Exhibit 99.1
SECURITIES PURCHASE AGREEMENT
BETWEEN
XXXXXXXX RESOURCES III, INC.
AND
XXXXXX PARTNERS LP, JCAR FUNDS LTD.
XXXXX XXXXX AND XXX XXXXXX
DATED
JUNE 2, 2006
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 2nd day of May, 2006 between Xxxxxxxx Resources III, Inc., a
corporation organized and existing under the laws of the State of Nevada (the
"Company") and Xxxxxx Partners LP, a Delaware limited partnership ("Xxxxxx"),
and the other investors named in Schedule A to this Agreement, Xxxxxx and the
other investors being collectively referred to as the "Investors" and each,
individually, an "Investor."
RECITALS
WHEREAS, the Investors wish to purchase from the Company, upon the terms
and subject to the conditions of this Agreement, for the Purchase Price as
hereinafter defined, (a) the Company's convertible subordinated promissory notes
(the "Notes") in the principal amount of three million five hundred thousand
dollars ($3,500,000) the Notes to be in the form attached hereto as Exhibit A,
(b) three hundred sixty nine thousand (369,000) shares (the "Initial Shares") of
Common Stock, and (c) Common Stock Purchase Warrants (the "Warrants") to
purchase up to six million (6,000,000) shares of Common Stock of the Company at
an exercise price of eighty five cents ($.85) per share, six million (6,000,000)
shares of Common Stock of the Company at an exercise price of one and 20/100
dollars ($1.20) per share and six million (6,000,000) shares of Common Stock of
the Company at an exercise price of one and 75/100 dollars ($1.75) per share.
The Note will be convertible into shares of Series A Preferred Stock or Common
Stock, as such terms are hereinafter defined, in the manner set forth in the
Notes; and
WHEREAS, pursuant to a separate agreement, but as part of the transaction
whereby the Investor is purchasing the Notes, the Initial Shares and Warrants,
Skywide Capital Management Limited, a British Virgin Island company, and
Eastpride Capital Limited, a British Virgin Island company, as the sole
stockholders of Sinoenergy Holding Limited, a British Virgin Island company
("Sinoenergy"), which is the sole stockholder of Qingdau Sinogas General
Machinery Corporation, a Chinese corporation ("Sinogas"), are acquiring fourteen
million two hundred fifteen thousand three hundred eighty five (14,215,385)
shares of Common Stock in exchange for all of the outstanding common stock or
other equity interests in Sinoenergy, with the result that Sinoenergy is a
wholly-owned subsidiary of the Company and Sinogas is a wholly-owned subsidiary
of Sinoenergy; and
WHEREAS, the parties intend to memorialize the purchase and sale of the
Notes, the Initial Common Stock and the Warrants.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby conclusively acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE AND DEFINITIONS
1.1. Incorporation by Reference. The foregoing recitals and the Exhibits and
Schedules attached hereto and referred to herein, are hereby acknowledged
to be true and accurate, and are incorporated herein by this reference.
1.2. Supersedes Other Agreements. This Agreement, to the extent that it is
inconsistent with any other instrument or understanding among the parties,
shall supersede such instrument or understanding to the fullest extent
permitted by law. A copy of this Agreement shall be filed at the Company's
principal office.
1.3. Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings (all capitalized terms
used in this Agreement that are not defined in this Article 1 shall have
the meanings set forth elsewhere in this Agreement):
1.3.1. "4.9% Limitation" has the meaning set forth in Section 2.1.3
of this Agreement.
1.3.2. "1933 Act" means the Securities Act of 1933, as amended.
1.3.3. "1934 Act" means the Securities Exchange Act of 1934, as
amended.
1.3.4. "Affiliate" means a Person or Persons directly or indirectly,
through one or more intermediaries, controlling, controlled by or under
common control with the Person(s) in question. The term "control," as used
in the immediately preceding sentence, means, with respect to a Person
that is a corporation, the right to the exercise, directly or indirectly,
of more than 50% of the voting rights attributable to the shares of such
controlled corporation and, with respect to a Person that is not a
corporation, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such
controlled Person.
1.3.5. "Articles" means the Articles of Incorporation of the
Company, as the same may be amended from time to time.
1.3.6. "Bylaws" means the bylaws of the Company, as the same may be
amended from time to time.
1.3.7. "Certificate of Designation" means the certificate of the
rights, preferences and privileges, subject to the limitations, with
respect to the Series A Preferred Stock, pursuant to Article Fourth of the
Restated Articles. The Certificate of Designation shall be in
substantially the form of Exhibit B to this Agreement, subject to the
provision of Section 6.5 of this Agreement.
SECURITIES PURCHASE AGREEMENT
PAGE 2
1.3.8. "Closing" means the consummation of the transactions
contemplated by this Agreement and the Exchange of Securities, all of
which transactions shall be consummated contemporaneously with the
Closing.
1.3.9. "Closing Date" means the date on which the Closing occurs,
which be not later than May 31, 2006.
1.3.10. "Common Stock" means the Company's common stock, which is
presently designated as the common stock, par value $.001 per share.
1.3.11. "Company's Governing Documents" means the Articles and
Bylaws.
1.3.12. "Convertible Securities" means the Notes and the Series A
Preferred Stock.
1.3.13. "EBITDA" means consolidated earnings before interest, taxes,
depreciation and amortization, determined in accordance with U.S. GAAP.
1.3.14. "Escrow Agreement" means the Escrow Agreement among the
Company, the Investors and Katsky Xxxxxx LLP, as Escrow Agent, attached
hereto as Exhibit C it being acknowledged that the Escrow Agent is counsel
for the Company.
1.3.15. "Exchange of Securities" means the issuance of shares of
Common Stock in exchange for the outstanding securities of Sinoenergy, as
described in the second recital.
1.3.16. "Exempt Issuance" means the issuance of (a) shares of Common
Stock or options to employees, officers, directors of and consultants
(other than consultants whose services relate to the raising of funds) of
the Company pursuant to the Company's 2006 long-term incentive plan and
any other stock or option plan that was or may be adopted by a majority of
the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise of or
conversion of any securities issued hereunder and pursuant to the
Registration Rights Agreement, the Notes, the Warrants and the Certificate
of Designation and any other options, warrants or convertible securities
which are outstanding on after completion of the Closing and the
effectiveness of the Exchange of Securities, and (c) securities issued
pursuant to acquisitions, licensing agreements, or other strategic
transactions, provided any such issuance shall only be to a Person which
is, itself or through its subsidiaries, an operating company in a business
which the Company's board of directors believes is beneficial to the
Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities.
SECURITIES PURCHASE AGREEMENT
PAGE 3
1.3.17. "GAAP" means United States generally accepted accounting
principles consistently applied.
1.3.18. "Initial Shares" shall have the meaning set forth in the
first recital.
1.3.19. "Material Adverse Effect" means any adverse effect on the
business, operations, properties or financial condition of the Company
that is material and adverse to the Company and its subsidiaries, taken as
a whole and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company
to perform any of its material obligations under this Agreement or the
Registration Rights Agreement or to perform its obligations under any
other material agreement.
1.3.20. "Net Income" means net income determined in accordance with
GAAP plus (a) any charges relating to the transaction contemplated by this
Agreement and the Registration Rights Agreement, and (b) any other
non-recurring items, including the issuance of warrants which are not
issued under a stock option or other equity-based incentive plan.
1.3.21. "Nevada Act" means Section 78 of the Nevada Revised
Statutes, as amended.
1.3.22. "Person" means an individual, partnership, firm, limited
liability company, trust, joint venture, association, corporation, or any
other legal entity.
1.3.23. "Pre-Tax Income" means income before income taxes determined
in accordance with GAAP plus (a) any charges relating to the transaction
contemplated by this Agreement and the Registration Rights Agreement, and
(b) any other non-recurring items, including the issuance of warrants
which are not issued under a stock option or other equity-based incentive
plan.
1.3.24. "Purchase Price" means the three million five hundred
thousand dollars ($3,500,000) to be paid by the Investors to the Company
for the Notes, the Initial Shares and the Warrants
1.3.25. "Registration Rights Agreement" means the registration
rights agreement between the Investors and the Company in substantially
the form of Exhibit D to this Agreement.
1.3.26. "Registration Statement" means the registration statement
under the 1933 Act to be filed with the Securities and Exchange Commission
for the registration of the Shares pursuant to the Registration Rights
Agreement.
SECURITIES PURCHASE AGREEMENT
PAGE 4
1.3.27. "Restated Articles" means the restated articles of
organization in substantially the form of Exhibit E to this Agreement.
1.3.28. "Securities" means the Notes, the shares of Series A
Preferred Stock, the Warrants and the Shares.
1.3.29. "SEC" means the Securities and Exchange Commission.
1.3.30. "SEC Documents" means, at any given time, the Company's
latest Form 10-K or Form 10-KSB and all Forms 10-Q or 10-QSB and 8-K and
all proxy statements or information statements filed between the date the
Form 10-K or Form 10-KSB was filed and the date as to which a
determination is being made until such time as the Company no longer has
an obligation to maintain the effectiveness of a Registration Statement as
set forth in the Registration Rights Agreement.
1.3.31. "Series A Preferred Stock" means the shares of Series A
Preferred Stock having the rights, preferences and privileges and subject
to the limitations set forth in the Certificate of Designation.
1.3.32. "Shares" means, collectively, the (a) the Initial Shares and
(b) the shares of Common Stock of the Company issued or issuable (i) upon
conversion of the Notes or the Series A Preferred Stock or (ii) upon
exercise of the Warrants.
1.3.33. "Subsequent Financing" means any offer and sale of shares of
the Company's preferred stock, par value $.0001 per share, or debt that,
in either case, is initially convertible into shares of Common Stock or
otherwise senior or superior to the Series A Preferred Stock.
1.3.34. "Total Shares" means the Initial Shares plus the total
number of shares of Common Stock as are issuable upon conversion of the
Notes, such number to be determined as if the Notes are never converted
into shares of Series A Preferred Stock.
1.3.35. "Transaction Documents" means this Agreement, all Schedules
and Exhibits attached hereto, the Certificate of Designation, the
Warrants, the Registration Rights Agreement and all other documents and
instruments to be executed and delivered by the parties in order to
consummate the transactions contemplated hereby.
1.3.36. "Warrants" means the Common Stock Purchase Warrants in
substantially the form of Exhibit F-1, F-2 and F-3 to this Agreement.
1.3.37. All references in this Agreement to "herein" or words of
like effect, when referring to preamble, recitals, article and section
numbers, schedules and exhibits shall refer to this Agreement unless
otherwise stated.
SECURITIES PURCHASE AGREEMENT
PAGE 5
ARTICLE II
SALE AND PURCHASE OF NOTE AND WARRANTS; PURCHASE PRICE
2.1. Sale of Note and Issuance of Warrants.
2.1.1. Upon the terms and subject to the conditions set forth
herein, and in accordance with applicable law, the Company agrees to sell
to the Investors, and the each Investor severally agrees to purchase from
the Company, on the Closing Date the Notes, the Initial Shares and the
Warrants as set forth after such Investor's name on Schedule A to this
Agreement for that portion of the Purchase Price as is set forth on said
Schedule A. The Purchase Price shall be paid by the Investors, severally,
to the Company on the Closing Date by a wire transfer of the Purchase
Price into escrow to be held by the escrow agent pursuant to the terms of
the Escrow Agreement. The Company shall cause the Notes and the Warrants
to be issued to the Investors upon the release of the Purchase Price to
the Company by the escrow agent pursuant to the terms of the Escrow
Agreement.
2.1.2. As set forth more fully in the Notes:
(a) Principal and interest on the Notes shall be automatically
converted into such number of shares of Series A Preferred Stock as
is determined by dividing the principal amount of the Notes by the
Conversion Price, as set forth in the Notes, which shall initially
be sixty five cents ($.65) upon the filing by the Company of (i) the
Restated Articles and (ii) the Certificate of Designation.
(b) If the Restated Articles and the Certificate of
Designation shall not have been filed at the time the Notes is
converted, the Notes shall be convertible into Common Stock at the
Conversion Rate set forth in the Notes.
2.1.3. Notwithstanding any other provision of this Agreement, except
as expressly provided in the Notes, the Certificate of Designation or the
Warrants, no Investor shall be entitled to convert the Notes or the Series
A Preferred Stock into shares of Common Stock or to exercise the Warrants
to the extent that such conversion or exercise would result in beneficial
ownership by such Investor and its Affiliates of more than 4.9% of the
then outstanding number of shares of Common Stock on such date. For the
purposes of this Agreement beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. The limitation set forth in this
Section 2.1.3 is referred to as the "4.9% Limitation."
SECURITIES PURCHASE AGREEMENT
PAGE 6
2.1.4. Upon execution and delivery of this Agreement and the
Company's receipt of the Purchase Price from the Escrow Agent pursuant to
the terms of the Escrow Agreement, the Company shall issue to the Investor
the Warrants to purchase the number of shares of Common Stock as is set
forth in Schedule A to this Agreement at exercise prices as stated in the
Warrants, all pursuant to the terms and conditions of the Warrants and
subject to 4.9% Limitation.
2.2. Purchase Price. The Purchase Price payable by each Investor shall be
delivered by such Investor in the form of wire transfers in United States
dollars from the Investor to the escrow agent pursuant to the Escrow
Agreement on the Closing Date.
2.3. Acquisition of Sinoenergy Stock. The Company shall have acquired all of
the outstanding capital stock of Sinoenergy pursuant to the Exchange of
Securities, and all of the stock and other equity interest of Sinogas
shall be owned by Sinoenergy. No Person shall have any right, title or
interest in, or any right or option to acquire, any shares of any class of
capital stock of Sinoenergy or Sinogas.
2.4. Ownership of Real Property. Sinogas has acquired, subject to formal
government approval, title to real property (the "Real Property") acquired
from Beijing Sanhuan Technology Development Co. Ltd., knows as Trycle.
ARTICLE III
CLOSING DATE AND DELIVERIES AT CLOSING
3.1. Closing Date. The Closing of the transactions contemplated by this
Agreement shall be held at the offices of counsel for the Company, at 1:00
P.M. local time, on the Closing Date or on such other date and time and at
such other place as may be mutually agreed by the parties, including
Closing by facsimile with originals to follow.
3.2. Deliveries by the Company. In addition to and without limiting any other
provision of this Agreement, the Company agrees to deliver, or cause to be
delivered, to the escrow agent under the Escrow Agreement, the following:
(a) At or prior to Closing, an executed Agreement with all exhibits
and schedules attached hereto.
(b) At the Closing, the executed Notes in the names of the
Investors.
SECURITIES PURCHASE AGREEMENT
PAGE 7
(c) At the Closing, a stock certificate for the Initial Shares.
(d) At or prior to the Closing, executed Warrants in the name of the
Investors.
(e) The executed Registration Rights Agreement.
(f) Certifications in form and substance acceptable to the Company
and the Investors from any and all brokers or agents involved in the
transactions contemplated hereby as to the amount of commission or
compensation payable to such broker or agent as a result of the
consummation of the transactions contemplated hereby and from the Company
or Investors, as appropriate, to the effect that reasonable reserves for
any other commissions or compensation that may be claimed by any broker or
agent have been set aside.
(g) Evidence of approval of the board of directors of the Company of
(i) the Transaction Documents and the transactions contemplated hereby and
(ii) the Restated Articles, which shall be subject to stockholder
approval.
(h) Evidence of the agreement of the holders of not less than a
majority of the share of Common Stock outstanding after the Exchange of
Securities to approve the Restated Articles.
(i) Evidence that the Company has complied with the provisions of
Sections 6.10, 6.11 and 6.12 of this Agreement on or prior to the Closing
Date.
(j) Good standing certificates of the Company issued by the
Secretary of State of Nevada.
(k) An opinion from the Company's special counsel concerning the
Transaction Documents and the transactions contemplated hereby in form and
substance reasonably acceptable to Investors.
(l) A letter from Sinogas' Chinese counsel concerning the Sinogas
and the transactions contemplated hereby in form and substance reasonably
acceptable to Investors.
(m) The executed Escrow Agreement.
(n) Copies of all executive employment agreements, all past and
present financing documentation or other documentation where stock could
potentially be issued or issued as payment, all past and present
litigation documents and historical financials, not previously provided to
Investors.
(o) Such other documents or certificates as shall be reasonably
requested by Xxxxxx on behalf of the Investor.
SECURITIES PURCHASE AGREEMENT
PAGE 8
3.3. Deliveries by Investors. In addition to and without limiting any other
provision of this Agreement, the Investor agrees to deliver, or cause to
be delivered, to the escrow agent under the Escrow Agreement, the
following:
(a) A deposit in the amount of the Purchase Price;
(b) The executed Agreement with all Exhibits and Schedules attached
hereto;
(c) The executed Registration Rights Agreement;
(d) The executed Escrow Agreement; and
(e) Such other documents or certificates as shall be reasonably
requested by the Company or its counsel.
In the event any document (other than the Notes and Warrants) provided to the
other party in Sections 3.2 and 3.3 herein are provided by facsimile, the party
shall forward an original document to the other party within seven (7) business
days.
3.4. Further Assurances. The Company and the Investors shall, upon request, on
or after the Closing Date, cooperate with each other (specifically, the
Company shall cooperate with the Investors, and the Investors shall
cooperate with the Company) by furnishing any additional information,
executing and delivering any additional documents and/or other instruments
and doing any and all such things as may be reasonably required by the
parties or their counsel to consummate or otherwise implement the
transactions contemplated by this Agreement.
3.5. Waiver. The Investors may waive any of the requirements of Section 3.2 of
this Agreement or any of its rights under the Escrow Agreement, and the
Company at its discretion may waive any of its rights of Section 3.3 of
this Agreement or any of its rights under the Escrow Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as of the date hereof
and as of Closing (which warranties and representations shall survive the
Closing regardless of what examinations, inspections, audits and other
investigations the Investors have heretofore made or may hereinafter make with
respect to such warranties and representations) as follows:
SECURITIES PURCHASE AGREEMENT
PAGE 9
4.1. Organization and Qualification.
4.1.1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, and Sinogas is
a Chinese equity joint venture, which is similar to a limited liability
company, and each of the Company and Sinogas has the requisite corporate
power and authority to own, lease and operate its properties and to carry
on its business as it is now being conducted and is duly qualified to do
business in any other jurisdiction by virtue of the nature of the
businesses conducted by it or the ownership or leasing of its properties,
except where the failure to be so qualified will not, when taken together
with all other such failures, have a Material Adverse Effect on the
business, operations, properties, assets, financial condition or results
of operation of the Company and its subsidiaries taken as a whole. Sinogas
is authorized to be a wholly-owned foreign enterprise, knows as a "WOFE,"
under the laws of the People Republic of China, and the Exchange of
Securities does not violate any provisions of Sinogas' organizational
documents or the laws of the People's Republic of China.
4.1.2. Sinogas is wholly-owned by Sinoenergy, and Sinoenergy is
wholly-owned by the Company. Except for the stock in Sinoenergy which is
owned by the Company and the stock of Sinogas which is owned by
Sinoenergy, no person has any right, title or interest in any equity, debt
or other securities of any kind of either Sinogas or Sinoenergy.
4.2. Governing Documents. The complete and correct copies of the Company's
Governing Documents, as in effect on the Closing Date, has been delivered
to the Investors.
4.3. Capitalization.
4.3.1. The authorized and outstanding capital stock of the Company
as of the date of this Agreement and as adjusted to reflect issuances
pursuant to the Exchange of Securities and as contemplated by this
Agreement is set forth in Schedule 4.3.1 to this Agreement. Schedule 4.3.1
contains all shares and derivatives currently and potentially outstanding.
The Company hereby represents that any and all shares and current
potentially dilutive events have been included in Schedule 4.3.1,
including shares issuable pursuant to employment agreements, acquisition,
consulting agreements, debts, payments, financing or business
relationships that could be paid in equity, derivatives or resulting in
additional equity issuances.
4.3.2. All outstanding shares of capital stock have been duly
authorized and are validly issued, and are fully paid and non-assessable
and free from preemptive rights. All shares of capital stock described
above to be issued have been duly authorized and when issued, will be
validly issued, fully paid and non-assessable and free from preemptive
rights.
SECURITIES PURCHASE AGREEMENT
PAGE 10
4.3.3. Except pursuant to this Agreement and as set forth in
Schedule 4.3.1 hereto, and as set forth in the Company's SEC Documents,
filed with the SEC, as of the date hereof and as of the Closing Date,
there are not now outstanding options, warrants, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
class of capital stock of the Company, or agreements, understandings or
arrangements to which the Company is a party, or by which the Company is
or may be bound, to issue additional shares of its capital stock or
options, warrants, scrip or rights to subscribe for, calls or commitment
of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of any class of its
capital stock. The Company agrees to inform the Investors in writing of
any additional warrants granted prior to the Closing Date.
4.3.4. The Company on the Closing Date (i) will have full right,
power, and authority to sell, assign, transfer, and deliver, by reason of
record and beneficial ownership, to the Investors, the Notes, free and
clear of all liens, charges, claims, options, pledges, restrictions, and
encumbrances whatsoever; and (ii) upon conversion of the Notes or exercise
of the Warrants, the Investors will acquire title to the Shares issuable
upon such conversion or exercise, free and clear of all liens, charges,
claims, options, pledges, restrictions, and encumbrances whatsoever,
except as otherwise provided in this Agreement and except for any of the
foregoing which results from actions or omissions on the part of the
Investors.
4.4. Authority.
4.4.1. The Company has all requisite corporate power and authority
to execute and deliver this Agreement, the Notes, the Initial Shares and
the Warrants, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part
of the Company is necessary to authorize this Agreement or to consummate
the transactions contemplated hereby except as disclosed in this
Agreement; provided, however, that stockholder approval is required for
the Company to adopt the Restated Articles. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms; provided, however, that no representation is
made with respect to the ability of either Investor to convert the Notes
or, following the filing of the Restated Articles and the Certificate of
Designation, the Series A Preferred Stock or exercise any Warrant if and
to the extent that the Conversion Price of the Notes or the Series A
Preferred Stock, as defined in the Notes or the Certificate of
Designation, or the number of Shares issuable upon exercise of the
Warrants would result in the issuance of a number of shares of Common
Stock which is greater than the amount by which the authorized Common
Stock exceeds the sum of the outstanding Common Stock and the shares of
Common Stock reserved for issuance pursuant to outstanding agreements and
outstanding options, warrants, rights, convertible securities and other
securities upon the exercise or conversion of which or pursuant to the
terms of which additional shares of Common Stock may be issuable (the
foregoing proviso being referred to as the "Authorized Stock Proviso").
SECURITIES PURCHASE AGREEMENT
PAGE 11
4.4.2. The Company's board of directors has adopted the Restated
Articles and the Certificate of Designation, subject to stockholder
approval of the Restated Articles, as required by the Nevada Act. Pursuant
to NRS 78.320, the holders of shares of Common Stock issued pursuant to
the Exchange of Securities have agreed to execute a consent of
stockholders approving the Restated Articles, which consent shall be given
twenty (20) days after the date the Company mails an information statement
pursuant to Section 14(c) of the Exchange Act to its stockholders. The
Company will file an information statement with the SEC as soon as
practical after the Closing Date, but not later than ten days after the
date the Form 10-KSB for the fiscal year ended March 31, 2006 is required
to be filed with the SEC.
4.4.3. The Initial Shares are, and shares of Series A Preferred
Stock issuable upon conversion of the Notes and the Shares issuable upon
conversion of the Notes and the Series A Preferred Stock and upon exercise
of the Warrants will be, when so issued, duly and validly authorized and
issued, fully paid and non-assessable and not issued in violation of any
preemptive rights or rights of first refusal.
4.4.4. Upon the filing with the Secretary of State of the State of
Nevada of the Restated Articles and the Certificate of Designation, the
shares of Series A Preferred Stock issued upon conversion of the Notes
will be duly and validly authorized and issued, fully paid and
non-assessable..
4.5. No Conflict; Required Filings and Consents. The execution and delivery of
this Agreement by the Company does not, and the performance by the Company
of its obligations hereunder will not: (i) conflict with or violate the
Company's Governing Documents or the governing instruments Sinogas; (ii)
conflict with, breach or violate any federal, state, foreign or local law,
statute, ordinance, rule, regulation, order, judgment or decree
(collectively, "Laws") in effect as of the date of this Agreement and
applicable to the Company or Sinoenergy or Sinogas; or (iii) result in any
breach of, constitute a default (or an event that with notice or lapse of
time or both would become a default) under, give to any other entity any
right of termination, amendment, acceleration or cancellation of, require
payment under, or result in the creation of a lien or encumbrance on any
of the properties or assets of the Company or Sinoenergy or Sinogas
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which the Company or Sinoenergy or Sinogas is a party or by the Company or
Sinoenergy or Sinogas or any of their respective properties or assets is
bound other than violations, conflicts, breaches, defaults, terminations,
accelerations, creations of liens, or incumbency that would not, in the
aggregate, have a Material Adverse Effect except to the extent that
stockholder approval may be required as a result of the Authorized Stock
Proviso, in which event, the Company will seek stockholder approval to an
increase in the authorized Common Stock sufficient to enable the Company
to be in compliance with this Section 4.5.
SECURITIES PURCHASE AGREEMENT
PAGE 12
4.6. Report and Financial Statements.
4.6.1. The Company has delivered to the Investors the audited
balance sheet of Sinogas as of December 31, 2005 and the audited
statements of operations, stockholders equity and cash flows for the years
ended December 31, 2005 and 2004, and the unaudited balance sheet as of
March 31, 2006 and unaudited statements of operations and cash flows for
the three months ended March 31, 2006 and 2005 and stockholders' equity
for the three months ended March 31, 2006, in each cash including notes to
the financial statements (collectively, the "Financial Statements"). Each
of the balance sheets contained in such Financial Statements (including
the related notes and schedules thereto) fairly presented the financial
position of Sinogas, as of its date, and each of the statements of
operations, stockholders' equity and cash flows in such Financial
Statements (including any related notes and schedules thereto) fairly
presents, changes in stockholders' equity and changes in cash flows, as
the case may be, of Sinogas, for the periods to which they relate, in each
case in accordance with GAAP, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of unaudited
statements. The books and records of the Company have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions. Xxxxxxxx Xxxxxxxx Xxxxxxx LLP, who audited the audited
financial statements, is independent within the meaning of the regulations
of the SEC.
4.6.2. The Company has provided the Investors with a copy of any
management letter issued by Xxxxxxxx Xxxxxxxx Xxxxxxx LLP in connection
with its audit of Sinogas's audited Financial Statements for 2004 if such
firm issued a management letter. The Company has addressed, to the
satisfaction of Xxxxxxxx Xxxxxxxx Xxxxxxx LLP any deficiencies reflected
in the management letter.
4.7. Compliance with Applicable Laws. The Company is not in violation of, or,
to the knowledge of the Company, is under investigation with respect to or
has been given notice or has been charged with the violation of any Laws,
except for violations which individually or in the aggregate do not have a
Material Adverse Effect.
4.8. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or Commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company.
4.9. SEC Documents. The Investors acknowledge that the Company is a publicly
held company and has made available to the Investors true and complete
copies of any requested SEC Documents. The Company has registered its
Common Stock pursuant to Section 12(g) of the 1934 Act. The Company has
not provided to the Investors any information that, according to
applicable law, rule or regulation, should have been disclosed publicly
prior to the date hereof by the Company, but which has not been so
disclosed.
SECURITIES PURCHASE AGREEMENT
PAGE 13
4.10. Litigation. To the knowledge of the Company, no litigation, claim, or
other proceeding before any court or governmental agency is pending or to
the knowledge of the Company, threatened against the Company, Sinoenergy
or Sinogas, the prosecution or outcome of which, if adversely determined,
is likely to have a Material Adverse Effect.
4.11. Exemption from Registration. Subject to the accuracy of the Investors'
representations in Article V, except as required pursuant to the
Registration Rights Agreement, the sale of the Securities by the Company
to the Investors will not require registration under the 1933 Act. When
validly converted in accordance with the terms of the Series A Preferred
Stock, and upon exercise of the Warrants in accordance with their terms,
the Shares underlying the Series A Preferred Stock and the Warrants will
be duly and validly issued, fully paid, and non-assessable. The Company is
issuing the Notes, the Initial Shares and, upon conversion of the Notes,
the Series A Preferred Stock, and the Warrants in accordance with and in
reliance upon the exemption from securities registration afforded, inter
alia, by Rule 506 under Regulation D as promulgated by the SEC under the
1933 Act, and/or Section 4(2) of the 1933 Act; provided, however, that
certain filings and registrations may be required under state securities
"blue sky" laws depending upon the residency of the Investors.
4.12. No General Solicitation or Advertising in Regard to this Transaction.
Neither the Company nor any of its Affiliates nor, to the knowledge of the
Company, any Person acting on its or their behalf (i) has conducted or
will conduct any general solicitation (as that term is used in Rule 502(c)
of Regulation D as promulgated by the SEC under the 0000 Xxx) or general
advertising with respect to the sale of the Series A Preferred Stock or
Warrants, or (ii) made any offers or sales of any security or solicited
any offers to buy any security under any circumstances that would require
registration of the Series A Preferred Stock or Warrants, under the 1933
Act, except as required herein.
4.13. No Material Adverse Effect. Since September 30, 2005, no event or
circumstance resulting in a Material Adverse Effect has occurred or exists
with respect to Sinenergy or Sinogas. To the knowledge of the Company, no
material supplier or customer has given notice, oral or written, that it
intends to cease or reduce the volume of its business with Sinogas from
historical levels.
4.14. Material Non-Public Information. The Company has not disclosed to either
Investor any material non-public information that (i) if disclosed, would
reasonably be expected to have a material effect on the price of the
Common Stock or (ii) according to applicable law, rule or regulation,
should have been disclosed publicly by the Company prior to the date
hereof but which has not been so disclosed; provided, however, that the
Company has disclosed to either Investor matters relating to the Company's
acquisition of Sinogas and the financing of such acquisition.
SECURITIES PURCHASE AGREEMENT
PAGE 14
4.15. Internal Controls And Procedures. To the knowledge of the Company, Sinogas
maintains books and records and internal accounting controls which provide
reasonable assurance that (I) all transactions to which Sinogas or any
subsidiary is a party or by which its properties are bound have been
executed with management's authorization; (ii) the recorded accounting of
Sinogas' assets is compared with existing assets at regular intervals;
(iii) access to Sinogas' assets is permitted only in accordance with
management's authorization; and (iv) all transactions to which Sinogas or
any subsidiary is a party or by which its properties are bound are
recorded as necessary to permit preparation of the financial statements of
the Company in accordance with standards of the Public Company Accounting
Oversight Board; it being understood that neither the Company nor Sinogas
has not conducted an internal controls audit and that no such audit has
been required under applicable law.
4.16. Full Disclosure. No representation or warranty made by the Company in this
Agreement and no certificate or document furnished or to be furnished to
the Investors pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein, taken as a whole, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investors, severally, represent and warrant to the Company that:
5.1. Organization and Standing of the Investor.
5.1.1. Such Investor was not formed for the purpose of investing
solely in the Notes, Series A Preferred Stock, the Warrants or the shares
of Common Stock which are the subject of this Agreement. Such Investor has
the requisite power and authority to enter into and perform this Agreement
and to purchase the securities being sold to it hereunder. The execution,
delivery and performance of this Agreement by such Investor and the
consummation by such Investor of the transactions contemplated hereby have
been duly authorized by all necessary partnership action where
appropriate.
5.1.2. The state in which any offer to purchase Preferred Stock
hereunder was made or accepted by such Investor is the state shown as such
Investor's address.
SECURITIES PURCHASE AGREEMENT
PAGE 15
5.2. Authorization and Power. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by such Investor and at
the Closing shall constitute valid and binding obligations of such
Investor enforceable against such Investor in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable
principles of general application.
5.3. No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by such Investor of the transactions contemplated
hereby or relating hereto do not and will not (i) result in a violation of
such Investor's charter documents or bylaws where appropriate or (ii)
conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of any
agreement, indenture or instrument to which such Investor is a party, or
result in a violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency applicable to such
Investor or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect on such Investor). The Investor is not required to obtain
any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver
or perform any of such Investor's obligations under this Agreement or to
purchase the securities from the Company in accordance with the terms
hereof, provided that for purposes of the representation made in this
sentence, such Investor is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
5.4. Financial Risks. Such Investor acknowledges that such Investor is able to
bear the financial risks associated with an investment in the securities
being purchased by such Investor from the Company and that it has been
given full access to such records of the Company and the subsidiaries and
to the officers of the Company and the subsidiaries as it has deemed
necessary or appropriate to conduct its due diligence investigation. The
Investor is capable of evaluating the risks and merits of an investment in
the securities being purchased by such Investor from the Company by virtue
of its experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and such Investor is
capable of bearing the entire loss of its investment in the securities
being purchased by such Investor from the Company.
SECURITIES PURCHASE AGREEMENT
PAGE 16
5.5. Accredited Investor. The Investor is (i) an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated under the 1933 Act
by reason of Rule 501(a)(3) and (6), (ii) experienced in making
investments of the kind described in this Agreement and the related
documents, (iii) able, by reason of the business and financial experience
of its officers (if an entity) and professional advisors (who are not
affiliated with or compensated in any way by the Company or any of its
affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in
the securities being purchased by such Investor from the Company. The
Investor is acquiring the Securities for investment and not with a view to
the sale or distribution thereof and understands that such Securities are
restricted securities, as defined in the 1933 Act, and may not be sold or
otherwise distributed except pursuant to an effective registration
statement or an exemption from the registration requirements of the 1933
Act and that the certificates for such securities shares and Warrants will
bear an investment legend.
5.6. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of such Investor.
5.7. Knowledge of Company. The Investor and its advisors, if any, have been,
upon request, furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer
and sale of the securities being purchased by such Investor from the
Company. The Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries.
5.8. Risk Factors. The Investor understands that the investment by such
Investor in the Securities being purchased by such Investor from the
Company involves a high degree of risk. The Investor understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the securities being purchased by such Investor from the
Company. The Investor warrants that it is able to bear the complete loss
of its investment in the securities being purchased by it from the
Company. In acquiring the Securities, such Investor is not relying upon
any projections of the future financial condition, results of operations
or cash flows relating to the Company. The Investor acknowledges and
agrees that (a) it has had the opportunity to obtain, and it has reviewed
and discussed with the Company, to the extent that it deems necessary,
information concerning the Company, including risks relating to the
Company, Sinogas and their respective financial statements, and that (b)
in entering into and performing this Agreement, such Investor has not
relied on any oral representations made by the Company or any of its
agents, representatives or advisors.
5.9. Full Disclosure. No representation or warranty made by such Investor in
this Agreement and no certificate or document furnished or to be furnished
to the Company pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or therein
not misleading. Except as set forth or referred to in this Agreement, (a)
such Investor does not have any agreement or understanding with any person
relating to acquiring, holding, voting or disposing of any equity
securities of the Company. and (b) during the past five years there has
not occurred any event listed in Item 401(f) of Regulation S-K or any
investigation relating to any such event with respect to such Investor or
any of its managing partners.
SECURITIES PURCHASE AGREEMENT
PAGE 17
ARTICLE VI
COVENANTS OF THE COMPANY
6.1. Registration Rights. The Company shall cause the Registration Rights
Agreement to remain in full force and effect and shall comply in all
material respects with the terms thereof.
6.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at
all times, free of preemptive rights, shares of Common Stock for the
purpose of enabling the Company to issue the Shares underlying the Notes
or the Series A Preferred Stock, as the case may be, and the Warrants;
provided, however, that if, as a result of the Authorized Stock Proviso,
there are not sufficient shares reserved as required in this Section 6.2,
the Company shall, within thirty (30) days after the Company becomes aware
of such deficiency, prepare and file with the Commission a proxy statement
pursuant to which the Company will seek stockholder approval for an
increase in the authorized Common Stock sufficient to enable the Company
to be in compliance with this Section 6.2. Each Investor agrees to vote in
favor of such proposal.
6.3. Compliance with Laws. The Company hereby agrees to comply in all material
respects with the Company's reporting, filing and other obligations under
the federal securities laws.
6.4. Exchange Act Registration. The Company will use its best efforts to comply
in all respects with its reporting and filing obligations under the 1934
Act, and will not take any action or file any document (whether or not
permitted by the 1934 Act or the rules thereunder) to terminate or suspend
any such registration or to terminate or suspend its reporting and filing
obligations under the 1934 until the Investors have disposed of all of
their Shares.
6.5. Corporate Existence; Conflicting Agreements. The Company will take all
steps necessary to preserve and continue the corporate existence of the
Company. The Company shall not enter into any agreement, the terms of
which agreement would restrict or impair the right or ability of the
Company to perform any of its obligations under this Agreement or any of
the other agreements attached as exhibits hereto. Notwithstanding the
foregoing, nothing in this Agreement shall preclude the Company from
re-incorporating in Delaware provided that (a) the rights of such Investor
under the Notes are not impaired in any manner and (b) the terms of the
Certificate of Designation shall be reflected in a certificate of
designation filed pursuant to the Delaware General Corporation Law which
is the same as the Certificate of Designation except for changes necessary
to conform to Delaware law, none of which shall impair the rights of the
holders of the Series A Preferred Stock. In the event of such
reincorporation, all references in this Agreement and the Notes to the
Certificate of Designation shall relate to the certificate of
incorporation of the Delaware corporation and the certificate of
designation filed pursuant thereto.
SECURITIES PURCHASE AGREEMENT
PAGE 18
6.6. Series A Preferred Stock. Until the earliest of (a) three years from the
Closing or (b) such date as the Investor shall have converted the Notes or
the Series A Preferred Stock into not less than 90% of the Total Shares
sold the underlying Shares or (c) such date as the Investor shall have
transferred the Notes or the Series A Preferred Stock which are
convertible into an aggregate of not less than 90% of the Total Shares,
the Company will not issue any preferred stock of with the exception of
Series A Preferred Stock issued to the Investor as provided in this
Agreement and the Registration Rights Agreement.
6.7. Convertible Debt. On or prior to the Closing Date, the Company will cause
to be cancelled all convertible debt in the Company. Until the earliest of
(a) three years from the Closing or (b) such date as the Investor shall
have converted the Notes or the Series A Preferred Stock into not less
than 90% of the Total Shares sold the underlying Shares or (c) such date
as the Investor shall have transferred the Notes or the Series A Preferred
Stock which are convertible into an aggregate of not less than 90% of the
Total Shares, the Company will not issue any convertible debt.
6.8. Debt Limitation. The Company agrees that, for two years after Closing,
neither it nor its consolidated subsidiaries, shall enter into any new
borrowings to the extent that the principal amount of such borrowings
outstanding at the end of a calendar quarter is more than three times the
sum of the EBITDA from continuing operations over the four quarters ending
on such date.
6.9. Reset Equity Deals. On or prior to the Closing Date, the Company will
cause to be cancelled any and all reset features related to any shares
outstanding that could result in additional shares being issued. For a
period of three years from the Closing the Company will not enter into any
transactions that have any reset features that could result in additional
shares being issued. For purposes of this Section 6.9, a reset provision
for a convertible security or derivative security shall mean a provision
(a) whereby the issuance of securities at a lower price or having a lower
conversion or exercise price will result in the conversion or exercise
price of the security being reduced to the lower price or lower conversion
or exercise price or more shares being issued, as the case may be, or (b)
which provide that the conversion or exercise price is based on the market
price at the time of conversion or exercise or (c) any other device which
results in an adjustment to the exercise price or conversion price of the
securities other than stock dividends, stock splits, stock distributions,
combination of shares, reverse splits, and other recapitalizations, as
long as they effect all stockholders appropriately.
SECURITIES PURCHASE AGREEMENT
PAGE 19
6.10. Independent Directors.
6.10.1. The Company shall have caused the appointment of the
majority of the board of directors to be independent directors, as defined
by the rules of the Nasdaq Stock Market, not later than the Closing Date.
6.10.2. If, at any time subsequent to the Closing Date until the
earlier of (a) three years from the Closing or (b) such date as the
Investors shall have converted not less than 90% of the Convertible
Securities and sold the underlying Shares or (c) such date as the
Investors shall have transferred not less than 90% of the Convertible
Securities or (d) such date as the total number or principal amount of
Convertible Securities which the Investors shall have either transferred
or converted and sold the underlying Shares shall represent not less than
90% of Shares issuable upon conversion of the Convertible Securities
issued to the Investors, the board of directors shall not be composed of a
majority of independent directors:
6.10.2.1. for a reason other than for an Excused Reason, the
Company shall have 60 days to take such steps as are necessary so
that a majority of the Company's directors are independent
directors, and
6.10.2.2. for an Excused Reason, the Company shall have 75
days from the date that the Company becomes aware of the event (or
the last event if there are more than one such event) giving rise to
the Excused Reason, to take such steps as are necessary so that a
majority of the Company's directors are independent directors.
6.10.3. The term "Excused Reason" shall mean the death or
resignation of an independent director or the occurrence of an event
whereby an independent director ceases to be independent.
6.10.4. If, during the period referred to in Section 6.10.2 of this
Agreement, the Company shall have failed to have a board of directors
composed of a majority of independent directors after the date by which
such situation was to have been cured pursuant to Section 6.10.2.1 or
Section 6.10.2.2 of this Agreement, whichever shall apply, the Company
shall pay to the Investors, as liquidated damages and not as a penalty, an
amount equal to twelve percent (12%) per annum of the Purchase Price of
the then outstanding shares of Series A Preferred Stock or principal
amount of the Notes, as the case may be, payable monthly in cash or Series
A Preferred Stock at the option of the Investors, based on the number of
days that such condition exists beyond the applicable grace period;
provided, however, that if the Restated Articles shall not have been
filed, the Company may issue a Note in lieu of shares of Series A
Preferred Stock pursuant to this Section 6.10 and Section 6.11 of this
Agreement. The parties agree that the only damages payable for a violation
of such provisions shall be such liquidated damages. Nothing shall
preclude the Investors from pursuing or obtaining specific performance or
other equitable relief with respect to this Agreement. The parties hereto
agree that the liquidated damages provided for in this Section 6.10.4
constitute a reasonable estimate of the damages that may be incurred by
the Investors by reason of the failure of the Company to have a majority
of directors as independent directors.
SECURITIES PURCHASE AGREEMENT
PAGE 20
6.10.5. In no event shall the total payments made pursuant to this
Section 6.10 and Section 6.11, whether in cash or Series A Preferred Stock
exceed in the aggregate twelve percent (12%) of the Purchase Price of the
shares of Series A Preferred Stock or principal amount of the Notes, as
the case may be, that are outstanding as of the date on which a
computation is being made.
6.11. Independent Directors on Audit and Compensation Committees. No later than
the Closing Date, the Company will have an audit committee comprised
solely of not less than three independent directors and a compensation
committee comprised of not less than three directors, a majority of whom
are independent directors. If at any time after the subsequent to the
Closing Date, independent directors do not comprise all of the members of
the audit committee and a majority of the members of the compensation
committee within the grace periods provided in Section 6.10, the Company
shall pay to the Investors, as liquidated damages and not as a penalty, an
amount equal to twelve percent (12%) per annum of the Purchase Price of
the then outstanding Series A Preferred Stock or principal amount of the
Notes, as the case may be, payable monthly in cash or Series A Preferred
Stock at the option of the Investors, such payment shall be based on the
number of days that such condition exists. The parties agree that the only
damages payable for a violation of the terms of this Agreement with
respect to which liquidated damages are expressly provided shall be such
liquidated damages. Nothing shall preclude the Investors from pursuing
other remedies or obtaining specific performance or other equitable relief
with respect to this Agreement. Notwithstanding the foregoing, no
liquidated damages shall be payable pursuant to this Section 6.11 during
any period for which liquidated damages are payable pursuant to Section
6.10.
6.12. Chief Financial Officer. Not later than the Closing Date, the Company will
have elected a chief financial officer who is familiar with both the
conduct of business in China and the SEC's rules and regulations relating
to accounting, financial statements and accounting controls.
6.13. Use of Proceeds. The Company will use the net proceeds from the sale of
the Notes, the Initial Shares and the Warrants (excluding amounts paid by
the Company for legal and administrative fees and other expenses of the
transaction) for working capital.
6.14. Right of First Refusal
6.14.1. In the event that the Company seeks to raise additional
funds through a private placement of its securities (a "Proposed
Financing"), other than Exempt Issuances, each Investor shall have the
right to participate in any subsequent funding by the Company of the
offering price on a pro rata basis, based on the percentage that (a) the
number of such Investor's Total Shares, without regard to the 4.9%
Limitation, bears to (b) the total number of shares of Common Stock
outstanding plus the number of Shares issuable upon conversion of the
Notes or Series A Preferred Stock, as the case may be, and any other
series of convertible preferred stock or debt securities, without regard
to the 4.9% Limitations any other limitations on exercise such other
convertible preferred stock or debt securities. This Section 6.14 shall
apply to each such offering based on the total purchase price of the
securities being offered by the Company.
SECURITIES PURCHASE AGREEMENT
PAGE 21
6.14.2. The terms on which the Investors shall purchase securities
pursuant to Proposed Financing shall be the same as such securities are
purchased by other investors. The Company shall give the Investors the
opportunity to participate in the offering by giving the Investors not
less than ten (10) days notice setting forth the terms of the Proposed
Financing. In the event that the terms of the Proposed Financing are
changed in a manner which is more favorable to the potential investor, the
Company shall provide the Investors, at the same time as the notice is
provided to the other potential investors, with a new ten (10) day notice
setting forth the revised terms that are provided to the other potential
investors.
6.14.3. In the event that the Investors does not exercise its right
to participate in the Proposed Financing within the time limits set forth
in Section 6.14.2 of this Agreement, the Company may sell the securities
in the Proposed Financing at a price and on terms which are no more
favorable to the investors than the terms provided to the Investors. If
the Company subsequently changes the price or terms so that the price is
more favorable to the investors or so the terms are more favorable to the
investors, the Company shall provide the Investors with the opportunity to
purchase the securities on the revised terms in the manner set forth in
Section 6.14.2 of this Agreement.
6.15. Price Adjustment. From the date hereof until such time as the Investors
holds no Securities, except for Exempt Issuances, as to which this Section
6.15 does not apply, if the Company closes on the sale or issuance of
Common Stock at a price, or warrants, options, convertible debt or equity
securities with a exercise price per share or exercise price per share
which is less than the Conversion Price then in effect (such lower sales
price, conversion or exercise price, as the case may be, being referred to
as the "Lower Price"), the Conversion Price in effect from and after the
date of such transaction shall be reduced to the Lower Price. For purpose
of determining the exercise price of warrants issued by the Company, the
price, if any, paid per share for the warrants shall be added to the
exercise price of the warrants. A similar provision shall be included in
the Warrants; provided, however, that the adjustment for the Warrants with
exercise prices of $1.20 and $1.75 per share shall have a formula
reduction.
SECURITIES PURCHASE AGREEMENT
PAGE 22
6.16. Price Adjustments Based on Pre-Tax Income Per Share.
6.16.1. The Certificate of Designation shall contain the following
provisions, and similar provisions shall be included in the Warrants.
6.16.2. In the event the Company's consolidated Pre-Tax Income for
the year ended December 31, 2006 is less than $.212 per share on a
fully-diluted basis, then the Conversion Price shall be reduced by the
percentage shortfall, up to a maximum of 40%. Thus, if Net Income for the
year ended December 31, 2006 is $.1272 per share on a fully-diluted basis,
the Conversion Price shall be reduced by 40%. Such reduction shall be made
at the time the Company files its Form 10-KSB for the year ended December
31, 2006, and shall apply to the Notes or all shares of the Series A
Preferred Stock, as the case may be, which are outstanding on the date the
Form 10-KSB is filed, or, if not filed on time, on the date that filing
was required.
6.16.3. In the event the Company's consolidated Pre-Tax Income for
the year ended December 31, 2007 is less than $.353 per share on a
fully-diluted basis, then the Conversion Price shall be reduced by the
percentage shortfall, up to a maximum of 40%. Thus, if Pre-Tax Income for
the year ended December 31, 2008 is $.2118 per share on a fully-diluted
basis, the Conversion Price shall be reduced by 40%. Such reduction shall
be made at the time the Company files its Form 10-KSB for the year ended
December 31, 2007, and shall apply to the Notes or all shares of the
Series A Preferred Stock, as the case may be, which are outstanding on the
date the Form 10-KSB is filed, or, if not filed on time, on the date that
filing was required.
6.16.4. For purpose of determining Net Income Per Share and Pre-Tax
Income Per Share on a fully-diluted basis, all shares of Common Stock
issuable upon conversion of convertible securities and upon exercise of
warrants and options shall be deemed to be outstanding, regardless of
whether (i) such shares are treated as outstanding for determining diluted
earnings per share under GAAP, (ii) such securities are "in the money," or
(iii) such shares may be issued as a result of the 4.9% Limitation.
6.17. Insider Selling. The earliest any Restricted Stockholders can start
selling their shares of Common Stock in the public market shall be
eighteen months from the Closing Date. Restricted Stockholders shall
include all persons who are officers and directors of the Company and all
present holders of equity interests in Sinogas. Xxxxxx Xxxxxx Xxxxxx and
the Investors shall not be considered Restricted Stockholders. The
restrictions in this Section 6.17 shall not apply to shares issued
pursuant to a stock option or long-term incentive plans which may be
approved by the Compensation Committee provided that such committee is
comprises of a majority of independent directors. The Company may include
in the registration statement filed pursuant to the Registration Rights
Agreement all of the shares of Common Stock which are outstanding
immediately prior to the Closing, none of which shall be owned by
Affiliates of the Company, Sinoenergy or Sinogas. Notwithstanding the
forgoing, Eastpride Capital Limited can sell fifty percent (50%) of its
shares of Common Stock in the public market during the one (1) year period
commencing twelve (12) months from the Closing Date and the remaining
shares of Common Stock commencing twenty four (24) months from the Closing
Date.
SECURITIES PURCHASE AGREEMENT
PAGE 23
6.18. Employment and Consulting Contracts. For three years after the Closing,
Company must have a unanimous approval from the Compensation Committee of
the Board of Directors having reached a conclusion that any awards other
than salary are usual, appropriate and reasonable for any officer,
director or consultants whose compensation is more than $100,000 per
annum. This Section 6.18 does not apply to attorneys, accountants and
other persons who provide professional services to the Company.
6.19. Subsequent Equity Sales. From the date hereof until such time as the
Investors hold no more than 5% of the Shares (determined as if the Series
A Preferred Stock were fully converted and the Warrants fully exercised),
the Company shall be prohibited from effecting or entering into an
agreement to effect any Subsequent Financing involving a "Variable Rate
Transaction" or an "MFN Transaction" (each as defined below). The term
"Variable Rate Transaction" shall mean a transaction in which the Company
issues or sells (i) any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (A) at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities, or (B) with
a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity
security or upon the occurrence of specified or contingent events directly
or indirectly related to the business of the Company or the market for the
Common Stock. The term "MFN Transaction" shall mean a transaction in which
the Company issues or sells any securities in a capital raising
transaction or series of related transactions which grants to an investor
the right to receive additional shares based upon future transactions of
the Company on terms which are more favorable to the Investors than the
terms initially provided to the investor in its initial securities
purchase agreement with the Company. The Investors shall be entitled to
obtain injunctive relief against the Company to preclude any such
issuance, which remedy shall be in addition to any right to collect
damages. Notwithstanding the foregoing, this Section 6.19 shall not apply
in respect of an Exempt Issuance, except that no Variable Rate Transaction
or MFN Transaction shall be an Exempt Issuance.
6.20. Approval of Restated Articles. The Company shall adopt the Restated
Articles and the file the Restated Articles and the Certificate of
Designation not later than one hundred twenty (120) from the Closing Date.
6.21. Stock Splits. All forward and reverse stock splits shall effect all equity
and derivative holders proportionately.
SECURITIES PURCHASE AGREEMENT
PAGE 24
6.22. Payment of Due Diligence Expenses. At Closing the Escrow Agent shall
disperse to the Xxxxxx Fifty Thousand Dollars ($50,000.00) for due
diligence, legal and any other expenses which the Investors may incur in
connection with this Agreement.
6.23. Title to Real Property. The Company shall, and shall cause Sinogas to,
obtain all necessary government approvals to the transfer of the Real
Property into the name of Sinogas.
6.24. Restriction on Certain Payments. The Company has advised the Investors
that Sinogas has incurred liabilities of RMB 56,000,000, in connection
with the purchase of the Real Property, of which approximately RMB
26,000,000 (the "Restricted Amount") is owed to officers, directors or
other affiliates of the Company, including Beijing Sanhuan Technology
Development Co. Ltd. The RMB 30,000,000 which may be paid as hereinafter
provided is referred to as the "Payable Amount." The Company shall not,
and shall cause Sinogas not to, pay any of Restricted Amount to Sinogas'
officers, directors or other affiliates until the earlier of (i) such time
as the Real Property is sold, and then only from the net proceeds of sale
or (ii) such time as all of the Shares shall have been sold in the public
market. The Company shall not, and shall cause Sinogas not to, make any
payment in respect to Payable Amount except as follows: Consolidated net
income for the Company shall be determined on a quarterly basis, in
accordance with GAAP as reflected in the Company's filings with the SEC.
For each quarter, the amount payable with respect to the Payable Amount
shall not exceed fifty percent (50%) of the Company's net income and shall
be payable not earlier than the second business day after the applicable
quarterly or annual report is filed with the SEC. Notwithstanding the
foregoing, in no event shall any payment may made on account of the
purchase of the Real Property prior to the date that Sinogas and the
seller shall have received all government approvals necessary for the
transfer of the Real Property to Sinogas.
ARTICLE VII
COVENANTS OF THE INVESTORS
7.1. Compliance with Law. Each Investor covenants that its trading activities
with respect to shares of the Company's Common Stock will be in compliance
with all applicable state and federal securities laws, rules and
regulations and rules and regulations of any public market on which the
Company's Common Stock is listed.
7.2. Transfer Restrictions. Each Investor acknowledges that (1) the Notes, the
Initial Shares and Warrants and shares of Series A Preferred Stock and
Common Stock issuable upon conversion of the Notes and Series A Preferred
Stock or upon exercise of the Warrants have not been registered under the
1933 Act, and may not be transferred unless (A) subsequently registered
thereunder or (B) the Investor shall have delivered to the Company an
opinion of counsel, which counsel and opinion shall be reasonably
satisfactory to the Company, to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from
such registration; and (2) any sale of the Securities made in reliance on
Rule 144 promulgated under the 1933 Act may be made only in accordance
with the terms of said Rule, to the extent that such Rule is applicable.
SECURITIES PURCHASE AGREEMENT
PAGE 25
7.3. Restrictive Legend. Each Investor acknowledges and agrees that the
Securities and the Shares shall bear a restrictive legend and a
stop-transfer order may be placed against transfer of any such Securities
except that the requirement for a restrictive legend shall not apply to
Shares sold pursuant to a current and effective registration statement or
a sale pursuant Rule 144 or any successor rule:
7.4. Restated Articles. Each Investor hereby agrees to vote any shares of
capital stock that the Investor may own directly or beneficially, for the
adoption of the Restated Articles.
7.5. Limitation on Amendment. No Investor shall take any action to modify the
4.9% Limitation in this Agreement, the Notes, the Certificate of
Designation or the Warrants.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to Closing Date, of the
following conditions:
8.1. No Termination. This Agreement shall not have been terminated pursuant to
Article X hereof.
8.2. Representations True and Correct. The representations and warranties of
the Investor contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as if made on as of the Closing Date.
8.3. Compliance with Covenants. The Investor shall have performed and complied
in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to
or at the Closing Date.
8.4. No Adverse Proceedings. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any
court or administrative body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or
to recover any damages or obtain other relief as a result of the
transactions proposed hereby.
SECURITIES PURCHASE AGREEMENT
PAGE 26
ARTICLE IX
CONDITIONS PRECEDENT TO INVESTORS' OBLIGATIONS
The obligation of the Investors to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or prior to Closing
Date unless specified otherwise, of the following conditions:
9.1. No Termination. This Agreement shall not have been terminated pursuant to
Article X hereof.
9.2. Representations True and Correct. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as if made on as of the Closing Date.
9.3. Compliance with Covenants. The Company shall have performed and complied
in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to
or at the Closing Date.
9.4. No Adverse Proceedings. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any
court or administrative body to restrain, enjoin, or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or
to recover any damages or obtain other relief as a result of the
transactions proposed hereby.
9.5. Exchange of Securities Completed. The Exchange of Securities shall have
been completed on or prior to the Closing Date, and the Company shall be
the sole equity owner of Sinoenergy and Sinoenergy shall be the sole
equity owner of Sinogas.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination. This Agreement may be terminated at any time prior to the
Closing Date
10.1.1. by mutual written consent of the Investors and the Company;
10.1.2. by the Company upon a material breach of any representation,
warranty, covenant or agreement on the part of the Investors set forth in
this Agreement, or by the Investors upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement, or by either party if (a) the representations
or warranties of the other party, taken together, shall fail to be true
and correct in all material respects or (b) if the conditions to closing
set forth in Article VIII or Article IX of this Agreement set forth in
Article VIII or Article IX hereof shall not be satisfied, and such breach
or failure shall, if capable of cure, not have been cured within five (5)
business days after receipt by the party in breach of a notice from the
non-breaching party setting forth in detail the nature of such breach.
SECURITIES PURCHASE AGREEMENT
PAGE 27
10.2. Effect of Termination. Except as otherwise provided herein, in the event
of the termination of this Agreement pursuant to Section 10.1 hereof,
there shall be no liability on the part of the Company or the Investors or
any of their respective officers, directors, agents or other
representatives and all rights and obligations of any party hereto shall
cease.
10.3. Amendment. This Agreement may be amended by the parties hereto any time
prior to the Closing Date by an instrument in writing signed by the
parties hereto; provided, however that the 4.9% Limitation may not be
amended or waived.
10.4. Waiver. At any time prior to the Closing Date, the Company or the
Investors, as appropriate, may: (a) extend the time for the performance of
any of the obligations or other acts of other party or; (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto which have been made to it or them;
or (c) waive compliance with any of the agreements or conditions contained
herein for its or their benefit other than the 4.9% Limitation which may
not be waived. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be
bound hereby.
ARTICLE XI
GENERAL PROVISIONS
11.1. Transaction Costs. Except as otherwise provided herein, each of the
parties shall pay all of his or its costs and expenses (including attorney
fees and other legal costs and expenses and accountants' fees and other
accounting costs and expenses) incurred by that party in connection with
this Agreement; provided, the Company shall pay the Investors for its
expenses as provided in Section 6.22.
11.2. Indemnification. The Investor agrees to indemnify, defend and hold the
Company (following the Closing Date) and its officers and directors
harmless against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities or damages, including interest,
penalties and reasonable attorney's fees, that it shall incur or suffer,
which arise out of or result from any breach of this Agreement by the
Investors or failure by the Investors to perform with respect to the
representations, warranties or covenants contained in this Agreement or in
any exhibit or other instrument furnished or to be furnished under this
Agreement. The Company agrees to indemnify, defend and hold the Investors
(following the Closing Date) harmless against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney's fees,
that it shall incur or suffer, which arise out of, result from or relate
to any breach of this Agreement or failure by the Company to perform with
respect to the representations, warranties or covenants contained in this
Agreement or in any exhibit or other instrument furnished or to be
furnished under this Agreement. In no event shall the Company or the
Investors be entitled to recover consequential or punitive damages
resulting from a breach or violation of this Agreement nor shall any party
have any liability hereunder in the event of gross negligence or willful
misconduct of the indemnified party. In the event of the failure of the
Company to issue the Series A Preferred Stock and Warrants in violation of
the provisions of this Agreement, the Investors, as their sole remedy,
shall be entitled to pursue a remedy of specific performance upon tender
into the Court an amount equal to the Purchase Price hereunder. The
indemnification by the Investors shall be limited to $50,000.00. This
Section 11.2 shall not relate to indemnification under the Registration
Rights Agreement.
SECURITIES PURCHASE AGREEMENT
PAGE 28
11.3. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.4. Entire Agreement. This Agreement (together with the Schedule, Exhibits,
Warrants and documents referred to herein) constitute the entire agreement
of the parties and supersede all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
11.5. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission or e-mail provided that any notice by
facsimile or e-mail shall only be effective if receipt is acknowledged by
the recipient; or (iv) on the on the date of delivery as shown on the
return receipt, if mailed by registered or certified mail, return receipt
requested with postage and other fees prepaid as follows:
If to the Company or Sinogas:
c/o Qingdao Sinogas General Machinery Corp.
00 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx, Xxxxx, 000000
Attn: Xx Xxxxx, CEO
Facsimile: (0000) 00000000
e-mail: XXXXXX@000.xxx
With a copy to:
Katsky Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx P.C.
Facsimile No.: (000) 000-0000
e-mail: xxxxxxxxx@xxxxxxxxxxxx.xxx
If to the Investors:
at their respective addresses set forth in Schedule A
SECURITIES PURCHASE AGREEMENT
PAGE 29
11.6. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any such term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
11.7. Binding Effect. All the terms and provisions of this Agreement whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors,
legal representatives, heirs, successors and assignees.
11.8. Preparation of Agreement. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and is equally
responsible for its preparation. In resolving any dispute regarding, or
construing any provision in, this Agreement, there shall be no presumption
made or inference drawn because of the drafting history of the Agreement,
or because of the inclusion of a provision not contained in a prior draft
or the deletion or modification of a provision contained in a prior draft.
11.9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect
to applicable principles of conflicts of law.
11.10. Jurisdiction. If any action is brought among the parties with respect to
this Agreement or otherwise, by way of a claim or counterclaim, the
parties agree that in any such action, and on all issues, the parties
irrevocably waive their right to a trial by jury. Exclusive jurisdiction
and venue for any such action shall be the federal and state courts
situated in the City, County and State of New York. In the event suit or
action is brought by any party under this Agreement to enforce any of its
terms, or in any appeal therefrom, it is agreed that the prevailing party
shall be entitled to reasonable attorneys fees to be fixed by the
arbitrator, trial court, and/or appellate court if such party prevails on
substantially all issues in dispute.
SECURITIES PURCHASE AGREEMENT
PAGE 30
11.11. Preparation and Filing of SEC filings. The Investors shall reasonably
assist and cooperate with the Company in the preparation of all filings
with the SEC after the Closing Date due after the Closing Date.
11.12. Further Assurances, Cooperation. Each party shall, upon reasonable
request by the other party, execute and deliver any additional documents
necessary or desirable to complete the transactions herein pursuant to and
in the manner contemplated by this Agreement. The parties hereto agree to
cooperate and use their respective best efforts to consummate the
transactions contemplated by this Agreement.
11.13. Survival. The representations, warranties, covenants and agreements made
herein shall survive the Closing of the transaction contemplated hereby.
11.14. Third Parties. Except as disclosed in this Agreement, nothing in this
Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than
the parties hereto and their respective administrators, executors, legal
representatives, heirs, successors and assignees. Nothing in this
Agreement is intended to relieve or discharge the obligation or liability
of any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or action over
or against any party to this Agreement.
11.15. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such
right preclude other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are cumulative to,
and not exclusive of, any rights or remedies otherwise available.
11.16. Counterparts. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement. A facsimile
transmission of this signed Agreement shall be legal and binding on the
party who delivered the Agreement by facsimile transmission; provided,
that such party shall promptly deliver the signed Agreement by overnight
courier services.
[SIGNATURES ON FOLLOWING PAGE]
SECURITIES PURCHASE AGREEMENT
PAGE 31
IN WITNESS WHEREOF, the Investors and the Company have as of the date
first written above executed this Agreement.
THE COMPANY:
XXXXXXXX RESOURCES III, INC.
By:
---------------------------------
Xx Xxxxx, Chief Executive Officer
INVESTORS:
XXXXXX PARTNERS LP
By: Xxxxxx Capital Advisors, LLC, its General Partner
By:
---------------------------------
Xxxxxx Xxxxxx Xxxxxx
President
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
JCAR Funds Ltd.
By:
---------------------------------
Xxx X.Xxxxxx, CEO
----------------------------------
Xxxxx Xxxxx
----------------------------------
Xxx Xxxxxx
33
Schedule A
NUMBER OF SHARES
OF COMMON STOCK
INTO WHICH NOTE NUMBER OF SHARES
AND/OR PREFERRED UNDERLYING "A", "B"
NAME AND ADDRESS AMOUNT OF INVESTMENT INITIAL SHARES STOCK IS CONVERTIBLE AND "C" WARRANTS
---------------- -------------------- -------------- -------------------- -----------------------------
Xxxxxx Partners LP $3,100,000 326,829 4,769,231 5,314,286/5,314,286/5,314,286
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx Xxxxxx
e-mail:
xxx@xxxxxxxxxxxxxx.xxx
xxx@xxxxxxxxxxxxxx.xxx
JCAR Funds Ltd. 200,000 21,086 307,692 342,857/342,857/342,857
Attn: Xxx X. Xxxxxx
Xxxxx Xxxxx 100,000 10,543 153,846 171,429/171,429/171,429
Xxx Xxxxxx 100,000 10,543 153,846 171,429/171,429/171,429
Schedule 4.3.1 - Capitalization
Exhibit A
Form of Note
Exhibit B
Form of Certificate of Designation
Exhibit C
Escrow Agreement
Exhibit D
Registration Rights Agreement
Exhibit E
Restated Articles
Exhibit F-1
$.85 Warrants
Exhibit F-2
$1.20 Warrant
Exhibit F-3
$1.75 Warrant
