CHINA WORLD TRADE CORPORATION PLACEMENT AGENT AGREEMENT
EXHIBIT 10.3
CHINA
WORLD TRADE CORPORATION
Dated as
of: November
15, 2004
▇▇▇▇▇▇
Capital Group
Ladies
and Gentlemen:
The
undersigned, China World Trade Corporation, a Nevada corporation (the
“Company”),
hereby agrees with ▇▇▇▇▇▇
Capital Group (the “Placement
Agent”) and
Cornell Capital Partners, LP, a Delaware Limited Partnership (the “Investor”), as
follows:
1 Offering. The
Company hereby engages the Placement Agent to act as its exclusive placement
agent in connection with the Standby Equity Distribution Agreement dated the
date hereof (the “Standby
Equity Distribution Agreement”),
pursuant to which the Company shall issue and sell to the Investor, from time to
time, and the Investor shall purchase from the Company (the “Offering”) up to
Thirty Million U.S. Dollars ($30,000,000) of the Company’s common stock (the
“Commitment
Amount”), par
value US$0.001 per share (the “Common
Stock”), at
price per share equal to the Purchase Price, as that term is defined in the
Standby Equity Distribution Agreement. The
Placement Agent services
shall
consist of reviewing the
terms of
the
Standby Equity Distribution Agreement and advising the
Company with
respect to those
terms.
All
capitalized terms used herein and not otherwise defined herein shall have the
same meaning ascribed to them as in the Standby Equity Distribution Agreement.
The Investor will be granted certain registration rights with respect to the
Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the Investor dated the date hereof (the “Registration
Rights Agreement”). The
documents to be executed and delivered in connection with the Offering,
including, but not limited, to the
Company’s latest Quarterly Report on Form 10-QSB as filed with the United
States Securities and Exchange Commission, this
Agreement, the Standby Equity Distribution Agreement, the Registration Rights
Agreement, and the Escrow Agreement dated the date hereof (the “Escrow
Agreement”), are
referred to sometimes hereinafter collectively as the “Offering
Materials.” The
Company’s Common Stock
purchased by the Investor hereunder or to be
issued in connection with the conversion of any debentures are sometimes
referred to hereinafter as the “Securities.” The
Placement Agent shall not be obligated to sell any Securities.
2 Compensation.
Upon the
execution of this Agreement, the Company shall issue to the Placement Agent or
its designee One Hundred Fifty Thousand (150,000) shares of the Company’s Common
Stock (the “Placement
Agent’s Shares”). The
Placement Agent shall be entitled to “piggy-back” registration rights, which
shall be triggered upon registration of any shares of Common Stock by the
Investor with respect to the Placement Agent’s Shares pursuant to the
Registration Rights Agreement dated the date hereof. For a period of ninety (90)
calendar days following the Effective Date, as this term is defined in the
Registration Rights Agreement dated the date hereof, the Placement Agent shall
not sell the Placement Agent Shares if the volume weighted average price of the
Company’s Common Stock as quoted Bloomberg, LP (the “VWAP”) is
less than One Dollar and Fifty Cents ($1.50). Thereafter the Placement Agent
shall be entitled to sell the Placement Agent Shares free of any limitation
other than as outlined herein. Notwithstanding the foregoing if the Company does
not obtain the effectiveness of the Registration Statement the Placement Agent
shall be entitled to convert and sell pursuant to Rule 144 and the restrictions
contained below. In addition, for a period of twelve (12) months following the
declaration of effectiveness of the Registration Statement by the United States
Securities and Exchange Commission, the Placement Agent shall not sell more than
twenty five percent (25%) of the Placement Agent Shares every thirty (30)
calendar days if the VWAP of the Company’s Common Stock is less than Two Dollars
and Fifty Cents ($2.50). If the VWAP of the Company’s Common Stock is higher
than Two Dollars and Fifty Cents ($2.50) the Placement Agent shall be entitled
to sell the Placement Agent Shares free of any limitation.
1
On each
Advance Date pursuant to the Standby Equity Distribution Agreement the Company
shall pay to the Placement Agent, directly from the gross proceeds held in
escrow, an amount equal to four percent (4%) of the amount of each
Advance.
3 Representations,
Warranties and Covenants of the Placement Agent.
A. The Placement Agent represents, warrants and covenants as
follows:
(i) The
Placement Agent has the necessary power to enter into this Agreement and to
consummate the transactions contemplated hereby.
(ii) The
execution and delivery by the Placement Agent of this Agreement and the
consummation of the transactions contemplated herein will not result in any
violation of, or be in conflict with, or constitute a default under, any
agreement or instrument to which the Placement Agent is a party or by which the
Placement Agent or its properties are bound, or any judgment, decree, order or,
to the Placement Agent’s knowledge, any statute, rule or regulation applicable
to the Placement Agent. This Agreement when executed and delivered by the
Placement Agent, will constitute the legal, valid and binding obligations of the
Placement Agent, enforceable in accordance with their respective terms, except
to the extent that (a) the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of equity, or
(c) the indemnification provisions hereof or thereof may be held to be in
violation of public policy.
(iii) Upon
receipt and execution of this Agreement, the Placement Agent will promptly
forward copies of this Agreement to the Company or its counsel and the Investor
or its counsel.
(iv) The
Placement Agent will not intentionally take any action that it reasonably
believes would cause the Offering to violate the provisions of the Securities
Act of 1933, as amended (the “1933
Act”), the
Securities Exchange Act of 1934 (the “1934
Act”), the
respective rules and regulations promulgated thereunder (the
“Rules
and Regulations”) or
applicable “Blue Sky” laws of any state or jurisdiction.
(v) The
Placement Agent is a member of the National Association of Securities Dealers,
Inc., and is a broker-dealer registered as such under the 1934 Act and under the
securities laws of the states in which the Securities will be offered or sold by
the Placement Agent unless an exemption for such state registration is available
to the Placement Agent. The Placement Agent is in material
compliance
with the rules
and regulations applicable to the Placement Agent generally and applicable to
the Placement Agent’s participation in the Offering.
4 Representations
and Warranties of the Company.
A The
Company represents and warrants as follows:
(i) The
execution, delivery and performance of each of this Agreement, the Standby
Equity Distribution Agreement, the Escrow Agreement, and the Registration Rights
Agreement has been or will be duly and validly authorized by the Company and is,
or with respect to this Agreement, the Standby Equity Distribution Agreement,
the Escrow Agreement, and the Registration Rights Agreement, will be a valid and
binding agreement of the Company, enforceable in accordance with its respective
terms, except to the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity
or (c) the indemnification provisions hereof or thereof may be held to be
in violation of public policy. The Securities to be issued pursuant to the
transactions contemplated by this Agreement and the Standby Equity Distribution
Agreement have been duly authorized and, when issued and paid for in accordance
with this Agreement, the Standby Equity Distribution Agreement and the
certificates/instruments representing such Securities, will be valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except to the extent that (1) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, and
(2) the enforceability thereof is subject to general principles of equity. All
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken by the Company.
(ii) The
Company has a duly authorized, issued and outstanding capitalization as set
forth herein and in the Standby Equity Distribution Agreement. The Company is
not a party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the agreements described herein and as
described in the Standby Equity Distribution Agreement, dated the date hereof
and the agreements described therein. All
issued and outstanding securities of the Company, have been duly authorized and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission or preemptive rights with respect thereto and are not
subject to personal liability solely by reason of being security holders; and
none of such securities were issued in violation of the preemptive rights of any
holders of any security of the Company.
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(iii) The
Common Stock to be issued in accordance with this Agreement and the Standby
Equity Distribution Agreement has been duly authorized and, when issued and paid
for in accordance with this Agreement, the Standby Equity Distribution Agreement
and the certificates/instruments representing such Common Stock will be validly
issued, fully-paid and non-assessable; the holders thereof will not be subject
to personal liability solely by reason of being such holders; such Securities
are not and will not be subject to the preemptive rights of any holder of any
security of the Company.
(iv) The
Company has good and marketable title to, or valid and enforceable leasehold
estates in, all items of real and personal property necessary to conduct its
business (including, without limitation, any real or personal property stated in
the Offering Materials to be owned or leased by the Company), free and clear of
all liens, encumbrances, claims, security interests and defects of any material
nature whatsoever, other than those set forth in the Offering Materials and
liens for taxes not yet due and payable.
(v) There is
no litigation or governmental proceeding pending or, to the best of the
Company’s knowledge, threatened against, or involving the properties or business
of the Company, except as set forth in the Offering Materials.
(vi) The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Nevada. Except as set forth in the
Offering Materials, the Company does not own or control, directly or indirectly,
an interest in any other corporation, partnership, trust, joint venture or other
business entity. The Company is duly qualified or licensed and in good standing
as a foreign corporation in each jurisdiction in which the character of its
operations requires such qualification or licensing and where failure to so
qualify would have a material adverse effect on the Company. The Company has all
requisite corporate power and authority, and all material and necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (domestic and foreign) to
conduct its businesses (and proposed business) as described in the Offering
Materials. Any disclosures in the Offering Materials concerning the effects of
foreign, federal, state and local regulation on the Company’s businesses as
currently conducted and as contemplated are correct in all material respects and
do not omit to state a material fact. The Company has all corporate power and
authority to enter into this Agreement, the Standby Equity Distribution
Agreement, the Registration Rights Agreement, and the Escrow Agreement, to carry
out the provisions and conditions hereof and thereof, and all consents,
authorizations, approvals and orders required in connection herewith and
therewith have been obtained. No consent, authorization or order of, and no
filing with, any court, government agency or other body is required by the
Company for the issuance of the Securities or execution and delivery of the
Offering Materials except for applicable federal and state securities laws. The
Company, since its inception, has not incurred any liability arising under or as
a result of the application of any of the provisions of the 1933 Act, the 1934
Act or the Rules and Regulations.
(vii) There has
been no material adverse change in the condition or prospects of the Company,
financial or otherwise, from the latest dates as of which such condition or
prospects, respectively, are set forth in the Offering Materials, and the
outstanding debt, the property and the business of the Company conform in all
material respects to the descriptions thereof contained in the Offering
Materials.
(viii) Except as
set forth in the Offering Materials, the
Company is not in breach of, or in default under, any term or provision of any
material indenture, mortgage, deed of trust, lease, note, loan or Standby Equity
Distribution Agreement or any other material agreement or instrument evidencing
an obligation for borrowed money, or any other material agreement or instrument
to which it is a party or by which it or any of its properties may be bound or
affected. The Company is not in violation of any provision of its charter or
by-laws or in violation of any franchise, license, permit, judgment, decree or
order, or in violation of any material statute, rule or regulation. Neither the
execution and delivery of the Offering Materials nor the issuance and sale or
delivery of the Securities, nor the consummation of any of the transactions
contemplated in the Offering Materials nor the compliance by the Company with
the terms and provisions hereof or thereof, has conflicted with or will conflict
with, or has resulted in or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or pursuant to the terms
of any indenture, mortgage, deed of trust, note, loan or any other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company may be bound or to which any of the property
or assets of the Company is subject except (a) where such default, lien, charge
or encumbrance would not have a material adverse effect on the Company and (b)
as described in the Offering Materials; nor will such action result in any
violation of the provisions of the charter or the by-laws of the Company or,
assuming the due performance by the Placement Agent of its obligations
hereunder, any material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign, federal, state or
other regulatory authority or other government body having jurisdiction over the
Company.
3
(ix) Subsequent
to the dates as of which information is given in the Offering Materials, and
except as may otherwise be indicated or contemplated herein or therein and the
securities offered pursuant to the Securities Purchase Agreement dated the date
hereof, the Company has not (a) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, or (b) entered into any
transaction other than in the ordinary course of business, or (c) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock. Except as described in the Offering Materials, the Company has no
outstanding obligations to any officer or director of the Company.
(x) The
Company owns or possesses, free and clear of all liens or encumbrances and
rights thereto or therein by third parties, the requisite licenses or other
rights to use all trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses necessary to conduct its
business (including, without limitation, any such licenses or rights described
in the Offering Materials as being owned or possessed by the Company) and,
except as set forth in the Offering Materials, there is no claim or action by
any person pertaining to, or proceeding, pending or threatened, which challenges
the exclusive rights of the Company with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent applications and
licenses used in the conduct of the Company’s businesses (including, without
limitation, any such licenses or rights described in the Offering Materials as
being owned or possessed by the Company) except any claim or action that would
not have a material adverse effect on the Company; the Company’s current
products, services or processes do not infringe or will not infringe on the
patents currently held by any third party.
(xi) Except as
described in the Offering Materials and the fees to World Trade Center
Association, the Company is not under any obligation to pay royalties or fees of
any kind whatsoever to any third party with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent applications,
licenses or technology it has developed, uses, employs or intends to use or
employ, other than to their respective licensors.
(xii) Subject
to the performance by the Placement Agent of its obligations
hereunder the
offer and sale of the Securities complies, and
will continue to comply, in all
material respects with the requirements of Rule 506 of Regulation D promulgated
by the SEC pursuant to the 1933 Act and any other applicable federal and state
laws, rules, regulations and executive orders. Neither the Offering Materials
nor any amendment or supplement thereto nor any documents prepared by the
Company in connection with the Offering will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. All statements of material facts in the
Offering Materials are true and correct as of the date of the Offering
Materials.
4
(xiii) All material
taxes which are due and payable from the Company have been paid in full or
adequate provision has been made for such taxes on the books of the
Company, except
for those taxes disputed in good faith by
the
Company.
(xiv) None of
the Company nor any of its officers, directors, employees or agents, nor any
other person acting on behalf of the Company, has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign) or
other person who is or may be in a position to help or hinder the business of
the Company (or assist it in connection with any actual or proposed transaction)
which (A) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, or (B) if not given in the
past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Offering Materials, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company in the future.
5 Representations,
Warranties and Covenants of the Investor.
A The
Investor represents, warrants and covenants as follows:
(i) The
Investor has the necessary power to enter into this Agreement and to consummate
the transactions contemplated hereby.
(ii) The
execution and delivery by the Investor of this Agreement and the consummation of
the transactions contemplated herein will not result in any violation of, or be
in conflict with, or constitute a default under, any agreement or instrument to
which the Investor is a party or by which the Investor or its properties are
bound, or any judgment, decree, order or, to the Investor’s knowledge, any
statute, rule or regulation applicable to the Investor. This Agreement when
executed and delivered by the Investor, will constitute the legal, valid and
binding obligations of the Investor, enforceable in accordance with their
respective terms, except to the extent that (a) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to general
principles of equity, or (c) the indemnification provisions hereof or thereof
may be held to be in violation of public policy.
(iii) The
Investor will promptly forward copies of any and all due diligence
questionnaires compiled by the Investor to the Placement Agent.
(iv) The Investor
is an Accredited Investor (as
defined under the 1933 Act).
(v) The
Investor is acquiring the Securities for the Inventor’s own account as
principal, not as a nominee or agent, for investment purposes only, and not with
a view to, or for, resale, distribution or fractionalization thereof in whole or
in part and no other person has a direct or indirect beneficial interest in such
Securities. Further, the Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
(vi) The
Investor acknowledges the Investor’s understanding that the offering and sale of
the Securities is intended to be exempt from registration under the 1933 Act by
virtue of Section 3(b) of the 1933 Act and the provisions of Regulation D
promulgated thereunder (“Regulation
D”). In
furtherance thereof, the Investor represents and warrants as
follows:
(a)
The Investor has the financial ability to bear the economic risk of the
Investor’s investment, has adequate means for providing for the Inventor’s
current needs and personal contingencies and has no need for liquidity with
respect to the Investor’s investment in the Company; and
(b)
The Investor has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of the prospective
investment. The Inventor also represents it has not been organized for the
purpose of acquiring the Securities.
(vii) The
Investor has been given the opportunity for a reasonable time prior to the date
hereof to ask questions of, and receive answers from, the Company or its
representatives concerning the terms and conditions of the Offering, and other
matters pertaining to this investment, and has been given the opportunity for a
reasonable time prior to the date hereof to obtain such additional information
in connection with the Company in order for the Investor to evaluate the merits
and risks of purchase of the Securities, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense. The
Investor is not relying on the Placement Agent or any of its affiliates with
respect to the accuracy or completeness of the Offering Materials or for any
economic considerations involved in this investment.
5
6. Certain Covenants and Agreements of the
Company.
The
Company covenants and agrees at its expense and without any expense to the
Placement Agent as follows:
A. To
advise the Placement Agent and the
Investor of any
material adverse change in the Company’s financial condition, prospects or
business or of any development materially affecting the Company or rendering
untrue or misleading any material statement in the Offering Materials occurring
at any time as soon as the Company is either informed or becomes aware
thereof.
B.
To use its commercially reasonable efforts to cause the Common Stock issuable in
connection with the Standby Equity Distribution Agreement to be qualified or
registered for sale on terms consistent with those stated in the Registration
Rights Agreement and under the securities laws of such jurisdictions as the
Placement Agent and the Investor shall reasonably request. Qualification,
registration and exemption charges and fees shall be at the sole cost and
expense of the Company.
C.
Upon written request, to provide and continue to provide the Placement Agent and
the Investor copies of all quarterly financial statements and audited annual
financial statements prepared by or on behalf of the Company, other reports
prepared by or on behalf of the Company for public disclosure and all documents
delivered to the Company’s stockholders.
D.
To deliver, during the registration period of the Standby Equity Distribution
Agreement, to the Investor upon the
Investor’s
request, within fifty (50) days, a statement of its income for each such
quarterly period, and its balance sheet and a statement of changes in
stockholders’ equity as of the end of such quarterly period, all in reasonable
detail, certified by its principal financial or accounting officer; (ii) within
one hundred five (105) days after the close of each fiscal year, its balance
sheet as of the close of such fiscal year, together with a statement of income,
a statement of changes in stockholders’ equity and a statement of cash flow for
such fiscal year, such balance sheet, statement of income, statement of changes
in stockholders’ equity and statement of cash flow to be in reasonable detail
and accompanied by a copy of the certificate or report thereon of independent
auditors if audited financial statements are prepared; and (iii) a copy of all
documents, reports and information furnished to its stockholders at the time
that such documents, reports and information are furnished to its
stockholders, if such
information is unavaiable on the official website of the SEC.
E.
To comply with the terms of the Offering Materials.
F.
To ensure that any transactions between or among the Company, or any of its
officers, directors and affiliates be on terms and conditions that are no less
favorable to the Company, than the terms and conditions that would be available
in an “arm’s length” transaction with an independent third party.
7.
Indemnification and
Limitation of Liability.
The
Company hereby agrees that it will indemnify and hold the Placement Agent and
each officer, director, shareholder, employee or representative of the Placement
Agent and each person controlling, controlled by or under common control with
the Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the SEC’s Rules and Regulations promulgated thereunder
(the “Rules
and Regulations”),
harmless from and against any and all loss, claim, damage, liability, cost or
expense whatsoever (including, but not limited to, any and all reasonable legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in any
action, suit or proceeding, including any inquiry, investigation or pretrial
proceeding such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933 Act,
the 1934 Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in (a)
Section 4 of this Agreement, (b) the Offering Materials (except those written
statements relating to the Placement Agent given by the
Placement Agent for
inclusion therein), (c) any application or other document or written
communication executed by the Company or based upon written information
furnished by the Company filed in any jurisdiction in order to qualify the
Common Stock under the securities laws thereof, or any state securities
commission or agency; (ii) the omission or alleged omission from documents
described in clauses (a), (b) or (c) above of a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(iii) the breach of any representation, warranty, covenant or agreement made by
the Company in this Agreement. The Company further agrees that upon demand by an
indemnified person, at any time or from time to time, it will promptly reimburse
such indemnified person for any loss, claim, damage, liability, cost or expense
actually and reasonably paid by the indemnified person as to which the Company
has indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this Paragraph 7(A), any such payment or reimbursement by the
Company of fees, expenses or disbursements incurred by an indemnified person in
any proceeding in which a final judgment by a court of competent jurisdiction
(after all appeals or the expiration of time to appeal) is entered against the
Placement Agent or such indemnified person based upon specific finding of fact
that the Placement Agent or such indemnified person’s gross negligence or
willful misfeasance will be promptly repaid to the Company.
6
B.
The Placement Agent hereby agrees that it will indemnify and hold the Company
and each officer, director, shareholder, employee or representative of the
Company, and each person controlling, controlled by or under common control with
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the Rules and Regulations, harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the material
breach of any representation, warranty, covenant or agreement made by the
Placement Agent in this Agreement, or (ii) any
false or misleading information provided to the Company in
writing by one of
the Placement Agent’s indemnified persons
specifically for inclusion in the Offering Materials.
C.
The
Investor hereby agrees that it will indemnify and hold the Placement Agent and
each officer, director, shareholder, employee or representative of the Placement
Agent, and each person controlling, controlled by or under common control with
the Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the Rules and Regulations, harmless from and against any
and all loss, claim, damage, liability, cost or expense whatsoever (including,
but not limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Placement Agent or such indemnified person of the
Placement Agent may become subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation, common law or
otherwise, arising out of or based upon (i) the conduct of the Investor or its
officers, employees or representatives in its acting as the Investor for the
Offering, (ii) the material breach of any representation, warranty, covenant or
agreement made by the Investor in the Offering Materials, or (iii) any false or
misleading information provided to the Placement Agent by one of the Investor’s
indemnified persons.
D.
The Placement Agent hereby agrees that it will indemnify and hold the Investor
and each officer, director, shareholder, employee or representative of the
Investor, and each person controlling, controlled by or under common control
with the Investor within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act or the Rules and Regulations, harmless from and against any and
all loss, claim, damage, liability, cost or expense whatsoever (including, but
not limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Investor or such indemnified person of the Investor may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon the
material breach of any representation, warranty, covenant or agreement made by
the Placement Agent in this Agreement.
E.
Promptly after receipt by an indemnified party of notice of commencement of any
action covered by Section 7(A), (B), (C) or (D), the party to be indemnified
shall, within five (5) business days, notify the indemnifying party of the
commencement thereof; the omission by one (1) indemnified party to so
notify the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other indemnified party that has given such notice
and shall not relieve the indemnifying party of any liability outside of this
indemnification if not materially prejudiced thereby. In the event that any
action is brought against the indemnified party, the indemnifying party will be
entitled to participate therein and, to the extent it may desire, to assume and
control the defense thereof with counsel chosen by it which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
Section 7(A), (B), (C), or (D) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof, but
the indemnified party may, at its own expense, participate in such defense by
counsel chosen by it, without, however, impairing the indemnifying party’s
control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any action, all at the expense of the
indemnifying party if (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstance, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnifying party.
7
F.
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 7(A) or 7(B) is due in
accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and the Placement
Agent shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with the
investigation or defense of same) which the other may incur in such proportion
so that the Placement Agent shall be responsible for such percent of the
aggregate of such losses, claims, damages and liabilities as shall equal the
percentage of the gross proceeds paid to the Placement Agent and the Company
shall be responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(F), any person
controlling, controlled by or under common control with the Placement Agent, or
any partner, director, officer, employee, representative or any agent of any
thereof, shall have the same rights to contribution as the Placement Agent and
each person controlling, controlled by or under common control with the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
and each officer of the Company and each director of the Company shall have the
same rights to contribution as the Company. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against the other party under this Section 7(D), notify such party from
whom contribution may be sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be sought from any obligation
they may have hereunder or otherwise if the party from whom contribution may be
sought is not materially prejudiced thereby.
G.
The indemnity and contribution agreements contained in this Section 7 shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified person or any termination of this
Agreement.
H.
The Company hereby waives, to the fullest extent permitted by law, any right to
or claim of any punitive, exemplary, incidental, indirect, special,
consequential or other damages (including, without limitation, loss of profits)
against the Placement Agent and each officer, director, shareholder, employee or
representative of the placement agent and each person controlling, controlled by
or under common control with the Placement Agent within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations
arising out of any cause whatsoever (whether such cause be based in contract,
negligence, strict liability, other tort or otherwise). Notwithstanding anything
to the contrary contained herein, the aggregate liability of the Placement Agent
and each officer, director, shareholder, employee or representative of the
Placement Agent and each person controlling, controlled by or under common
control with the Placement Agent within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act or the Rules and Regulations shall not exceed
the compensation received by the Placement Agent pursuant to Section 2 hereof.
This limitation of liability shall apply regardless of the cause of action,
whether contract, tort (including, without limitation, negligence) or breach of
statute or any other legal or equitable obligation.
8. Payment of
Expenses.
The
Company hereby agrees to bear all of the expenses in connection with the
Offering, including, but not limited to the following: filing fees, printing and
duplicating costs, advertisements, postage and mailing expenses with respect to
the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company’s counsel and accountants,
issue and transfer taxes, if any.
9. Conditions
of Closing.
The
Closing shall be held at the offices of the Investor or its counsel. The
obligations of the Placement Agent hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company and the
Investor herein as
of the date hereof and as of the Date of Closing (the “Closing
Date”) with
respect to the Company or the
Investor, as the case may be, as if it
had been made on and as of such Closing Date; the accuracy on and as of the
Closing Date of the statements of the officers of the Company made pursuant to
the provisions hereof; and the performance by the Company and the
Investor on and as
of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:
8
A. Upon the
effectiveness of a registration statement covering the Standby Equity
Distribution Agreement, the Investor
and the Placement
Agent shall receive the opinion of Counsel to the Company, dated as of the date
thereof, which opinion shall be in form and substance reasonably satisfactory to
the Investor, their counsel and the Placement Agent.
B. At or prior
to the Closing, the
Investor and the
Placement Agent shall have been furnished such documents, certificates and
opinions as it may reasonably require for the purpose of enabling them to review
or pass upon the matters referred to in this Agreement and the Offering
Materials, or in order to evidence the accuracy, completeness or satisfaction of
any of the representations, warranties or conditions herein
contained.
C. At and prior
to the Closing, (i) there shall have been no material adverse change nor
development involving a prospective change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Offering Materials; (ii)
there shall have been no transaction, not in the ordinary course of business
except the transactions pursuant to the Securities Purchase Agreement entered
into by the Company on the date hereof which has not been disclosed in the
Offering Materials or to the Placement Agent in writing; (iii) except as set
forth in the Offering Materials, the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness for which a
waiver or extension has not been otherwise received; (iv) except as set forth in
the Offering Materials, the Company shall not have issued any securities (other
than those to be issued as provided in the Offering Materials) or declared or
paid any dividend or made any distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities or obligations of the Company (contingent or otherwise) and trade
payable debt; (v) no material amount of the assets of the Company shall have
been pledged or mortgaged, except as indicated in the Offering Materials; and
(v) no action, suit or proceeding, at law or in equity, against the Company or
affecting any of its properties or businesses shall be pending or threatened
before or by any court or federal or state commission, board or other
administrative agency, domestic or foreign, wherein an unfavorable decision,
ruling or finding could materially adversely affect the businesses, prospects or
financial condition or income of the Company, except as set forth in the
Offering Materials.
D. If requested
at
Closing the
Investor and the
Placement Agent shall receive a certificate of the Company signed by an
executive officer and chief financial officer, dated as of the applicable
Closing, to the effect that the conditions set forth in subparagraph (C) above
have been satisfied and that, as of the applicable closing, the representations
and warranties of the Company set forth herein are true and
correct.
E. The
Placement Agent shall have no obligation to insure that (x) any check, note,
draft or other means of payment for the Common Stock will be honored, paid or
enforceable against the Investor in accordance with its terms, or (y) subject to
the performance of the Placement Agent’s obligations and the accuracy of the
Placement Agent’s representations and warranties hereunder, (1) the Offering is
exempt from the registration requirements of the 1933 Act or any applicable
state “Blue Sky” law or (2) the Investor is an Accredited Investor.
10. Termination.
This
Agreement shall be co-terminus with, and terminate upon the same terms and
conditions as those set forth in, the Standby Equity Distribution Agreement. The
rights of the Investor and the obligations of the Company under the Registration
Rights Agreement, and the rights of the Placement Agent and the obligations of
the Company shall survive the termination of this Agreement
unabridged.
11.
Miscellaneous.
A. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all which shall be deemed to be one and the same
instrument.
B. Any notice
required or permitted to be given hereunder shall be given in writing and shall
be deemed effective when deposited in the United States mail, postage prepaid,
or when received if personally delivered or faxed (upon confirmation of receipt
received by the sending party), addressed as follows to such
other address of which written notice is given to the others):
9
|
If
to Placement Agent, to: |
▇▇▇▇▇▇
Capital Group |
|
▇▇▇
▇▇▇
▇▇▇▇▇▇ | |
|
▇▇▇
▇▇▇▇, ▇▇ | |
|
Attention: | |
|
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇ | |
|
Facsimile: | |
|
If
to the Company, to: |
China
World Trade Corporation |
|
Room
1217, 12th
Floor, The ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | |
|
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇, Chief Financial Officer | |
|
Telephone:
(▇▇▇) ▇▇▇▇-▇▇▇▇ | |
|
Facsimile:
(▇▇▇) ▇▇▇▇-▇▇▇▇ | |
|
With
a copy to: |
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, P.A. |
|
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇ | |
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ | |
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇ | |
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇ | |
|
If
to the Investor: |
Cornell
Capital Partners, LP |
|
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇ | |
|
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇ | |
|
Portfolio Manager | |
|
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇ | |
|
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇ | |
|
With
copies to: |
▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq. |
|
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇ | |
|
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ | |
|
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇ | |
C. This
Agreement shall be governed by and construed in all respects under the laws of
the State of Nevada , without reference to its conflict of laws rules or
principles. Any suit, action, proceeding or litigation arising out of or
relating to this Agreement shall be brought and prosecuted in such federal or
state court or courts located within the State of New York as provided by law.
The parties hereby irrevocably and unconditionally consent to the jurisdiction
of each such court or courts located within the State of New York and to service
of process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding or
litigation so commenced has been commenced in an inconvenient
forum.
D. This
Agreement and the other agreements referenced herein contain the entire
understanding between the parties hereto and may not be modified or amended
except by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
E. If any
provision of this Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision of this
Agreement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
10
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written
above.
|
COMPANY: | |
|
CHINA
WORLD TRADE CORPORATION | |
|
By:
/s/ ▇▇▇▇ ▇▇▇ | |
|
Name: ▇▇▇▇
▇▇▇ | |
|
Title: CEO
& Vice Chairman | |
|
PLACEMENT
AGENT: | |
|
▇▇▇▇▇▇
CAPITAL, LLC | |
|
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇
▇▇▇▇▇ | |
|
Title: Managing
Member | |
|
INVESTOR: | |
|
CORNELL
CAPITAL PARTNERS, LP | |
|
By: Yorkville
Advisors, LLC | |
|
Its: General
Partner | |
|
By:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇ | |
|
Title: Portfolio
Manager | |
11