PREFERRED STOCK PURCHASE AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC. AND T SQUARED INVESTMENTS LLC DATED JULY 16, 2008
BETWEEN
AND
T
SQUARED INVESTMENTS LLC
DATED
JULY
16, 2008
This
PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement")
is
made and entered into as of the 16th day of July, 2008 between China
Kangtai Cactus Bio-Tech, Inc., a
corporation organized and existing under the laws of the State of Nevada (“CKGT”
or the “Company”)
and
T
Squared Investments LLC, a
Delaware limited liability company, (“T
Squared Investments”
or
“Investor”).
PRELIMINARY
STATEMENT:
WHEREAS,
the
Investor wishes to purchase from the Company, upon the terms and subject to
the
conditions of this Agreement, Four Houndred and Sixteen Thousand Six Hundred
and
Sixty Seven (416,667) shares of preferred stock of the Company, with such
preferred stock being as described in the First Amended and Restated Certificate
of Designations, Rights and Preferences (the “Certificate
of Designations”)
in
substantially the form attached hereto as Exhibit
A
(the
“Preferred
Stock”)
for the
Initial Purchase Price set forth in Section 1.3.13 hereof. Subject to the
limitations set forth herein and in the Certificate of Designation, the
Preferred Stock shall be initially convertible into shares of common stock
of
the Company at any time at a conversion ratio of One (1) share of Common Stock
for One (1) share of Preferred Stock (the “Conversion
Value”).
In
addition, the Company will issue to the Investor Common Stock Purchase Warrants
(the “Warrants”)
to
purchase up to an additional 1,100,000 shares of common stock of the Company
at
exercise prices as stated in the Warrants; and
WHEREAS,
the
parties intend to memorialize the purchase and sale of such Preferred 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, SUPERSEDER 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 Superseder.
This
Agreement, to the extent that it is inconsistent with any other instrument
or
understanding among the parties governing the affairs of the Company, 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 “1933
Act”
means
the Securities Act of 1933, as amended.
1.3.2 “1934
Act”
means
the Securities Exchange Act of 1934, as amended.
1.3.3 “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 percent 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.
1.3.4 “Articles”
means
the Articles of Incorporation of the Company, as the same may be amended from
time to time.
1.3.5 “Closing”
shall
mean the Closing of the transactions contemplated by this Agreement on the
Closing Date.
1.3.6 “Closing
Date”
means
the date on which the payment of the Purchase Price (as defined herein) by
the
Investor to the company is completed pursuant to this Agreement to purchase
the
Preferred Stock and Warrants, which shall occur on or before July 16,
2008.
1.3.7 “Common
Stock”
means
shares of common stock of the Company, par value $0.001 per share.
1.3.8 [Reserved].
1.3.9 "Exempt
Issuance"
means
the issuance of (a) shares of Common Stock or options to employees, officers,
or
directors of the Company pursuant to any stock or option plan duly 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 (c) securities issued pursuant to acquisitions
or 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
synergistic with the business of 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.
1.3.10 "Material
Adverse Effect"
shall
mean 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 and affiliates, 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.
1.3.11 “Nevada
Act”
means
the Nevada General Corporation Law, as amended.
1.3.12 “Person”
means
an individual, partnership, firm, limited liability company, trust, joint
venture, association, corporation, or any other legal entity.
1.3.13 “Initial Purchase
Price”
means
the Two Hundred Fifty Thousand Dollars ($250,000.00) paid by the Investor to
the
Company for the Preferred Stock and the Warrants.
1.3.14 Reserved.
1.3.15 "Registration
Statement"
shall
mean the registration statement under the 1933 Act to be filed with the
Securities and Exchange Commission for the registration of the Shares pursuant
to Section 6.1 below.
1.3.16 “SEC”
means
the Securities and Exchange Commission.
1.3.17 “SEC
Documents”
shall
mean the Company's latest Form 10-K or 10-KSB as of the time in question, all
Forms 10-Q or 10-QSB and 8-K filed thereafter, and the Proxy Statement for
its
latest fiscal year as of the time in question 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.
1.3.18
“Shares”
shall
mean, collectively, the shares of Common Stock of the Company issued upon
conversion of the Preferred Stock subscribed for hereunder and those shares
of
Common Stock issuable to the Investor upon exercise of the
Warrants.
1.3.19
“Subsequent
Financing”
shall
mean any offer and sale of shares of Preferred Stock or debt that is initially
convertible into shares of Common Stock or otherwise senior or superior to
the
Preferred Stock.
1.3.20
“Transaction
Documents”
shall
mean this Agreement, all Schedules and Exhibits attached hereto and all other
documents and instruments to be executed and delivered by the parties in order
to consummate the transactions contemplated hereby, including, but not limited
to the documents listed in Sections 3.2 and 3.3 hereof.
1.3.21 “Warrants”
shall
mean the Common Stock Purchase Warrants in the form attached hereto Exhibit
B.
ARTICLE
II
SALE
AND PURCHASE OF COMPANY PREFERRED STOCK AND WARRANTS PURCHASE
PRICE
2.1 Sale
of Preferred Stock and Issuance of Warrants.
(a) Upon
the
terms and subject to the conditions set forth herein, and in accordance with
applicable law, the Company agrees to sell to the Investor, and the Investor
agrees to purchase from the Company, on the Closing Date 416,667 shares of
Preferred Stock and the Warrants for the (the “Initial Purchase
Price”)
of
Five Hundred Thousand Dollars ($250,000.00). The Purchase Price shall be paid
by
the Investor to the Company on the Closing Date by a wire transfer or check
of
the Purchase Price in immediately available funds payable to an account at
the
direction of the Company. The Company shall cause the Preferred Stock and the
Warrants to be issued to the Investor upon the receipt of the Initial Purchase
Price. The Company shall register the shares of Common Stock into which the
Preferred Stock is convertible pursuant to the terms and conditions set forth
in
Section 6.1 below.
(b) Each
share of Preferred stock shall initially be convertible by the Investor into
One
(1.0) share of Common Stock; provided, however, that the Investor shall not
be
entitled to convert the Preferred Stock into shares of Common Stock that would
result in beneficial ownership by the 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 the immediately preceding sentence, 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.
(c) Upon
execution and delivery of this Agreement and the Company’s receipt of the
Initial Purchase Price from the Investor, the Company shall issue to the
Investor the Warrant to purchase an aggregate of 1,100,000 shares of Common
Stock at exercise prices as stated in the Warrants, all pursuant to the terms
and conditions of the form of Warrants attached hereto as Exhibit
B;
provided, however, that the Investor shall not be entitled to exercise the
Warrants and receive shares of Common Stock that would result in beneficial
ownership by the 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
the immediately preceding sentence, 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.
2.2 Purchase
Price.
The
Initial Purchase Price shall be delivered by the Investor in the form of a
check
or wire transfer of immediately available funds made payable to the Company
in
United States Dollars from the Investor on the Closing Date.
ARTICLE
III
CLOSING
DATE AND DELIVERIES AT CLOSING
3.1 Closing
Date. The
closing of the transactions contemplated by this Agreement (the “Closing”),
unless expressly determined herein, shall be held at the offices of the Company,
at 5:00 P.M. local time, on the Closing Date or on such other date 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
or prior to Closing, an executed Warrant in the name of the Investor
in
the form attached hereto as Exhibit
B;
|
| (c) |
Stock
Certificate in the name of Investor evidencing the Preferred Stock;
|
| (d) |
Such
other documents or certificates as shall be reasonably requested
by
Investor or its counsel; and
|
| (e) |
Good
Standing Certificate from the State of
Nevada.
|
3.3 Deliveries
by Investor.
In
addition to and without limiting any other provision of this Agreement, the
Investor agrees to deliver, or cause to be delivered, to the Company, the
following:
|
(a)
|
A
deposit in the amount of the Investor Funds in immediately available
funds;
|
|
(b)
|
The
executed Agreement with all Exhibits and Schedules attached
hereto;
|
|
(c)
|
Such
other documents or certificates as shall be reasonably requested
by the
Company or its counsel.
|
In
the
event any document provided to the other party in Paragraphs 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 Investor shall, upon request, on or after the Closing Date,
cooperate with each other (specifically, the Company shall cooperate with the
Investor, and the Investor 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
Investor may waive any of the requirements of Section 3.2 of this Agreement,
and
the Company at its discretion may waive any of the provisions of Section 3.3
of
this Agreement. The Investor may also waive any of the requirements of the
Company under the Escrow Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF
THE
COMPANY
Except
as
set forth in the Company’s SEC Documents and the Disclosure Schedules which
Disclosure Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the disclosure
contained in the corresponding section of the Disclosure Schedules, the Company
represents and warrants to the Investor 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 Investor
has
heretofore made or may hereinafter make with respect to such warranties and
representations) as follows:
4.1 Organization
and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, and 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.
4.2 Articles
of Incorporation and By-Laws.
The
complete and correct copies of the Company’s Articles and By-Laws, as amended or
restated to date which have been filed with the Securities and Exchange
Commission are a complete and correct copy of such document as in effect on
the
date hereof and as of the Closing Date.
4.3 Capitalization.
4.3.1
The
authorized and outstanding capital stock of the Company is set forth in The
Company’s Annual Report on Form 10-KSB, filed on April 15, 2008 with the
Securities and Exchange Commission and updated on all subsequent SEC Documents.
All shares of capital stock have been duly authorized and are validly issued,
and are fully paid and no assessable, and free of preemptive
rights.
4.3.2 As
of the
date of this Agreement, the authorized capital stock of the Company consists
of
200,000,000 shares of common Stock ($.001 par value) and 200,000,000 shares
of
preferred stock ($.001 par value), of which approximately 17,739,625 share
of
common Stock are issued and outstanding as of July 16, 2008. As of Closing,
following the issuance by the Company of the Preferred Stock to the Investor,
the authorized capital stock of the Company will consist of 200,000,000 shares
of Common Stock ($.001 par value) and 200,000,000 shares of preferred stock
($.001 par value), of which approximately 17,739,625 share of Common Stock
and
833,333 shares of preferred stock shall be issued and outstanding. All
outstanding shares of capital stock have been duly authorized and are validly
issued, and are fully paid and nonassessable and free of 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 nonassessable and free
of preemptive rights. Schedule 4.3 hereby 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, including employment agreements, acquisition, consulting
agreements, debts, payments, financing or business relationships that could
be
paid in equity, derivatives or resulting in additional equity issuances that
could potentially occur.
4.3.3
Except pursuant to this Agreement and as set forth in Schedule 4.3 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 no 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 Investor, the Company Shares hereunder, free and clear of
all
liens, charges, claims, options, pledges, restrictions, and encumbrances
whatsoever; and (ii) upon conversion of the Preferred Stock or exercise of
the
Warrants, the Investor will acquire good and marketable title to such Shares,
free and clear of all liens, charges, claims, options, pledges, restrictions,
and encumbrances whatsoever, except as otherwise provided in this Agreement
as
to the limitation on the voting rights of such Shares in certain
circumstances.
4.4 Authority.
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, the Preferred Stock, 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. 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.
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 their respective obligations hereunder will not:
(i) conflict with or violate the Articles or By-Laws of the Company; (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 (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 pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by the Company
or
any of its properties or assets is bound. Excluding from the foregoing are
such
violations, conflicts, breaches, defaults, terminations, accelerations,
creations of liens, or incumbency that would not, in the aggregate, have a
Material Adverse Effect.
4.6 Report
and Financial Statements.
The
Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31,
2007, filed on April 15, 2008 with the SEC contains the audited financial
statements of the Company and quarterly reports on Form 10-QSB for subsequent
quarters filed with the SEC contains the unaudited interim financial statements
of the Company (the “Financial
Statements”).
Each
of the balance sheets contained in or incorporated by reference into any such
Financial Statements (including the related notes and schedules thereto) fairly
presented the financial position of the Company, as of its date, and each of
the
statements of income and changes in stockholders’ equity and cash flows or
equivalent statements 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 the Company, for the periods
to
which they relate, in each case in accordance with United States generally
accepted accounting principles (“U.S.
GAAP”)
consistently applied during the periods involved, 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 U.S. GAAP and
any
other applicable legal and accounting requirements and reflect only actual
transaction.
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 Law of a governmental agency, except for violations which
individually or in the aggregate do not have a Material Adverse Effect.
4.8 Brokers.
Except
as set forth on Schedule 4.8, 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
Company acknowledges that the Company is a publicly held company and has made
available to the Investor after demand true and complete copies of any requested
SEC Documents. The Company has registered its Common Stock pursuant to Section
12(d) of the 1934 Act, and the Common Stock is quoted and traded on the OTC
Bulletin Board of the National Association of Securities Dealers, Inc. The
Company has received no notice, either oral or written, with respect to the
continued quotation or trading of the Common Stock on the OTC Bulletin Board.
The Company has not provided to the Investor 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. As of
their
respective dates, the SEC Documents complied in all material respects with
the
requirements of the 1934 Act, and rules and regulations of the SEC promulgated
thereunder and the SEC Documents did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
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, the prosecution or outcome of which may have
a
Material Adverse Effect.
4.11 Exemption
from Registration.
Subject
to the accuracy of the Investor’s representations in Article V, except as
required pursuant to the Registration Rights Agreement, the sale of the Common
Stock and Warrants by the Company to the Investor will not require registration
under the 1933 Act, but may require registration under New York state securities
law if applicable to the Investor. When validly converted in accordance with
the
terms of the Preferred Stock, and upon exercise of the Warrants in accordance
with their terms, the Shares underlying the Preferred Stock and the Warrants
will be duly and validly issued, fully paid, and non-assessable. The Company
is
issuing the 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 Investor.
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 ▇▇▇▇ ▇▇▇) or general advertising with respect
to the sale of the 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 Preferred Stock or
Warrants, under the 1933 Act, except as required herein.
4.13 No
Material Adverse Effect.
Except
as set forth in Schedule 4.13 attached hereto and in the Company’s SEC
Documents, since June 30, 2007, no event or circumstance resulting in a Material
Adverse Effect has occurred or exists with respect to 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 the Company from historical levels.
Since June 30, 2004, no event or circumstance has occurred or exists with
respect to the Company or its businesses, properties, prospects, operations
or
financial condition, that, under any applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by the
Company but which has not been so publicly announced or disclosed in writing
to
the Investor.
4.14 Material
Non-Public Information.
The
Company has not disclosed to the Investors 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.
4.15 Internal
Controls And Procedures.
The
Company maintains books and records and internal accounting controls which
provide reasonable assurance that (i) all transactions to which the Company
or
any subsidiary is a party or by which its properties are bound are executed
with
management's authorization; (ii) the recorded accounting of the Company's
consolidated assets is compared with existing assets at regular intervals;
(iii)
access to the Company's consolidated assets is permitted only in accordance
with
management's authorization; and (iv) all transactions to which the Company
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 U.S. generally accepted accounting principles.
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
Investor 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.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR
The
Investor represents and warrants to the Company that:
5.1 Organization
and Standing of the Investor.
The
Investor is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. The state in which any
offer to purchase shares hereunder was made or accepted by such Investor is
the
state shown as such Investor’s address. The Investor was not formed for the
purpose of investing solely in the Preferred Stock, the Warrants or the shares
of Common Stock which are the subject of this Agreement.
5.2 Authorization
and Power.
The
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 the Investor and the
consummation by the Investor of the transactions contemplated hereby have been
duly authorized by all necessary limited liability company action where
appropriate. This Agreement and the Registration Rights Agreement have been
duly
executed and delivered by the Investor and at the Closing shall constitute
valid
and binding obligations of the Investor enforceable against the 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
the 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 the 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 the
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, the Investor is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.
5.4 Financial
Risks.
The
Investor acknowledges that such Investor is able to bear the financial risks
associated with an investment in the securities being purchased by the 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 the Investor from
the Company by virtue of its experience as an investor and its knowledge,
experience, and sophistication in financial and business matters and the
Investor is capable of bearing the entire loss of its investment in the
securities being purchased by the Investor from the Company.
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 the Investor from the Company.
5.6 Brokers.
Except
as set forth in Schedule 4.8, 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 Investor.
5.7 Knowledge
of Company.
The
Investor and such Investor’s 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 the Investor from the Company. The Investor and such
Investor’s 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 such Investor’s investment in the securities being
purchased by the 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 the Investor from the Company.
The Investor warrants that such Investor is able to bear the complete loss
of
such Investor’s investment in the securities being purchased by the Investor
from the Company.
5.9 Full
Disclosure.
No
representation or warranty made by the 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, 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.
5.10 Payment
of Due Diligence Expenses.
At
Closing the Company shall disperse to the Investor Six Thousand Two Hundred
and
Fifty Dollars ($6,250.00) as partial payment for due diligence expenses as
set
forth in Section 5.10 of the Preferred Stock Purchase Agreement by and between
the parties herein dated March 21, 2008.
ARTICLE
VI
COVENANTS
OF THE COMPANY
6.1 Registration
Rights.
Provided that the Registrable Securities have not been registered, if at any
time after the date hereof, the Company proposes to register any of its
securities under the 1933 Act (other than by a registration in connection with
an acquisition in a manner which would not permit registration of the Shares
for
sale to the public, on Form S-8, or any successor form thereto, on Form S-4,
or
any successor form thereto), the Company will each such time give prompt written
notice to all holders of the Shares of its intention to do so and of such
holders of the Shares' rights under this Section 6.1. Upon the written request
of any such holders of the Shares made within ten (10) days after the receipt
of
any such notice (which request shall specify the Shares intended to be disposed
of by such holders of the Shares and the intended method of disposition
thereof), the Company will, subject to the terms of this Agreement, use its
commercially reasonable best efforts to effect the registration under the 1933
Act of the Shares, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of such Shares so
to
be registered, by inclusion of such Shares in the registration statement which
covers the securities which the Company proposes to register, provided that
if,
at any time after written notice of its intention to register any securities
and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason either not
to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each holders of the
Shares and, thereupon, (i) in the case of a determination not to register,
shall
be relieved of this obligation to register any Shares in connection with such
registration (but not from its obligation to pay the registration expenses
in
connection therewith), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any of the Shares, for
the
same period as the delay in registering such other securities. The Company
will
pay all registration expenses in connection with each registration of the Shares
requested pursuant to this Section 6.1. The right provided the holders of the
Shares pursuant to this Section shall be exercisable at their sole discretion
and will in no way limit any of the Company's obligations to pay the Shares
according to their terms.
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 of
Common Stock underlying the Preferred Stock and Warrants.
6.3 Compliance
with Laws.
The
Company hereby agrees to comply in all respects with the Company's reporting,
filing and other obligations under the Laws.
6.4 Exchange
Act Registration.
The
Company (a) will continue its obligation to report to the SEC under the 1934
Act
and thereafter shall continue to be registered thereunder and 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.
6.6 Listing,
Securities Exchange Act of 1934 and Rule 144
Requirements.
The
Company is required to maintain their current listing on OTC Bulletin Board
or a
listing on a national exchange and maintain their status as a Company regulated
by Securities Exchange Act of 1934 and if the Company is current currently
listed on the Pink Sheets the Company must be fully reporting per Rule 144
until
such time as they are regulated by the Securities Exchange Act of 1934. If
for
any time post Closing the Company is no longer regulated by the Securities
Exchange Act of 1934 and is not a fully reporting Company, then the Company
shall pay to the Investors as liquidated damages and not as a penalty, one
percent
(1%)
a month
of the Initial Purchase Price plus the Additional Investment Right as described
in Section 6.16, should such investment right be exercised, in cash or PIK
at
the option of the Investor. Such damages shall cease at the time the Company
begins complying with the standards as mentioned above in Section
6.6.
6.7 Convertible
Debt.
On
or
prior to the Closing Date, the Company will cause to be cancelled all
convertible debt in the Company. For a period of two years from the closing
the
Company will not issue any convertible debt below $0.90 per share.
6.8 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 five 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.
6.9 Use
of Proceeds.
The
Company will use the proceeds from the sale of the Preferred Stock and the
Warrants (excluding amounts paid by the Company for legal and administrative
fees in connection with the sale of such securities) for sales and marketing,
working capital and acquisitions.
6.10 Right
of First Refusal.
Each
Investor shall have the right to participate in any subsequent funding by the
Company on a pro rata basis at one hundred percent (100%) of the offering price
for a three month period following the Closing.
6.11 Price
Adjustment.
From
the
date hereof until such time as no Purchaser holds any of the Securities, the
Company closes on the sale of a note or notes, shares of Common Stock, or shares
of any class of Preferred Stock at a price per share of Common Stock, or with
a
conversion right to acquire Common Stock at a price per share of Common Stock,
that is less than the Conversion Price (as adjusted to the capitalization per
share as of the Closing Date, following any stock splits, stock dividends,
or
the like) (collectively, the “Subsequent Conversion Price”), the Company shall
make a post-Closing adjustment in the Conversion Price so that the effective
price per share paid by the Investor is adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall
be
the number of shares of Common Stock Outstanding (defined below) immediately
prior to such issuance plus the number of shares of Common Stock that the
aggregate consideration received by the Company for such issuance would purchase
at such Conversion Price; and the denominator of which shall be the number
of
shares of Common Stock Outstanding (as defined below) immediately prior to
such
issuance plus the number of shares issued at such issuance. For purposes of
this
Section
6.11,
the
term “Common Stock Outstanding” shall mean and include the following: (1)
outstanding Common Stock, (2) Common Stock issuable upon conversion of
outstanding Preferred Stock, (3) Common Stock issuable upon exercise of
outstanding warrants. Shares described in (1) through (4) above shall be
included whether vested or unvested, whether contingent or non-contingent and
whether exercisable or not yet exercisable.
6.12 Price
Adjustment
Based on Earnings Per Share.
In
the
event the Company earns between $0.0670 and $0.0335 (50% Decline) per share
(where such earnings in this paragraph shall always be defined as earnings
on a
pre tax fully diluted basis (including dilution from any options, warrants
and
convertible securities) as reported for the audited sixth months ended
June
30,
2008
from
continuing
operations before any non-cash
items the then current Conversion Price to the Investor at the time the audited
numbers are reported to the SEC shall be decrease
proportionately by 0% if the pre tax earnings (for first six months ended June
30, 2008) are $0.0670
per
share or greater and by 50% if the pre tax earnings (for first six months ended
June 30, 2008) are $0.0335
per
share (50%
decrease). For example if the earnings are $ 0.0536 per share or less (20%
Decline) then the then current Conversion Price to the investor shall be reduced
by 20%. Such adjustment shall be made automatically within five business days
of
the audited numbers being reported to the SEC.
In
the
event the Company earns between $0.1559 and $0.0780 (50% Decline) per share
(where such earnings in this paragraph shall always be defined as earnings
on a
pre tax fully diluted basis (including dilution from any options, warrants
and
convertible securities) as reported for the audited fiscal year ending 2008
from
continuing operations before any non-cash items the then current Conversion
Price to the Investor at the time the audited numbers are reported to the SEC
shall be decrease proportionately by 0% if the pre tax earnings are $0.1559
per
share or greater and by 50% if the pre tax earnings are $0.0780 per share (50%
decrease). For example if the earnings are $ 0.1247 per share or less (20%
Decline) then the then current Conversion Price to the investor shall be reduced
by 20%. Such adjustment shall be made automatically within five business days
of
the audited numbers being reported to the SEC.
6.13 Insider
Selling.
The
earliest any “Insiders” can start selling their shares shall be six months from
registration effectiveness. Insiders shall include all officers, consultants
and
directors of the Company. The managing members of the Investor and the Investor
shall not be considered “Insiders”.
6.14 Subsequent
Equity Sales.
From
the
date hereof until such time as no Purchaser holds any of the Securities, 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 more favorable than those granted to such investor
in
such offering. Any Purchaser 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 6.14 shall not apply in respect of an Exempt Issuance, except that
no
Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance, nor
shall this Section 6.14 prevent the Company from potentially granting
anti-dilution protection to any potential future investors in the Company.
6.15 Stock
Splits.
All
forward and reverse stock splits shall effect all equity and derivative holders
proportionately.
ARTICLE
VII
COVENANTS
OF THE INVESTOR
7.1 Compliance
with Law.
The
Investor's 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. The
Investor’s acknowledge that (1) the Preferred Stock, Warrants and shares
underlying the Preferred Stock and Warrants have not been registered under
the
provisions of 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, reasonably satisfactory in form, scope and substance to
the
Company, to the effect that the Preferred Stock, Warrants and shares underlying
the Notes and Warrants to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; and (2) any sale of the
Preferred Stock, Warrants and shares underlying the Preferred Stock and Warrants
made in reliance on Rule 144 promulgated under the 1933 Act may be made only
in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the
SEC
thereunder.
7.3 Restrictive
Legend. The
Investor acknowledges and agrees that the Preferred Stock, the Warrants and
the
Shares underlying the Preferred Stock and Warrants, and, until such time as
the
Shares underlying the Preferred Stock and Warrants have been registered under
the 1933 Act and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Shares, shall bear
a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such securities):
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS
OF
REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
7.4 Amendment
to Articles of Incorporation.
Investor
hereby agrees to vote any shares of capital stock that it may own directly
or
beneficially, for the amendment to the Articles. Pending adoption of such
amendment, Investor hereby agrees for itself and its successors and assigns
that
neither this Section 7.4 or any restriction on exercise of the Warrant shall
be
amended, modified or waived without the consent of the holders of a majority
of
the shares of Common Stock held by Persons who are not Affiliates of the
Company, or the Investor or Affiliates of the Investor.
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 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.
ARTICLE
IX
CONDITIONS
PRECEDENT TO INVESTOR’S 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 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.
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 Investor 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 Investor set forth in this Agreement, or the
Investor upon a material breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company or the Investor, respectively, shall
have become untrue, in either case such that any of the conditions set forth
in
Article VIII or Article IX hereof would not be satisfied (a "Terminating
Breach"),
and
such breach 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.
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 Investor or any of their respective officers, directors, agents
or other representatives and all rights and obligations of any party hereto
shall cease; provided that in the event of a Terminating Breach, the breaching
party shall be liable to the non-breaching party for all costs and expenses
incurred by the non-breaching party not to exceed $50,000.00.
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.
10.4 Waiver.
At any
time prior to the Closing Date, the Company or the Investor, 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. 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
Investor such due diligence expenses as described in section 5.10.
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 such Investor or failure by such Investor to perform with respect
to any of its 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
Investor 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 any of its 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 a breach of this Agreement by the
Company, the Investor shall be entitled to pursue a remedy of specific
performance upon tender into the Court an amount equal to the Initial Purchase
Price hereunder. The indemnification by the Investor shall be limited to the
Initial Purchase Price.
11.3 Headings.
The
table of contents and 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 followed by registered or certified mail confirmation; (iii) on
the
date delivered by an overnight courier service; or (iv) on the third business
day after it is mailed by registered or certified mail, return receipt requested
with postage and other fees prepaid as follows:
If
to
the Company:
▇▇
▇▇▇▇▇▇
▇▇▇▇
Limin
Economic and Technological Development ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile
No.: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Attention:
Jinjiang Wang
With
a
copy to:
▇▇▇▇▇
Rozynko, LLP
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If
to
the Investor:
T
Squared
Investments LLC
c/o
T
Squared Capital LLC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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.
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.
This
Agreement shall be exclusively governed by and construed in accordance with
the
laws of the State of New York. 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 Courts serving the 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.
11.11
Preparation
and Filing of Securities and Exchange Commission
filings.
The
Investor 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 nay 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 all parties hereto.
[SIGNATURES
ON FOLLOWING PAGE]
IN
WITNESS WHEREOF,
the
Investors and the Company have as of the date first written above executed
this
Agreement.
|
By:
|
/s/
Jinjiang Wang
|
|
Jinjiang
Wang
|
|
|
President
and CEO
|
|
|
INVESTOR:
|
|
|
T
Squared Investments LLC
|
|
|
By:
T Squared Capital LLC, Managing Member
|
|
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
Managing
Member
|
|
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
|
|
Schedule
A
|
NAME
AND ADDRESS
|
AMOUNT OF
INVESTMENT
|
NUMBER OF SHARES
OF COMMON STOCK
INTO WHICH PREFERRED
STOCK IS CONVERTIBLE
|
NUMBER OF SHARES
UNDERLYING
WARRANTS
|
|||||||
|
T
Squared Investments LLC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
$
|
250,000
|
416,667
|
1,100,000
|
||||||