Side Letter Agreement
This Side
Letter Agreement (the “Agreement”), dated as
of July 14, 2009, is made by and among RINO International Corporation, a Nevada
corporation (the “Company”), and Blue
Ridge Investments LLC (“Blue Ridge”).
Reference is made to that certain Securities Purchase Agreement, dated September
27, 2007, by and among the Company, Innomind Group Limited, Dalian Innomind
Environment Engineering Co., Ltd. (“WOFE”), Dalian RINO
Environmental Engineering Science and Technology Co., Ltd. (“Dalian Rino”, and
together with WOFE and the Company, collectively, the “Rino Group”) and the
investors signatories thereto, as amended (the “Securities Purchase
Agreement”).
WHEREAS,
pursuant to Section 4.13 of the Securities Purchase Agreement, Blue Ridge has
the right to designate one member to the Board of Directors of the Company or,
at Blue Ridge’s option, of WOFE or of Dalian Rino and the Rino Group is required
to take, all necessary corporate and other action to have any such designee
elected to the Board of the Company, WOFE or Dalian Rino, as applicable within
10 business days of receipt of a request to cause such designee to be elected
(the “Board
Designation Right”); and
WHEREAS,
as of the date hereof, Blue Ridge has not exercised the Board Designation Right
and the parties hereto desire to replace Blue Ridge’s Board Designation Right
with a board observation right under the terms and conditions provided 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 Blue Ridge agree as
follows:
Commencing
on the date hereof, Blue Ridge hereby waives and relinquishes the Board
Designation Right in exchange for a Board Observation Right as follows: for so
long as Blue Ridge shall hold 100,000 shares of the Company’s common stock, par
value $.0001 per share, it shall be entitled to have one representative of it
attend all meetings of the Board of Directors of the Company in a nonvoting
observer capacity and to be notified of all meetings of the Company's Board of
Directors; provided, that Blue Ridge shall, and shall cause each of its
representatives who may have access to any of the information made available at
any meeting of the Company's Board of Directors or provided by the Company to
its Board of Directors, agree to be subject to the Company’s Policy Statements
on Non-public Information Disclosure and Communications in substantially the
form attached hereto as Exhibit A, which
policy statements shall hereby be incorporated as part of this Agreement;
provided further, that the Company reserves the right not to provide information
to Blue Ridge or its representatives and to exclude them from any meeting or
portion thereof if attendance at such meeting by them would adversely affect the
attorney-client privilege between the Company and its counsel or if any of Blue
Ridge or its representatives is or becomes a competitor, or affiliated in any
manner with a competitor, of the Company.
All
notices, requests, demands, and other communications provided herein shall be in
writing, shall be delivered by hand or by first-class mail, facsimile, or
electronic mail and shall be sent to the parties hereto at their respective
addresses, facsimile numbers or electronic mail addresses set forth below their
respective signatures on the signature pages.
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.
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 or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page were an original thereof.
RINO
International Corporation
Side
Letter Agreement with Blue Ridge Investments LLC
IN
WITNESS WHEREOF, the parties have executed and delivered this Side Letter
Agreement as of the date first written above.
RINO
INTERNATIONAL CORPORATION
By:_________________________________
Name: Xxx
Xxxxx
Title: Chief
Executive Officer
Date of
Signature: _____________________
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Attn:
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Xxx
Xxxxxxxx
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Address:
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11
Youquan Road, Zhanqian Street,
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Jinzhou
District, Dalian,
People’x
Xxxxxxxx xx Xxxxx 000000
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Email:
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xxxx@xxxxxxxxx.xxx
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Phone:
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000
00 000 0000 0000
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BLUE
RIDGE INVESTMENTS, LLC
By:_________________________________
Name:
Title:
Attn:
RINO 0807 Deal Team.
Email:
XXXX@xxxxxxxxxxxxx.xxx
Fax
x0-000-000-0000,
RINO
INTERNATIONAL CORPORATION
POLICY
STATEMENTS ON
NON-PUBLIC
INFORMATION DISCLOSURE AND COMMUNICATIONS
July
2009
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I.
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PURPOSE
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The
purpose of this policy (hereinafter the “Policy”)
of RINO International Corporation (the “Company”)
is to comply with federal and state securities laws governing (a) trading in
Company securities while in the possession of "material nonpublic information"
concerning the Company, and (b) tipping or disclosing material nonpublic
information to outsiders, and in order to prevent improper xxxxxxx xxxxxxx or
tipping by any of its directors, officers and employees, their family members,
and specially designated outsiders who have access to the Company's material
nonpublic information.
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II.
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SCOPE
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A.
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This policy shall be applicable
to all directors,
officers and employees of the Company, their family members and
certain outsiders who have access to material
nonpublic information concerning the Company (collectively
referred to as
"Insiders" as defined below).
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B.
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The policy applies to any and all
transactions in the Company's securities, including its common stock and
options to purchase common stock, and any other type of securities that
the Company may issue, such as preferred stock, convertible debentures,
warrants and exchange-traded options or other derivative
securities.
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C.
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The policy will be delivered to
all directors, officers, employees and designated outsiders upon its
adoption by the Company, and to all new directors, officers, employees and designated
outsiders at the start of their employment or relationship with the
Company.
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III.
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DEFINITIONS
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A.
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INSIDERS
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Any
person who possesses material nonpublic information is considered an insider
as to
that information. Insiders include the Company’s board members, officers,
employees, independent contractors and those persons in a special relationship
with the Company (e.g., its auditors, consultants or attorneys). The definition
of insider is specific to each transaction. In other words, an individual is an
insider with respect to each item of material nonpublic information of which he
or she is aware.
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B.
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RELATED
PERSONS
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For
purposes of this Policy, a Related Person includes:
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·
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your
spouse, minor children and anyone else living in your
household,
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·
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partnerships
in which you are a general partner;
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·
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trusts
of which you are a trustee; and
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·
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estates
of which you are an executor or
executrix.
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C. MATERIAL
INFORMATION
Information
about the Company is "material" if it would be expected to affect the investment
or voting decisions of the reasonable shareholder or investor, or if the
disclosure of the information would be expected to significantly alter the total
mix of the information in the marketplace about the Company. In simple terms,
material information is any type of information which could reasonably be
expected to affect the price of Company securities. While it is not possible to
identify all information that would be deemed "material," the following types of
information ordinarily would be considered material:
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·
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Financial
performance, especially quarterly and year-end earnings, and significant
changes in financial performance or
liquidity.
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·
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Company
projections and strategic plans.
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·
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Potential
mergers and acquisitions or the sale of Company assets or
subsidiaries.
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·
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New
major contracts, orders, suppliers, customers, or finance sources, or the
loss thereof.
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·
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Major
discoveries or significant changes or developments in products or product
lines, research or technologies.
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·
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Significant
changes or developments in supplies or inventory, including significant
product defects, recalls or product
returns.
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·
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Significant
pricing changes.
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·
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Stock
splits, public or private securities/debt offerings, or changes in Company
dividend policies or amounts.
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·
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Significant
changes in senior management.
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·
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Significant
labor disputes or negotiations.
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·
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Actual
or threatened major litigation, or the resolution of such
litigation.
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D. NONPUBLIC
INFORMATION
Material
information is "nonpublic" if it has not been widely disseminated to the public
through major newswire services, national news services and financial news
services. For the purposes of this policy, information will be considered
public, i.e., no longer "nonpublic", after the close of trading on the second
full trading day following the Company's widespread public release of the
information.
IV. STATEMENTS
OF COMPANY POLICY AND PROCEDURES
A. TIMING
OF TRANSACTIONS
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1.
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No Trading
During Trading Windows While in the Possession of Material Nonpublic
Information. No
Insiders possessing
material nonpublic information concerning the Company may trade in Company
securities even during applicable trading windows. Persons possessing such
information may trade during a trading window only after the close of
trading on the second full trading day following the
Company's widespread public release of the
information.
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2.
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As
a general rule, if you know of material nonpublic information about the
Company, you should not engage in any trading in the Company's securities
until forty-eight (48) hours after the information is publicly announced.
Please note the following policy on the permissible trading time after the
release of the Company’s financial information (the "Earnings
Dissemination Time"):
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a.
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If
the information relates to the Company's financial performance, you should
wait until forty-eight (48) hours after the Company issues its relevant
earnings release.
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b.
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If
the information relates to routine financial performance by the Company,
you should wait until the beginning of trading on the day when at least
twenty-four (24) hours has passed following the Company's publication of
its periodic earnings release. For example, if the Company's routine
quarterly earnings release is issued on Monday at 8:00 a.m., you may trade
when the market opens on Tuesday. If the release is issued at 11:00 a.m.
that day or at 5:00 p.m. after the market closes, you may trade when the
market opens on Wednesday. The release of earnings will typically occur
during January, April, July and
October.
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3.
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An
exception to this rule is trading in compliance with SEC Rule 10b5-1
pursuant to a contract, instruction or plan previously established at a
time when you were not aware of material nonpublic information (a "10b5-1
Plan"). Any 10b5-1 Plan should be cleared by the Chief Financial
Officer before any trading is done in reliance on
it.
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4.
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Blackout Period. It is
a violation of Company policy for a director, executive officer or certain
employees with access to material nonpublic information (to be determined
by the Company from time to time) to engage in any trading in the
Company's securities during a "blackout period" that
covers the following periods:
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a.
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The
last two weeks of the month ending each calendar quarter (i.e., March,
June, September and December); and
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b.
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The
period from the end of that quarter until [forty-eight hours after the
earnings release] [the earnings dissemination
time.]
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Exceptions
may be made to trading during the blackout period pursuant to a 10b5-1 Plan only
with the prior approval of the Chief Executive Officer or Chief Financial
Officer.
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5.
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There
is no exception to this Policy for transactions that may be necessary or
justifiable for independent reasons (such as the need to raise money for
an emergency expenditure).
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B. COMMUNICATIONS
It is
against the law and the policy of the Company for any person acting on behalf of
the Company to selectively disclose material nonpublic information to securities
professionals (including, for example, buy and sell-side analysts, institutional
investment managers and investment companies) or to stockholders of the Company
under circumstances where it is reasonably foreseeable that the stockholder may
be likely to trade on the basis of such information, unless the information is
simultaneously disclosed to the public generally.
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1.
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Authorized
Company Representatives
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Senior
officials of the Company or any other officer, employee or agent of the Company
who regularly communicates with stockholders of the Company or securities
professionals may be deemed persons "acting on behalf of the Company". It is the
Company's intent to limit the number of spokespersons authorized to speak on
behalf of the Company. Accordingly, the only individuals authorized to represent
the Company in its dealing with securities professionals and stockholders,
including institutional investors, are the Chief Executive Officer and the Chief
Financial Officer and others designated in any writing by them referencing this
Policy (the "Authorized
Company Representatives"). In addition, by similar designation of the
Chief Executive Officer or the Chief Financial Officer, other individuals may be
authorized to represent the Company in dealings with the print and electronic
media, including news, financial and trade publications. If you are not
authorized to speak on behalf of the Company and receive requests for
information, please direct the inquiry to an appropriate authorized
person.
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2.
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Investor/Analyst
Conferences
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Whenever
practical, the Company will encourage investor and analyst conferences to be
open to the public and simultaneously web-cast. The planned portion of any
conference presentation should be reviewed in advance by the Company's Chief
Executive Officer or Chief Financial Officer. If the conference is not open to
the public, consideration should be given to appropriate dissemination of the
material to be presented. Special care should be given to statements made during
informal or one-on-one meetings with analysts or institutional investors to
avoid the inadvertent disclosure of material nonpublic information.
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3.
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Prompt
Reporting of Communication
Violations
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If an
employee believes that material nonpublic information may have been disclosed to
a securities professional or stockholder, such employee must immediately contact
the Chief Executive Officer or Chief Financial Officer. In certain
circumstances, steps to protect the Company and the employee may still be
available. Applicable laws give the Company a short period, generally 24 hours,
after discovery of an inadvertent selective disclosure of material nonpublic
information, to disclose such information to the public.
C. OTHER
PROHIBITED ACTIVITIES
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1.
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No
Insider may "tip" or disclose material nonpublic information concerning
the Company to any outside person (including family members, analysts,
individual investors, and members of the investment community and news
media), unless required as part of that Insider's regular duties for the
Company and authorized by the Board of Directors of the Company. In any
instance in which such information is disclosed to outsiders, the Company
will take such steps as are necessary to preserve the confidentiality of
the information, including requiring the outsider to agree in writing to
comply with the terms of this policy and/or to sign a confidentiality
agreement. All inquiries from outsiders regarding material nonpublic
information about the Company must be forwarded to Chief Executive
Officer, Chief Financial Officer or the Board of Directors of the
Company.
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2.
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No Insider may give trading
advice of any kind about the Company to anyone while possessing
material nonpublic
information about the Company, except that Insiders
should advise others not to trade if doing so might violate the law or
this policy. The Company strongly discourages all Insiders from giving
trading advice concerning the Company to third
parties even when the Insiders do not possess material nonpublic
information about the
Company.
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3.
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No Insider may trade in any
interest or position relating to the future price of Company securities,
such as a put, call or short
sale.
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4.
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No Insider may (a) trade in the
securities of any other public company while possessing material nonpublic
information concerning that company, (b) "tip" or disclose material
nonpublic information concerning any other public company to anyone,
or (c) give trading
advice of any kind to anyone concerning any other public company while
possessing material nonpublic information about that
company.
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VII. POTENTIAL
CIVIL, CRIMINAL AND DISCIPLINARY SANCTIONS
A. CIVIL
AND CRIMINAL PENALTIES
The
consequences of prohibited xxxxxxx xxxxxxx or tipping can be severe. Persons
violating xxxxxxx xxxxxxx or tipping rules may be required to disgorge the
profit made or the loss avoided by the trading, pay the loss suffered by the
person who purchased securities from or sold securities to the insider tippee,
pay civil penalties up to three times the profit made or loss avoided, pay a
criminal penalty of up to $1 million, and serve a jail term of up to ten years.
The Company and/or the supervisors of the person violating the rules may also be
required to pay major civil or criminal penalties.
B. COMPANY
DISCIPLINE
Violation
of this policy or federal or state xxxxxxx xxxxxxx or tipping laws by any
director, officer or employee, or their family members, may subject the director
to dismissal proceedings and the officer or employee to disciplinary action by
the Company up to and including termination for cause.
C. REPORTING
OF VIOLATIONS
Any
Insider who violates this policy or any federal or state laws governing xxxxxxx
xxxxxxx or tipping, or knows of any such violation by any other Insiders, must
report the violation immediately to the Board of Directors of the Company. Upon
learning of any such violation, the Board, in consultation with the Company's
legal counsel, will determine whether the Company should release any material
nonpublic information, or whether the Company should report the violation to the
SEC or other appropriate governmental authority.
VIII. INQUIRIES
Please
direct all inquiries regarding any of the provisions or procedures of this
policy to the counsel of the Company.
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