRC
|
Press
Cladding Device for CCA
|
Patent
|
ZL200320105377.0
|
Dalian
Fushi Bimetallic Manufacturing Co., Ltd.
|
PRC
|
Jointing
Device For Copper Clad Steel Bimetallic Composite Lead
|
Patent
|
ZL992234549
|
Fushi
International (Dalian) Bimetallic Cable Co., Ltd.
|
PRC
|
Vertical
Integrated Drawing Machine for CCA
|
Patent
|
ZL200320105380.2
|
Dalian
Fushi Bimetallic Manufacturing Co., Ltd.
|
PRC
|
Facture For Producing
Regular Wire of Copper Clad Aluminium
|
Patent
|
Application
Pending
|
Dalian
Fushi Bimetallic Manufacturing Co., Ltd.
|
PRC
|
Fushi
|
Trademark
|
Li
Fu ;Trademark Authorization to Dalian Fushi Bimetallic Manufacturing
Co.,
Ltd.
|
PRC
|
SCHEDULE
3.1(q)
Internal
controls
The
Company has completed the re-engineering of the internal control system and
is
currently test-running the system. The Company has not yet evaluated its
internal controls over financial reporting in order to allow management to
report on, and the independent auditors to attest to, its internal controls
over
financial reporting, as will be required by Section 404 of the Xxxxxxxx-Xxxxx
Act of 2002 and the rules and regulations of the SEC. The Company plans to
perform the testing of the operating effectiveness of controls before December
31, 2007 in an effort to comply with the management assessment certification
requirements of Section 404, which will initially apply to us as of December
31,
2007.
SCHEDULE
3.1(r)(1)
Financial
Statements
1. As
disclosed in the Company’s quarterly report on Form 10-QSB for the quarter ended
September 30, 2006, the Company’s consolidated statement of income and other
comprehensive income for the three and nine months ending September 30, 2005
was
restated due to an error with respect to the foreign exchange rate used in
the
calculation of foreign exchange translation gain (loss) as part of other
comprehensive income (loss). The Company is also in the process of reviewing
the
calculation of foreign exchange translation gain (loss) for the year ended
December 31, 2005. Once it has completed the review process, it may
need to restate the financial statements to the extent that it is necessary
and
material.
2. In
the
Company’s annual report on Form 10-KSB for the period ended December 12, 2005
and its Registration Statement on Form SB-2, which was declared effective
August
2, 2006, it disclosed that according to its internal market surveys based
on
information provided by its customers and information collected from its
competitors, it believed the estimated consumption of CCA in the U.S. has
averaged approximately 30,000 tons per year in recent years. This and certain
other market information may have been over-estimated and therefore,
inaccurate.
SCHEDULE
3.1(r)(ii)
Please
refer to the Company’s Form 8-K filed with the SEC on January 26,
2007.
SCHEDULE
3.1 (aa)
Related
Party Transactions
Xxxx
Xxxxx is formerly a director of both the Company and FHI and is also a
shareholder, director and chairman of Xxxxx Brothers, Inc.
On
December 13, 2005, the Company entered into and consummated a share exchange
agreement with the 14 holders of all of the outstanding capital stock of
Fushi
Holdings, Inc. (“FHI”)
(formerly known as Diversified Products, Inc.). The stockholders of FHI were
Dalian Fushi Enterprise Group Co. Ltd., Xxx Xxxxxx Yang, Xxxxxx Xxxx, Xxxxxxx
Xx, Xxxxx Brothers, Xxxx Xxxxx, Xxxx Xxxxxxx, Xxxx Xxxxx, Xxx Xxxxxxxxx,
Xxxxx
Xxxx, Redwood Capital, Inc., Xxxxx Xxxxxx, Xxx Xxxxx and Xxxx Xxxxx.
Xxxxx
Brothers, Inc. received its shares of FHI common stock for services rendered
in
connection with the reorganization of Dalian Fushi's business.
Under
the
share exchange agreement, the Company issued an aggregate of 784,575.16 shares
of the Company’s Series A convertible preferred stock in exchange for the 15,560
shares of common stock of FHI held by the FHI Stockholders, representing
all of
the outstanding capital stock of FHI. As a result of the reverse stock-split,
which was effectuated on January 30, 2006, the series A convertible preferred
stock converted into an aggregate of 15,475,595 shares of common stock of
the
Company, representing approximately 77.85% of its total outstanding common
stock.
On
December 28, 2005, the Company completed a private placement offering of
215,424.84 shares of its series B convertible preferred stock, together with
warrants, for $12,000,000 under certain stock purchase agreements. The series
B
convertible preferred stock converted automatically into approximately 4,250,000
shares of the Company’s common stock upon the occurrence of the reverse
stock-split on January 30, 2006. In addition to the series B convertible
preferred stock, each investor received one warrant for every two shares
of the
Company’s common stock that it acquired upon the automatic conversion of the
series B convertible preferred stock.
The
Company sold the series B convertible preferred stock, together with the
warrants, in a private placement through Xxxxx Brothers Securities Corporation
(“Xxxxx Brothers Securities"), an NASD and SEC registered broker-dealer. Xxxxx
Brothers Securities is a subsidiary of Xxxxx Brothers, Inc.
In
connection with the placement of the Company’s series B convertible preferred
stock and warrants, Xxxxx Brothers Securities, as placement agent, received
the
following compensation: (i) $200,000 cash as signing fee, documentation fee
and
purchase fee, (ii) 10% of the total cash paid for the series B convertible
preferred stock and warrants, (iii) 38,321.15 shares of series A convertible
preferred stock, which converted automatically into approximately 756,017
shares
of the Company’s common stock on January 30, 2006, and (iv) a warrant to
purchase 424,929 shares of common stock at the exercise price of $3.1064
per
share, exercisable within 5 years of the date of issue. In addition, Xxxxx
Brothers Securities is to receive 10% of the proceeds from the exercise of
the
warrants issued to the investors.
SCHEDULE
3.1(mm)
Prefer
refer to Schedule 3.1(h).