NOTE PURCHASE AGREEMENT
Execution
Version
THIS
NOTE PURCHASE AGREEMENT (this
"Agreement")
is
made as of February 1,
2008,
by and between Colorep, Inc., a California corporation (the "Company"
or
"Colorep"), and
Carthew Bay Technologies Inc., an Ontario corporation (the "Lender"
or
"CBT").
WHEREAS,
the
Lender intends to provide certain loans to the Company of up to the principal
aggregate amount of Two Million U.S. Dollars (US$2,000,000) upon the terms
and
conditions
set forth herein (the "Loans")
and
the Company intends to issue certain debentures to the Lender evidencing the
Loans (each a "Debenture"
and
collectively, the "Debentures").
NOW,
THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1.
Definitions.
(a) "Adjusted
Post-CBT Transaction Outstanding Shares" shall
mean: the actual
number of outstanding shares of CBT Common Stock immediately after the CBT
Transaction,
PLUS the number of shares of CBT Common Stock issuable upon exercise of
options
and warrants outstanding immediately after the CBT Transaction LESS (i) the
number of shares
of
CBT Common Stock issued to investors under the Financing except for the shares
issued
to
holders of the Senior Secured Notes and Senior Subordinated Notes further to
conversion
of such notes and (ii) shares issuable upon exercise of warrants issued to
the
holders of
the
Senior Secured Notes, holders of the Senior Subordinated Notes and all investors
in the Financing.
(b) "Adjusted
Post-CBT Transaction Shares" shall
mean 7.548% of the Adjusted
Post-CBT Transaction Outstanding Shares, subject to adjustment in accordance
with Section
2.3(a).
(c) "CBT
Agreement" shall
mean that certain Share Exchange Agreement to be
entered into by and between the Company and Lender whereby the Lender shall
issue shares of
its
common stock to the shareholders of the Company in exchange for all of the
issued and outstanding
shares of the Company.
(d) "CBT
Alternate Transaction" shall
mean any proposal, offer, agreement, arrangement
or understanding between CBT and a target company regarding a merger or share
exchange.
(e) "CBT
Common Stock" shall
mean the common stock of CBT.
(f) "CBT
Shareholders" shall
mean those shareholders of CBT who were shareholders
of CBT immediately prior to the CBT Transaction.
(g) "CBT
Transaction" shall
mean the closing of the share exchange between
the Company and Lender, or a wholly-owned subsidiary thereof, further to the
CBT
Agreement.
(h)
"Colorep Alternate Transaction" shall
mean any proposal or offer with respect
to any merger, consolidation or other business combination involving the Company
or its business
or the acquisition of the assets or equity of the Company or its business,
excluding the Financing
and the Colorep Credit Facility.
(i)
"Colorep
Common Stock" shall
mean the Common Stock of the Company.
(j)
"Colorep
Credit Facility" shall
mean that certain credit facility between Colorep
and a commercial lender for a minimum of Seven Million Four Hundred Thousand
U.S. Dollars
(US$7,400,000) further to the acquisition of Transprint USA, Inc., such facility
to be obtained
at reasonable market rates.
(k)
"Conversion
Shares" shall,
if
the Debentures, or any portion thereof, are converted
to equity pursuant to Section 2.3 below, mean shares of Colorep Common
Stock.
(1)
"Conversion
Price" shall
mean, with respect to a conversion pursuant to Section
2.3 below, US$0.80 per share (as adjusted for any stock splits, stock dividends,
combinations,
subdivisions, recapitalizations or the like).
(m)
"Debentures"
shall
mean one or more debentures issued to Lender pursuant
to Section 2.1 below, the form of which is attached hereto as Exhibit
B.
(n)
"Financing"
shall
mean that certain private placement of at least Fifteen Million U.S. Dollars
(US$15,000,000) pursuant to that certain Common Stock and Warrant Purchase
Agreement dated as of December 28, 2007, as amended from time to
time.
(o)
"Maturity
Date" shall
mean April 30, 2008; provided,
however,
that
such date
shall automatically be extended to June 30, 2008 to the extent that: (i) the
CBT
Agreement has
been
executed but the CBT Transaction has not been consummated on or before Xxxxx
00,
0000, (xx) the CBT Transaction has progressed such that Lender and the Company
reasonably expect
that to receive all necessary regulatory approvals and acceptances required
pursuant to the CBT
Agreement and that the CBT Transaction will in fact close, and (iii) the holders
of the Senior
Subordinated Notes still outstanding, if any, shall also have agreed to extend
the due dates of such notes to June 30, 2008.
(p)
"Post-CBT
Transaction Shares" shall
mean the shares of CBT Common Stock
held by the CBT Shareholders immediately after the CBT Transaction.
(q)
"Securities
Act" shall
mean the Securities Act of 1933, as amended.
(r)
"Security
Agreement" shall
mean that certain Security Agreement entered
into as of even date herewith by and between the Company and
Lender.
(s)
"Senior
Secured Notes" shall
mean those certain notes issued to various lenders
pursuant to Note and Warrant Purchase Agreements with the Company in the
aggregate principal
amount of One Million Two and 80/100 U.S. Dollars (US$1,000,002.80), which
such
notes
were automatically converted into Colorep Common Stock upon the closing of
the
Financing.
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(t)
"Senior
Subordinated Notes" shall
mean those certain notes issued to various
lenders pursuant to Note and Warrant Purchase Agreements with the Company in
the
aggregate
principal amount of Two Million One Hundred Thousand U.S. Dollars (US$2,100,000),
which certain of such notes were converted, at the option of the holders
thereof, into
Colorep Common Stock after the closing of the Financing.
2.
Terms
of the Secured Debentures.
2.1 Loans.
Lender
shall make a loan of One Million U.S. Dollars (US$1,000,000)
to the Company at the First Closing. Lender shall make a loan of an additional
One Million U.S. Dollars (US$1,000,000) to the Company at the Second Closing,
subject to the terms
and
conditions set forth herein.
2.2 Issuance
of Secured Debentures.
In
return
for the Loans made by Lender,
the Company shall sell and issue to Lender the Debentures. The Debentures shall
have a principal
balance equal to that portion of the Loans paid by Lender for the Debentures.
The Debentures
shall be cancelable for Cancellation Shares and/or convertible into Conversion
Shares
pursuant to Section 2.3 below and shall be secured by the assets of the Company
as described
in the Debentures and the Security Agreement.
2.3
Rights.
(a) CBT
Transaction.
All
principal owing under the Debentures shall be canceled
upon the closing of the CBT Transaction. In such event, the aggregate number
of
shares
held by the CBT Shareholders shall be adjusted such that the Post-CBT
Transaction Shares
shall equal the number of Adjusted Post-CBT Transaction Shares. Any share of
CBT
Common
Stock issued pursuant to this Section 2.3(a) shall be referred to as
"Cancellation
Shares."
The
unpaid accrued interest owing under the Debentures may, at the option of the
holder
thereof, (i) be paid to such holder in cash, payable immediately prior to the
closing of the CBT
Transaction, or (ii) be converted, in whole, into Conversion Shares with the
number of Conversion
Shares to be issued upon such conversion equal to the quotient obtained by
dividing the
unpaid accrued interest due and owing under the Debenture to be converted on
the
date of conversion
by the Conversion Price.
(b) Maturity
Conversion.
If
the
CBT Transaction has not closed on or before
the Maturity Date and the reason for such transaction failing to close is not
due to any breach
of
the CBT Agreement by Lender or Lender's acceptance of a CBT Alternate
Transaction,
the principal and unpaid accrued interest of the Debentures may be converted,
at
the option
of
the holder thereof, in whole, into Conversion Shares. The number of Conversion
Shares
to
be issued upon conversion shall be equal to the quotient obtained by dividing
the outstanding principal and unpaid accrued interest due and owing under the
Debenture to be converted
on the date of conversion by the Conversion Price.
(c) Breach
of CBT Agreement.
If
the
CBT Transaction has not closed on or before
the Maturity Date and the reason for such transaction failing to close is due
to
any breach of
the
CBT Agreement by the Company or the Company's acceptance of a Colorep Alternate
Transaction,
the principal and unpaid accrued interest of the Debentures may be converted,
at
the option
of
the holder thereof, in whole, into Conversion Shares. The number of Conversion
Shares
to
be issued upon conversion shall be equal to the quotient obtained by dividing
Three Million
U.S. Dollars (US$3,000,000) by the Conversion Price.
3
(d) No
Fractional Shares.
Upon
the
conversion of any Debenture into Conversion
Shares, in lieu of any fractional shares to which the Lender would otherwise
be
entitled,
the Company shall pay the Lender cash equal to such fraction multiplied by
the
Conversion
Price.
(e) Mechanics
of Conversion.
Before
Lender shall be entitled to convert the same
into
Conversion Shares, Lender shall give notice to the Company no later than the
tenth (10th
) business day prior to the Maturity Date of the election to convert the
Debentures into Conversion Shares. The Company shall not be required to issue
or
deliver the Conversion Shares
until the Lender has surrendered the Debentures to the Company. Such conversion
may be
made
contingent upon the closing of the CBT Transaction.
3. Closing
Mechanics.
The
closing (the "Closing")
of the
Loans shall take place at one or more closings (each
a
"Closing"
and
collectively, the "Closings").
The
first Closing (the "First
Closing")
shall
take
place on February 1, 2008 (the "First
Closing Date")
at the
offices of Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxx Xxxxx Xxxxx LLP, 00000 Xxxxx Xxxxxx Xxxx., 0xx
Xxxxx,
Xxx Xxxxxxx, XX 00000,
or
at such other time and place mutually agreeable to the Company and Lender,
but
not prior
to
the date that the conditions for such Closing set forth in Section 9 below
have
been satisfied
or waived by Lender. The second Closing (the "Second
Closing")
shall
take place at the
time
and place mutually agreeable to the Company and Lender after the date that
the
conditions
or such Closing set forth in Section 9 below have been satisfied, but in any
event no later
than three (3) days after such conditions have been satisfied. At each Closing,
Lender shall deliver
the applicable portion of the Loans, subject to the terms and conditions set
forth in the applicable Debenture, to the Company and the Company shall deliver
to Lender the executed Debenture in return for the applicable portion of the
Loans provided to the Company at such Closing.
4. Representations
and Warranties of the Company.
In
connection with the transactions
provided for herein, the Company hereby represents and warrants to the Lender
that:
4.1 Organization,
Good Standing and Qualification.
The
Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of California
and has all requisite corporate power and authority to carry on its business
as
now conducted.
The Company is duly qualified to transact business and is in good standing
in
each jurisdiction
in which the failure to so qualify would have a material adverse effect on
its
business or
properties.
4.2 Authorization.
All
corporate action has been taken on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery
of this Agreement, the Debentures and the Security Agreement. Except as may
be
limited
by applicable bankruptcy, insolvency, reorganization, or similar laws relating
to or affecting
the enforcement of creditors' rights, the Company has taken all corporate action
required
to make all of the obligations of the Company reflected in the provisions of
this Agreement,
the Debentures and the Security Agreement, the valid and enforceable obligations
they
purport to be. The issuance of the Debentures, or their subsequent conversion
into Conversion
Shares, will not be subject to the preemptive rights of any stockholder of
the
Company. The Company has authorized sufficient shares of its capital stock
to
allow for conversion
of the Debentures as described in Section 2.3.
4
4.3 Compliance
with Other Instruments.
Neither
the authorization, execution
and delivery of this Agreement or the Security Agreement, nor the issuance
and
delivery
of the Debentures, will constitute or result in a material default or violation
of any law or
regulation applicable to the Company or any material term or provision of the
Company's current
Certificate of Incorporation or bylaws or any material agreement or instrument
by which it is bound or to which its properties or assets are
subject.
4.4 Valid
Issuance of Stock.
The
Conversion Shares to be issued, sold and delivered
upon conversion of the Debentures, in whole or in part, will be duly and validly
issued, fully
paid and nonassessable and, based in part upon the representations and
warranties of the Lender
in
this Agreement, will be issued in compliance with all applicable federal and
state securities
laws.
4.5 Usury
Laws.
The
Company represents that it has total assets of at least Two
Million U.S. Dollars (US$2,000,000). Assuming that the representations and
warranties of the
Lender set forth in Section 5 of this Agreement are true, the Debentures are
exempt from the usury
laws of the State of California pursuant to Section 25118 of the California
Corporations Code.
5.
Representations
and Warranties of the Lenders.
In
connection with the transactions
provided for herein, Lender hereby represents and warrants to the Company
that:
5.1 Authorization.
This
Agreement constitutes Lender's valid and legally binding
obligation, enforceable in accordance with its terms, except as may be limited
by (i)
applicable bankruptcy, insolvency, reorganization, or similar laws relating
to
or affecting the enforcement
of creditors' rights and (ii) laws relating to the availability of specific
performance, injunctive
relief or other equitable remedies. Lender represents that it has full power
and
authority
to enter into this Agreement.
5.2 Purchase
Entirely for Own Account.
Lender
acknowledges that this Agreement
is made with Lender in reliance upon its representation to the Company that
the
Debentures,
and any securities issuable upon conversion of the Debentures (collectively,
the
"Securities")
will
be acquired for investment for Lender's own account, not as a nominee or
agent,
and not with a view to the resale or distribution of any part thereof, and
that
Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing
this Agreement, Lender further represents that it does not have any contract,
undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Securities.
5
5.3 Disclosure
of Information.
Lender
acknowledges that it has received all the
information it considers necessary or appropriate for deciding whether to
acquire the Debentures.
Lender further represents that it has had an opportunity to ask questions and
receive answers
from the Company regarding the terms and conditions of the offering of the
Debentures.
5.4 Investment
Experience.
Lender
is
an investor in securities of companies in
the
development stage and acknowledges that it is able to fend for itself, can
bear
the economic
risk of its investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Securities. If other than an individual, Lender also
represents it has not been organized solely for the purpose of
acquiring the Securities.
5.5 Restricted
Securities.
Lender
understands that the Debentures are characterized
as "restricted securities" under the federal securities laws inasmuch as it
is
being acquired
from the Company in a transaction not involving a public offering and that
under
such laws and applicable regulations such securities may be resold without
registration under the Act only
in
certain limited circumstances. Lender represents that it is familiar with SEC
Rule 144 and
Regulations, as presently in effect, and understands the resale limitations
imposed thereby and
by
the Act.
5.6 Not
a U.S. Person.
Lender
is
not a "U.S. Person" within the meaning of Rule
901
of Regulation S of the Securities and Exchange Commission (the "SEC"),
as
presently in
effect.
5.7 Further
Offshore Representations and Warranties; Rule 903 of Regulation
S.
Without
in any way limiting the representations and warranties set forth above,
Lender
further represents and warrants to the Company that:
(a) Lender
is
not acquiring the Securities as a result of, and Lender covenants that
it
will not engage in any "directed selling efforts" (as defined in Regulation
S
under the Securities
Act) in the United States in respect of the Securities which would include
any
activities
undertaken for the purpose of, or that could reasonably be expected to have
the
effect of,
conditioning the market in the United States for the resale of any of the
Securities;
(b) Lender
is
not acquiring the Securities for the account or benefit of, directly or
indirectly, any U.S. Person;
(c) Lender
is
a resident of the jurisdiction in which it resides;
(d) the
offer
and the sale of the Securities to Lender as contemplated in this Agreement
complies with or is exempt from the applicable securities legislation of the
jurisdiction
in which the Lender resides;
6
(e) Lender
is
outside the United States when receiving and executing this Agreement
and that the Lender will be outside the United States when acquiring the
Securities; and
(f) Lender
covenants with Company that:
(i)
offers and sales of any of the Securities prior to the expiration of a
period
of
one year (as such period may be amended from time to time under Regulation
S of
the Securities
Act) after the date of original issuance of the Securities (the one year period
hereinafter
referred to as the "Distribution
Compliance Period")
shall
only be made in compliance
with the safe harbor provisions set forth in Regulation S, pursuant to the
registration provisions of the Securities Act or an exemption therefrom, and
that all offers and sales after the Distribution
Compliance Period shall be made only in compliance with the registration
provisions
of the Securities Act or an exemption therefrom and in each case only in
accordance with
applicable state securities laws; and
(ii)
the
Lender will not engage in hedging transactions with respect to the
Securities until after the expiration of the Distribution Compliance
Period.
5.8
Legends.
It
is
understood that any certificates or other documents evidencing
the Securities held by Lender may bear legends substantially similar to the
following:
"THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE "SECURITIES ACT"),
OR
ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF WITHIN THE UNITED STATES (AS THAT TERM IS DEFINED
IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT)
OR
TO A U.S. PERSON (AS THAT TERM IS DEFINED IN REGULATION
S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES
LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE. HEDGING
TRANSACTIONS INVOLVING
SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT. ANY PERSON ACCEPTING ANY
INTEREST IN THE SECURITIES REPRESENTS THAT IT IS NOT A U.S.
PERSON AND IS ACQUIRING SUCH SECURITIES IN AN OFFSHORE TRANSACTION PURSUANT
TO
RULE 903 OR 904 OF REGULATION S."
"UNLESS
PERMITTED UNDER APPLICABLE CANADIAN SECURITIES LEGISLATION,
THE HOLDER OF THESE SECURITIES MUST NOT TRADE
THE
SECURITIES BEFORE THE DATE THAT IS FOUR (4) MONTHS
AND ONE (1) DAY AFTER THE LATER OF (i) THE DATE SUCH SECURITIES
ARE ISSUED, AND (ii) THE DATE THAT THE ISSUER BECAME
A
REPORTING ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA."
7
5.9 No
Prospectus in Canada.
Lender
acknowledges that the Company is relying
on an exemption from the requirement to provide Lender with a prospectus under
Canadian
securities legislation and, as a consequence of acquiring the Securities
pursuant to such exemption,
certain protections, rights and remedies provided by the Canadian securities
legislation,
including statutory rights of rescission or damages, will not be available
to
Lender.
5.10 Canadian
Restricted Securities.
Lender
acknowledges that in Canada, the
Securities will be subject to statutory resale restrictions under Canadian
securities legislation applicable
in the province in which Lender resides and Lender covenants that it will not
resell the Securities,
except in compliance with such laws and further acknowledges that it is solely
responsible
for such compliance.
5.11 Information
Provided by Lender.
All
information which Lender has provided
to the Company concerning itself, its financial position and its knowledge
of
financial and
business matters is truthful, accurate, correct, and complete as of the date
set
forth herein.
6. State
Commissioners of Corporations.
THE
SALE
OF THE SECURITIES ISSUABLE UPON CONVERSION OF THE DEBENTURES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH
SECURITIES OR THE PAYMENT OR RECEIPT
OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE
SALE IS SO EXEMPT.
7. Defaults
and Remedies.
7.1
Events
of Default.
The
following events shall be considered Events of Default
with respect to the Debentures:
(a) The
Company shall default in the payment of any part of the principal or
unpaid
accrued interest on the Debentures for more than five (5) days after payment
is
due pursuant
to the terms of the Debentures;
(b) The
Company shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts as they become due, or shall
file a voluntary petition
for bankruptcy, or shall file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, dissolution or similar
relief under any present or future statute, law or regulation, or shall file
any
answer admitting the material allegations of a petition filed against the
Company in any such proceeding, or shall seek or consent to or acquiesce in
the
appointment
of any trustee, receiver or liquidator of the Company, or of all or any
substantial part
of
the properties of the Company, or the Company or its respective directors or
majority stockholders
shall take any action looking to the dissolution or liquidation of the
Company;
8
(c) Within
thirty (30) days after the commencement of any proceeding against the
Company seeking any bankruptcy reorganization, arrangement, composition,
readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such
proceeding shall not have been dismissed, or within thirty (30) days after
the
appointment without the consent or acquiescence of the Company of any trustee,
receiver or liquidator of the Company
or of all or any substantial part of the properties of the Company, such
appointment shall
not
have been vacated;
(d) Any
default or defined event of default that has not otherwise been cured
or
forgiven shall occur under any agreement to which the Company or any of its
subsidiaries is a party that evidences indebtedness of US$500,000 or
more;
(e) The
Company shall fail to observe or perform any other obligation to be observed
or
performed by it under this Agreement, the Debentures or the Security Agreement
within
thirty (30) days after written notice from Lender to perform or observe such
obligation.
7.2
Remedies.
Upon
the
occurrence of an Event of Default under Section 7.1 hereof, at the option and
upon the declaration of the Lender, the entire unpaid principal and accrued
and unpaid interest on the Debentures shall, without presentment, demand,
protest, or notice
of
any kind, all of which are hereby expressly waived, be forthwith due and
payable, and such holder may, immediately and without expiration of any period
of grace, enforce payment of all
amounts due and owing under the Debentures and exercise any and all other
remedies granted to
it at
law, in equity or otherwise.
8. Post-Closing
Covenant.
Lender
agrees and acknowledges that it shall not in any event
distribute, dividend or otherwise distribute any Conversion Shares to any of
its
shareholders
without the prior written consent of the Company, which consent may be withheld
in
the
Company's sole discretion.
9.
Conditions
Precedent to Closings.
9.1
First
Closing.
(a) The
obligations of the Lender under the First Closing are subject to the
fulfillment,
on or before the First Closing, of each of the following
conditions:
(i)
The
representations and warranties of the Company contained in Section
4
shall be true and correct as of the First Closing Date.
(ii)
The
Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to
be
performed
or complied with by it on, or prior to, the First Closing Date.
(b) The
obligations of the Company under the First Closing are subject to the
fulfillment,
on or before the First Closing, of each of the following
conditions:
9
(i)
The
representations and warranties of the Purchaser contained in Section
5
shall be true and correct as of the First Closing Date.
(ii)
The
Lender shall have delivered the Loan in the principal amount of
One
Million U.S. Dollars (US$1,000,000).
9.2
Second
Closing.
(a) The
obligations of the Lender under the Second Closing are subject to the
fulfillment,
on or before the Second Closing, of each of the following
conditions:
(i)
The
CBT Agreement shall have been executed.
(ii)
The
representations and warranties of the Company contained in Section
4
shall be true and correct as of the Second Closing Date.
(iii)
The
Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to
be
performed
or complied with by it on, or prior to, the Second Closing Date.
(b) The
obligations of the Company under the Second Closing are subject to the
fulfillment, on or before the Second Closing, of each of the following
conditions:
(i)
The
representations and warranties of the Purchaser contained in Section
5
shall be true and correct as of the Second Closing Date.
(ii)
The
Lender shall have delivered the Loan in the principal amount of
One
Million U.S. Dollars (US$1,000,000).
10.
Collection
of Personal Information.
The
Lender, on its own behalf, acknowledges, consents and authorizes the Company
to
collect
the Lender's personal information for the purpose of completing the Lender's
subscription.
The Lender, on its own behalf, acknowledges and consents to the Company
retaining
the personal information for as long as permitted or required by applicable
law
or business
practices. The Lender further acknowledges, consents and authorizes the Company
to deliver
to the Ontario Securities Commission personal information (such as full name,
residential address
and telephone number) pertaining to the Lender if the Lender is resident in
Ontario or otherwise subject to the securities legislation of Ontario and
further acknowledges and consents to
the
fact that the Company may be required by applicable Securities Laws, stock
exchange rules
and
Investment Dealers Association of Canada rules to provide regulatory authorities
any personal
information provided by the Lender respecting itself. The Lender, on its own
behalf, acknowledges
that this information is being collected indirectly by the Ontario Securities
Commission (as applicable), and may be collected, used and disclosed by other
Securities Regulators (as applicable), under the authority granted to it in
applicable Securities Laws. If resident
in Ontario or otherwise subject to the securities legislation of Ontario, the
Lender on its own
behalf acknowledges that this information is being collected for the purposes
of
the administration
and enforcement of the securities legislation of Ontario and further
acknowledges that
the
public official in Ontario who can answer questions about the Ontario Securities
Commission's
indirect collection of such information is the Administrative Assistant to
the
Director
of Corporate Finance, Xxxxx 0000, Xxx 00, 00 Xxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx,
X0X
0X0,
who may be contacted at (000) 000-0000. Without limiting the foregoing, the
Lender acknowledges
and expressly consents to the collection, use and disclosure of Personal
Information
(as defined herein) by the Company for the purposes identified by the Company
from
time
to time. For the purposes of this section, "Personal
Information" means
any
information
about the Lender set out in this Note Purchase Agreement.
10
11.
Miscellaneous.
11.1 Survival
of Representations and Warranties.
The
representations, warranties and covenants of the Company and Lender contained
in
or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and each Closing
for
a period
of
twelve (12) months after such Closing.
11.2 Successors
and Assigns.
Except
as
otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors
and assigns of the parties, provided,
however,
that
the Company may not assign its obligations
under this Agreement without the written consent of the Lender. Nothing in
this
Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
11.3 Governing
Law.
This
Agreement and the Debentures shall be governed by
and
construed under the laws of the State of California as applied to agreements
among California
residents, made and to be performed entirely within the State of
California.
11.4 Counterparts.
This
Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.5 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used
for
convenience only and are not to be considered in construing or interpreting
this
Agreement.
11.6 Notices.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to
the
party
to be notified, (ii) when sent by confirmed electronic mail or facsimile if
sent
during normal
business hours of the recipient, if not so confirmed, then on the next business
day, (iii) five
(5)
days after having been sent by registered or certified mail, return receipt
requested, postage
prepaid or (iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent
to
the respective parties at the following addresses (or at such other addresses
as
shall be specified
by notice given in accordance with this Section 11.6):
If
to the
Company:
Colorep,
Inc.
0000
Xxxxxxxx Xxxxxx
Xxxxxx
Xxxxxxxxx, XX 00000
Fax:
(000)000-0000
Attention:
Chief Executive Officer
11
If
to
Lender:
Brookfield
Place, 000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxx, Xxxxxx M5 J 2T7
Fax:
_______________________
Attention:
Chief Executive Officer
11.7 Finder's
Fee.
Except
as
disclosed on Schedule
I,
each
party represents that
it
neither is nor will be obligated for any finder's fee or commission in
connection with this transaction.
Lender agrees to indemnify and to hold harmless the Company from any liability
for any
commission or compensation in the nature of a finder's fee (and the costs and
expenses of defending
against such liability or asserted liability) for which Lender or any of its
officers, partners,
employees or representatives is responsible. The Company agrees to indemnify
and
hold
harmless Lender from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for
which
the Company or any of its officers, employees or representatives is
responsible.
11.8 Expenses.
If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to
which
such party may be entitled. Each party shall pay all costs and expenses that
it
incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
11.9 Entire
Agreement; Amendments and Waivers.
This Agreement and the Debentures
and the other documents delivered pursuant hereto constitute the full and entire
understanding
and agreement between the parties with regard to the subjects hereof and
thereof. Any
waiver or amendment effected in accordance with this Section shall be binding
upon each party
to
this Agreement and any holder of the Debentures purchased under this Agreement
at the time outstanding and each future holder of such Debentures.
11.10 Severability.
If
one or
more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement
and
the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
11.11 Exculpation
Among
Lenders.
Lender acknowledges that it is not relying upon any person, firm, corporation
or
stockholder, other than the Company and its officers and directors
in their capacities as such, in making its investment or decision to invest
in
the Company.
12
11.12
Acknowledgement.
In
order
to avoid doubt, it is acknowledged by the Company
and Lender that the Lender shall be entitled to the benefit, or obligated by
the
detriment,
as the case may be, of all adjustments to the number of Conversion Shares and
Cancellation
Shares, as the case may be, issuable upon conversion of the Debentures as a
result of any splits, recapitalizations, combinations or other similar
transaction affecting the Colorep Common Stock underlying the Conversion Shares
that occur prior to the conversion of the Debentures.
[Remainder
of Page Intentionally Left Blank]
13
IN
WITNESS
WHEREOF, the parties have executed this Agreement as of
the
date first above written,
| COLOREP, INC. | ||
| By: |  |
|
|
Name: Xxxxx Xxx |
||
| Title: Chief Executive Officer | ||
| CARTHEW BAY TECHNOLOGIES INC. | ||
| By: |  |
|
|
Name: Xxxxx Xxxxxx |
||
| Title: CFO | ||
Signature
Page to Note Purchase Agreement
Schedule
I
Finder's
Fee
|
Xxxxxx
Xxxxxxxxx:
|
||||
|
(a)
|
Date
of Grant:
|
November
23, 2007
|
||
|
(b)
|
Designated
Number (maximum number of shares which you may
purchase under this Option):
|
254,349
|
||
|
(c)
|
Option
Price (price per share):
|
US$0.022
(US two point two cents)
|
||
|
(d)
|
Earliest
Exercise Date:
|
Vesting
Date
|
||
|
(e)
|
Latest
Exercise Date:
|
November
23, 2012
|
||
|
(f)
|
Vesting
Date and Designated Percentage (% of Designated Number you may
purchase each year after the applicable Vesting Date):
|
|||
|
|
Vesting
Date
|
Designated
Percentage
|
||
|
Upon
successful completion of the
Colorep
RTO transaction
|
100%
|
|||
|
Xxxxx
Xxxxxx
|
||||
|
(a)
|
Date
of Grant:
|
November
23, 2007
|
||
|
(b)
|
Designated
Number (maximum number of shares which you may
purchase under this Option):
|
254,348
|
||
|
(c)
|
Option
Price (price per share):
|
US$0.022
(US two point two cents)
|
||
|
(d)
|
Earliest
Exercise Date:
|
Vesting
Date
|
||
|
(e)
|
Latest
Exercise Date:
|
November
23, 2012
|
||
|
(f)
|
Vesting
Date and Designated Percentage (% of Designated Number you may
purchase each year after the applicable Vesting Date):
|
|||
|
|
Vesting
Date
|
Designated
Percentage
|
||
|
Upon
successful completion of the
Colorep
RTO transaction
|
100%
|
|||
Exhibit
A
Form
of
Debenture
