SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT BY AND AMONG ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., BARRON PARTNERS LP AND EOS HOLDINGS, LLC DATED FEBRUARY 25, 2008
BY
AND AMONG
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.,
▇▇▇▇▇▇
PARTNERS LP
AND
EOS
HOLDINGS, LLC
DATED
FEBRUARY
25, 2008
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”)
is
made and entered into as of the 25th day of February, 2008 between Entech
Environmental Technologies, Inc.,
a
Florida
corporation (the “Company”),
and
each of the parties signatory hereto (each an “Investor”,
and
collectively, the “Investors”).
RECITALS
WHEREAS,
the
Investors wish to purchase from the Company, upon the terms and subject to
the
conditions of this Agreement, for the Purchase Price, as hereinafter defined,
an
aggregate of (i) 2,833,333
shares
of
the Company’s Series B Convertible Preferred Stock, par value $0.001 per share
(“Series
B Preferred Stock”),
with
each share of Series B Preferred Stock being initially convertible into one
(1)
share of the Company’s common stock, par value $0.001 per share (“Common
Stock”),
subject to adjustment, and (ii) common stock purchase warrants to purchase
Seven
Million (7,000,000)
shares
of Common Stock at Three Dollar ($3.00) per share (collectively, the
“Warrants”).
WHEREAS,
the
Investors are purchasing Securities in the amounts set forth in Schedule A
of
this Agreement;
WHEREAS,
the
parties intend to memorialize the terms on which the Company will sell to the
Investors and the Investors will purchase the Securities;
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
1
INCORPORATION
BY REFERENCE AND DEFINITIONS
1.1 Incorporation
by Reference.
The
foregoing recitals and the exhibits and schedules attached hereto and referred
to herein, are hereby acknowledged to be true and accurate, and are incorporated
herein by this reference.
1.2 Supersedes
Other Agreements.
This
Agreement, to the extent that it is inconsistent with any other instrument
or
understanding among the parties, shall supersede such instrument or
understanding to the fullest extent permitted by law. A copy of this Agreement
shall be filed at the Company’s principal office.
1.3 Certain
Definitions.
For
purposes of this Agreement, the following capitalized terms shall have the
following meanings (all capitalized terms used in this Agreement that are not
defined in this Article 1 shall have the meanings set forth elsewhere in this
Agreement):
1.3.1 “4.9%
Limitation”
has
the
meaning set forth in Section 2.1.2 of this Agreement.
1.3.2 “1933
Act”
means the Securities Act of 1933, as amended.
1.3.3 “1934
Act”
means
the Securities Exchange Act of 1934, as amended.
1.3.4 “Affiliate”
means
a
Person or Persons directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with the Person(s) in
question. The term “control,” as used in the immediately preceding sentence,
means, with respect to a Person that is a corporation, the right to exercise,
directly or indirectly, more than 50% of the voting rights attributable to
the
shares of such controlled corporation and, with respect to a Person that is
not
a corporation, the possession, directly or indirectly, of the power to direct
or
cause the direction of the management or policies of such controlled
Person.
1.3.5 “Articles”
means
the Articles of Incorporation of the Company, as the same may be amended from
time to time.
1.3.6 “Authorized
Stock Proviso”
has
the
meaning set forth in Section 4.4.3 of this Agreement.
1.3.7 “Board
of Directors”
means
the Board of Directors of the Company
1.3.8 “Bylaws”
means
the Bylaws of the Company, as the same may be amended from time to
time.
1.3.9 “Certificate
of Designation”
means
the Certificate of Designations, Preferences and Rights, with respect to the
Series B Preferred Stock. The Certificate of Designation shall be in
substantially the form of Exhibit A to this Agreement.
1.3.10 “Closing” means
the
consummation of the transactions contemplated by this Agreement, all of which
transactions shall be consummated simultaneously.
1.3.11 “Closing
Date”
shall
have the meaning set forth in Section 3.1 of this Agreement.
1.3.12 “Closing
Escrow Agreement”
shall
mean the agreement between the Company, the Investors and the Escrow Agent
pursuant to which securities are deposited into escrow to be held as provided
in
Section 6 of this Agreement. The Closing Escrow Agreement shall be in
substantially the form of Exhibit
B
to this
Agreement.
1.3.13 “Common
Stock”
means
the Company’s common stock, which is presently designated as the common stock,
par value $0.001 per share.
1.3.14 “Company’s
Governing Documents”
means
the Articles and Bylaws.
1.3.15 “Escrow
Agent”
means
Tri-State Tile and Escrow, LLC, a Virginia limited liability company.
1.3.16 “Escrow
Agreement”
means
the Escrow Agreement dated February 7, 2008, among the Company, the Investors
and the Escrow Agent. The Escrow Agreement shall be in substantially the form
of
Exhibit
C
to this
Agreement.
1.3.17 “Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to employees, officers,
directors and consultants (other than consultants whose services relate to
the
raising of funds) of the Company pursuant to any stock or option plan that
was
or may be adopted by (i) a majority of independent members of the Board of
Directors or (ii) a majority of the members of a committee of independent
directors established for compensatory purposes, (b) securities upon the
exercise or conversion of any securities issued hereunder or pursuant to other
Transaction Documents, the Series B Preferred Stock, the Warrants and the
Certificate of Designation and (c), (d) securities issued pursuant to
acquisitions, licensing agreements, or other strategic transactions provided,
with respect to clause (e), any such issuance shall only be to a Person which
is, itself or through its subsidiaries, an operating company in a business
which
the Board of Directors believes is beneficial to the Company and in which the
Company receives benefits in addition to the investment of funds, but shall
not
include a transaction in which the Company is issuing securities primarily
for
the purpose of raising capital or to an entity whose primary business is
investing in securities.
1.3.18 “Florida
Law”
shall
mean the Florida Business Corporation Act, as amended from time to
time.
2
1.3.19 “Fully
Diluted Shares Outstanding”
means all
shares of Common Stock issuable upon conversion of convertible securities and
upon exercise of warrants and options (whether or not vested) regardless of
whether (i) such shares are treated as outstanding for determining diluted
earnings per share under GAAP, (ii) such securities are “in the money,” or (iii)
such shares may be issued as a result of the 4.9% Limitation.
1.3.20 “GAAP”
means
United States generally accepted accounting principles consistently
applied.
1.3.21
“Make
Good Escrow Stock”
means
2,000,000 shares of Series B Preferred Stock.
1.3.22
“Material
Adverse Effect”
means
any adverse effect on the business, operations, properties or financial
condition of the Company or any of its Subsidiaries that is material and adverse
to the Company and its Subsidiaries taken as a whole and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company or any Subsidiary to perform any of its material
obligations under this Agreement, the Registration Rights Agreement or the
Warrants or to perform its obligations under any other material agreement.
1.3.23 “Person”
means
an individual, partnership, firm, limited liability company, trust, joint
venture, association, corporation, or any other legal entity.
1.3.24 “Preferred
Stock”
means
the Company’s authorized preferred stock, par value $0.001 per share.
1.3.25 “Pre-Tax
Income”
means,
with respect to any complete fiscal year, income before income taxes determined
in accordance with GAAP plus (a) any cash or non-cash charges relating to the
transaction contemplated by the Transaction Documents (including, without
limitation, any charges for derivative instruments), minus (b) the amount,
if
any, by which all non-recurring losses or expenses exceed all non-recurring
items of income or gain.
Pre-Tax
Income shall not be adjusted if all non-recurring items of income or gain exceed
all non-recurring losses or expenses. Items shall be deemed to be non-recurring
only if they qualify as non-recurring pursuant to GAAP.
1.3.26 “Pre-Tax
Income Per Share”
means
with respect to a particular fiscal year, the Pre-Tax Income for such fiscal
year divided by the Fully Diluted Shares Outstanding at the end of such fiscal
year.
1.3.27 “Purchase
Price”
means
the three million and four hundred thousand dollars ($3,400,000) to be paid
by
the Investors to the Company for the Securities.
1.3.28 “Registration
Rights Agreement”
means
the registration rights agreement by and among the Investors and the Company
in
substantially the form of Exhibit
D
to this
Agreement.
1.3.29 “Registration
Statement”
means
the registration statement under the 1933 Act to be filed with the SEC for
the
registration of the Shares pursuant to the Registration Rights
Agreement.
1.3.30 “Required
Pre-Tax Income Per Share”
means
with respect to a particular fiscal year, the applicable Target Number (as
defined in Section 6.16) for such fiscal year divided by the Fully Diluted
Shares Outstanding at the end of such fiscal year.
1.3.31 “Restricted
Stockholders”
shall
have the meaning set forth in Section 6.17 of this Agreement.
1.3.32 “Restriction
Termination Date”
shall
mean the date on which the Investors shall have (a) converted or sold all shares
of Series B Preferred Stock and exercised or sold all Warrants (other than
Warrants that shall have expired unexercised) and (b) sold the underlying Shares
(other than the shares issuable upon exercise of the Warrants that shall have
expired unexercised) in the public market.
1.3.33 “Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
1.3.34 “Securities”
means
the shares of Series B Preferred Stock, the Warrants and the
Shares.
1.3.35 “SEC”
means
the Securities and Exchange Commission.
3
1.3.36 “SEC
Documents”
means,
at any given time, the Company’s latest Form 10-K or Form 10-KSB, all Forms 10-Q
or 10-QSB, 8-K and all proxy statements or information statements filed between
the date the most recent Form 10-K or Form 10-KSB was filed and the date as
to
which a determination is being made.
1.3.37 “Series
B Preferred Stock”
means
the shares of Series B Preferred Stock having the rights, preferences and
privileges and subject to the limitations set forth in the Certificate of
Designation.
1.3.38 “Shares”
means,
collectively, the shares of Common Stock issued or issuable (i) upon conversion
of the Series B Preferred Stock and (ii) upon exercise of the
Warrants.
1.3.39 “Share
Exchange Agreement”
means
the share exchange agreement dated February ___, 2008 by and among the Company,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the shareholders of Pacific Industry Holding Group Co.,
Ltd..
1.3.40 “Subsidiary”
means
an entity in which the Company and/or one or more other Subsidiaries directly
or
indirectly own either 50% of the voting rights or 50% of the equity
interests.
1.3.41 “Subsequent
Financing”
means
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
Series B Preferred Stock.
1.3.42 “Target
Number”
with
respect to any fiscal year, has the meaning set forth in Section 6.16 of this
Agreement.
1.3.43 “Total
Shares”
means
the number of shares of Common Stock issuable upon conversion of the Series
B
Preferred Stock and exercise of the Warrants, as adjusted from time to time
in
accordance with the Certificate of Designation and the terms of the Warrants.
1.3.44 “Transaction
Documents”
means
this Agreement, all schedules and exhibits attached hereto, the Share Exchange
Agreement, the Certificate of Designation, the Warrants, the Registration Rights
Agreement, the Closing Escrow Agreement, the Escrow Agreement and all other
documents and instruments to be executed and delivered by the parties in order
to consummate the transactions contemplated hereby.
1.3.45 “Warrants”
means the common stock purchase warrants in substantially the form of
Exhibits
E-1 to
this Agreement.
1.4 All
references in this Agreement to “herein” or words of like effect, when referring
to preamble, recitals, article and section numbers, schedules and exhibits
shall
refer to this Agreement unless otherwise stated.
Article
2
SALE
AND PURCHASE OF SECURITIES; PURCHASE PRICE
2.1 Sale
of Securities.
2.1.1 Upon
the
terms and subject to the conditions set forth herein, and in accordance with
applicable law, the Company agrees to sell to the Investors, and each Investor
agrees to purchase from the Company, on the Closing Date, the number of
Securities and for the Purchase Price set forth after such Investor’s name on
Schedule
A
attached
hereto. At or prior to the Closing each Investor shall wire the portion of
the
Purchase Price set forth opposite such Investor’s name on Schedule A to the
Escrow Agent, who shall release the Purchase Price to the Company upon receipt
of instructions from the Investors and the Company as provided in the Escrow
Agreement. The Company shall cause the Securities to be issued to the Investors
upon the release of the Purchase Price to the Company by the Escrow Agent
pursuant to the terms of the Escrow Agreement.
2.1.2 Except
as
expressly provided in the Certificate of Designation,
the
Investors shall not be entitled to convert the Series B Preferred
Stock
into shares of Common Stock or to exercise the Warrants to the extent that
such
conversion or exercise would result in beneficial ownership by the Investors
and
their respective Affiliates of more than 4.9% of the then outstanding number
of
shares of Common Stock on such date after giving effect to such conversion
or
exercise. For the purposes of this Agreement, beneficial ownership shall be
determined in accordance with Section 13(d) of the 1934 Act, and Regulation
13d-3 thereunder. The limitation set forth in this Section 2.1.2 is referred
to
as the “4.9%
Limitation.”
4
Article
3
CLOSING
DATE AND DELIVERIES AT CLOSING
3.1 Closing
Date.
The
Closing of the transactions contemplated by this Agreement, unless expressly
determined herein, shall be held at the offices of Guzov Ofsink, LLC, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 2:00 P.M. local time, on __________
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 (the
“Closing
Date”).
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 Closing Escrow Agreement, the following:
(a) At
or
prior to Closing, an executed Agreement with all exhibits and schedules attached
hereto;
(b) At
the
Closing, shares of Series B Preferred Stock and Warrants in the name of the
Investors in the numbers set forth in Schedule A to this Agreement;
(c) The
executed Registration Rights Agreement;
(d) The
executed Escrow Agreement and Closing Escrow Agreement;
(e) Copies
of all SEC correspondence, if any, since the last Form 10-KSB and any
correspondence which was issued prior to the last Form 10-KSB, if any, which
has
not been resolved to the satisfaction of the SEC;
(f) Schedule
of all amounts owed (cash and stock) to officers, consultants and key employees
(salary, bonuses, etc.);
(g) Certifications
in form and substance acceptable to the Company and the Investors from any
and
all brokers or agents involved in the transactions contemplated hereby as to
the
amount of commission or compensation payable to such broker or agent as a result
of the consummation of the transactions contemplated hereby and from the Company
or Investors, as appropriate, to the effect that reasonable reserves for any
other commissions or compensation that may be claimed by any broker or agent
have been set aside
(h) Copies
of
management letters from the Company’s registered independent accounting firm
issued in connection with the Company’s most recent audit;
(i) Evidence
of approval by the Board of Directors of this Agreement and other Transaction
Documents and the transactions contemplated hereby and thereby;
(j) Agreements
from the Restricted Stockholders pursuant to Section 6.17 of this
Agreement;
(k) Good
standing certificate from the Secretary of State of the State of
Florida;
(l) Copy
of
the Company’s Articles and the Certificate of Designation, as currently in
effect, certified by the Secretary of State of the State of
Florida;
(m) An
opinion from the Company’s legal counsel, Guzov Ofsink, LLC, concerning this
Agreement and other Transaction Documents and the transactions contemplated
hereby and thereby in form and substance reasonably acceptable to the
Investors;
(n) Executed
disbursement instructions pursuant to the Escrow Agreement, which shall provide
that the Escrow Agent continue to hold $100,000 to pay the Company’s anticipated
obligations to its investor relations company;
(o) Copies
of
(i) all executive employment agreements which have not been disclosed in the
Company’s Form 10-KSB for the year ended December 31, 2006, (ii) all past and
present financing documents or other documents where stock could potentially
be
issued or issued as payment, (iii) all past and present material litigation
documents which have not been disclosed in the Company’s Form 10-KSB for the
year ended December 31, 2006; and
(p) Such
other documents or certificates as shall be reasonably requested by the
Investors or their counsel.
5
3.3 Deliveries
by the Investors.
In
addition to and without limiting any other provision of this Agreement, the
Investors agree to deliver, or cause to be delivered, to the Escrow Agent under
the Closing Escrow Agreement, the following:
(a) The
Purchase Price;
(b) The
executed Agreement with all exhibits and schedules attached hereto;
(c) The
executed Registration Rights Agreement;
(d) The
executed Escrow Agreement and the Closing Escrow Agreement;
(e) The
executed disbursement instructions pursuant to the Escrow Agreement;
and
(f) Such
other documents or certificates as shall be reasonably requested by the Company
or its counsel.
3.4 Delivery
of Original Documents.
In the
event any document provided to the other party in Paragraphs 3.2 and 3.3 herein
is provided by facsimile, the party shall forward an original document to the
other party within seven (7) business days.
3.5 Further
Assurances.
The
Company and the Investors shall, upon request, on or after the Closing Date,
cooperate with one other 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.
3.6 Waiver.
The
Investors may waive any of the requirements of Section 3.2 of this Agreement,
and the Company may waive any of the provisions of Section 3.3 of this
Agreement. The Investors may also waive any of the requirements of the Company
under the
Escrow Agreement and the Closing Escrow Agreement.
Article
4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Investors as of the date hereof and
as of
Closing Date (which warranties and representations shall survive the Closing
regardless of any examinations, inspections, audits and other investigations
the
Investors have heretofore made or may hereinafter make with respect to such
warranties and representations) as set forth below. The Investors are entering
into this Agreement in reliance on the representations and warranties set forth
in this Agreement and no reliance is being placed on oral representations,
if
any, that may have been made prior to the execution and delivery of this
Agreement.
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 Florida, 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 where the nature of the businesses conducted by it or
the
ownership or leasing of its properties requires such qualification, except
where
the failure to be so qualified will not 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 Company’s
Governing Documents.
Complete and correct copies of the Company’s Governing Documents (a) have been
provided to the Investors and (b) have been filed with the SEC in accordance
with the regulations of the SEC and (c) will be in full force and effect on
the
Closing Date.
4.3 Capitalization.
4.3.1 The
authorized and outstanding capital stock of the Company as of the date of this
Agreement and as adjusted to reflect the issuance and sale of the Securities
pursuant to this Agreement and the other Transaction Documents is set forth
in
Schedule
4.3.l
to this
Agreement. Schedule
4.3.1
also
lists all shares issuable pursuant to employment, consulting and other services
agreements, acquisition agreements, options and equity-based incentive plans,
debt securities, convertible securities, warrants, financing or business
relationships as well as each agreement, plan, arrangement or understanding
pursuant to which any shares of any class of capital stock may be issued (except
as previously disclosed in the Company’s filings with the SEC and except for
shares issuable hereunder or under the other Transaction Documents), a copy
of
each of which has been provided to the Investors.
6
4.3.2 All
shares of capital stock to be issued pursuant to this Agreement have been duly
authorized and when issued, will be validly issued, fully paid and
non-assessable and free of preemptive rights.
4.3.3 Except
pursuant to this Agreement, the other Transaction Documents and as set forth
in
Schedule
4.3.1 or
as
previously disclosed in the Company’s filings with the SEC, as of the date
hereof, there are no 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 or other awards granted prior to the Closing
Date.
4.4
Authority.
4.4.1 The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, the Securities, the Registration Rights Agreement, the Escrow
Agreement and any other Transaction Documents to which the Company is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this
Agreement, the Securities, the Registration Rights Agreement, the Escrow
Agreement and any other Transaction Documents to which the Company is a party,
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 any other Transaction Document or to consummate the transactions
contemplated hereby and thereby 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, except as enforceability may be limited
by
bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any granting of equitable
relief is in the discretion of the court.
4.4.2 The
Securities, when issued pursuant to this Agreement, constitute the legal, valid,
and binding obligations of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any granting of equitable
relief is in the discretion of the court. The Certificate of Designation has
been approved by the Board of Directors. Upon the filing of the Certificate
of
Designation, the Series B Preferred Stock, when issued, will be duly and validly
authorized and issued, fully paid and non-assessable. The Warrants constitute
the valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any granting of equitable
relief is in the discretion of the court. All the Securities, when so issued,
will be free and clear of all liens, charges, claims, options, pledges,
restrictions, preemptive rights, rights of first refusal and encumbrances
whatsoever (other than those, if any, incurred by the Investors).
4.4.3 Notwithstanding
any contrary representations and warranties, no representation is made with
respect to the ability of any Investor to convert the Series B Preferred Stock
or exercise any Warrant if and to the extent that the conversion price of the
Series B Preferred Stock, as defined in the Certificate of Designation, or
the
number of shares of Common Stock issuable upon exercise of the Warrants would
result in the issuance of a number of shares of Common Stock which is greater
than the amount by which the authorized shares of Common Stock exceeds the
sum
of the outstanding Common Stock and the shares of Common Stock reserved for
issuance pursuant to outstanding agreements and outstanding options, warrants,
rights, convertible securities and other securities upon the exercise or
conversion of which (or pursuant to the terms of which) additional shares of
Common Stock may be issuable (the foregoing proviso being referred to as the
“Authorized
Stock Proviso”).
4.5
No
Conflict; Required Filings and Consents.
Neither
the issuance of the Securities, nor the execution and delivery of this Agreement
and other Transaction Documents by the Company and the performance by the
Company of its obligations hereunder and thereunder will: (i) conflict with
or
violate the Company’s or any Subsidiary’s Governing Instruments; (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 any
Subsidiary; or (iii) result in any breach of, constitute a default (or an event
that with notice or lapse of time or both would become a default) under, give
to
any other entity any right of termination, amendment, acceleration or
cancellation of, require payment under, or result in the creation of a lien
or
encumbrance on any of the properties or assets of the Company or any Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any of their respective properties or assets is bound, other than (with
respect to clauses (i), (ii) and (iii) above) such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens that
would
not, in the aggregate, have a Material Adverse Effect and except to the extent
that stockholder approval may be required as a result of the Authorized Stock
Proviso, in which event, the Company will seek stockholder approval to effect
an
increase in the authorized Common Stock sufficient to enable the Company to
be
in compliance with this Section 4.5.
4.6
Report
and Financial Statements.
Set
forth in Schedule 4.4 attached hereto is Shaanxi Tianren’s audited
consolidated financial statements, certified by Child, ▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, PLLC (the “Auditor”),
Shaanxi Tianren’s independent registered accounting firm. Each of the
consolidated balance sheets contained in Schedule 4.4 fairly presents the
financial position of the Company, as of its date, and each of the consolidated
statements of income, stockholders’ equity and cash flows (including any related
notes and schedules thereto) fairly presents the results of operations, cash
flows and changes in stockholders’ equity, as the case may be, of Shaanxi
Tianren for the periods to which they relate, in each case in accordance with
GAAP consistently applied during the periods involved. The Auditor is
independent as to Shaanxi Tianren in accordance with the rules and regulations
of the SEC. The books and records of Shaanxi Tianren and its subsidiaries have
been, and are being, maintained in all material respects in accordance
applicable legal and accounting requirements and reflect only actual
transactions.
7
4.7
Compliance
with Applicable Laws.
Neither
the Company nor any Subsidiary is 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.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by
this
Agreement based upon arrangements made by or on behalf of the
Company.
4.9
SEC
Documents.
The
Investors acknowledge that the Company is a publicly held company and has made
available to the Investors upon request 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 Investors any information that, according
to
applicable law, rule or regulation, should have been disclosed publicly prior
to
the date hereof by the Company, but which has not been so disclosed. The SEC
Documents, taken as a whole, 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 affect
the validity of this Agreement or the right of the Company to enter into this
Agreement or to consummate the transactions contemplated hereby.
4.11
[Intentionally
Omitted.]
4.12
Exemption
from Registration.
Subject
to the accuracy of each Investor’s representations in Article V of this
Agreement, except as required pursuant to the Registration Rights Agreement,
the
sale of the Series B Preferred Stock and Warrants by the Company to such
Investor will not require registration under the 1933 Act. When issued upon
conversion of the Series B Preferred Stock or upon exercise of the Warrants
in
accordance with their terms, the shares of Common Stock underlying the Series
B
Preferred Stock and the Warrants will be duly and validly authorized and issued,
fully paid, and non-assessable. The Company is issuing the Series B Preferred
Stock and the Warrants in accordance with and in reliance upon the exemption
from 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.
4.13
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 Series B Preferred Stock or Warrants, or (ii) made any offers
or sales of any security or solicited any offers to buy any security under
any
circumstances that would require registration of the Series B Preferred Stock
or
Warrants under the 1933 Act, except as required herein and the other Transaction
Documents.
4.14 No
Material Adverse Effect.
Since
December 31, 2006, no event or circumstance resulting in a Material Adverse
Effect has occurred or exists with respect to Shaanxi Tianren. No material
supplier or customer has given notice, oral or written, that it intends to
cease
or reduce the volume of its business with Shaanxi Tianren from historical
levels. Since December 31, 2006, no event or circumstance has occurred or exists
with respect to Shaanxi Tianren or its businesses, properties, operations or
financial condition, that, under any applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by Shaanxi
Tianren but which has not been so publicly announced or disclosed in writing
to
the Investors.
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.
After
the Closing Date, the Company shall not communicate with ▇▇▇▇▇▇ in any way,
including phone conversations, e-mails, and all other forms of communication,
any material information which is not already disclosed in previously filed
SEC
documents. If after the Closing, the Company provides ▇▇▇▇▇▇ material non-public
information, the Company will within 24 hours file a report on Form 8-K or
on
another appropriate form of report to disclose that information to the general
public.
8
4.15
Internal
Controls And Procedures.
Shaanxi
Tianren maintains books and records and internal accounting controls which
provide reasonable assurance that (i) all transactions to which Shaanxi Tianren
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 Shaanxi
Tianren’s consolidated assets is permitted only in accordance with management’s
authorization; and (iv) all transactions to which Shaanxi Tianren is a party
or
by which any of its properties are bound are recorded as necessary to permit
preparation of the financial statements of the Tianren in accordance with the
applicable accounting rules, and with respect to any such financial statements
prepared for the fiscal years 2005 and 2005 and the interim period ended
September 30, 2007, in accordance with GAAP.
4.16 Full
Disclosure.
No
representation or warranty made by the
Company in
this
Agreement and no certificate or document furnished to the Investors pursuant
to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained herein or
therein, taken as a whole and in the light of the circumstances under which
they
were made herein or therein, not misleading.
Article
5
REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS
Each
Investor represents and warrants to the Company as of the date hereof and as
of
Closing Date (which warranties and representations shall survive the Closing
regardless of any examinations, inspections, audits and other investigations
the
Company has heretofore made or may hereinafter make with respect to such
warranties and representations) as set forth below:
5.1 Concerning
the Investor.
The
state in which any offer to purchase shares hereunder was made or accepted
by
the Investor is the state shown as the Investor’s address. The Investor was not
formed for the purpose of investing solely in the Securities.
5.2 Authorization
and Power.
The
Investor has the requisite corporate power and authority to execute and deliver
this Agreement, the Registration Rights Agreement, the Escrow Agreement and
any
other Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. 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 corporate action and no other
corporate proceedings on the part of the Investor is necessary to authorize
the
foregoing agreements or to consummate the transactions contemplated hereby
or
thereby. This Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Closing Escrow Agreement and the other Transaction Documents
to
which it is a party have been duly executed and delivered by the Investor and
at
the Closing shall constitute legal, valid and binding obligations of the
Investor enforceable against the Investor in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency and other laws of
general application affecting the enforcement of creditors’ rights and except
that any granting of equitable relief is in the discretion of the
court.
5.3 No
Conflicts.
The
execution, delivery and performance of this Agreement, the Registration Rights
Agreement, the Escrow Agreement and the other Transaction Documents to which
the
Investor is a party, and the consummation by the Investor of the transactions
contemplated hereby or thereby or relating hereto or thereto do not and will
not
(i) result in a violation of the 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 the 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 the Investor’s obligations under
this Agreement, the Registration Rights Agreement, the Closing Escrow Agreement,
the Escrow Agreement and the other Transaction Documents to which the Investor
is a party, or to purchase the Securities from the Company in accordance with
the terms hereof.
5.4 Financial
Risks.
The
Investor acknowledges that the 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 its Subsidiaries and to the officers of the Company and its
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.
9
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 and under the terms and
conditions described in this Agreement and the other Transaction 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 other Transaction Documents, (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 on Schedule 5.6, 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 and the other Transaction Documents
based upon arrangements made by or on behalf of the Investor.
5.7 Knowledge
of Company.
The
Investor and its advisors, if any, have been, upon request, furnished with
all
materials relating to the business, finances and operations of the Company
and
materials relating to the offer and sale of the securities being purchased
by
the Investor from the Company. The Investor and its advisors, if any, have
been
afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries.
5.8 Risk
Factors.
The
Investor understands that the 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 the Investor is able to bear the complete loss of
its
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 to the Company pursuant to this Agreement
contains any untrue statement of a material fact, or omits 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, the Investor
does not have any agreement or understanding with any person relating to
acquiring, holding, voting or disposing of any securities of the
Company.
Article
6
COVENANTS
OF THE COMPANY
6.1 Reservation
of Shares.
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, the maximum
number of Shares for the purpose of enabling the Company to issue the shares
issuable on conversion of the Series B Preferred Stock and on exercise of the
Warrants without giving effect to any adjustments.
6.2 Compliance
with Laws.
The
Company hereby agrees to comply in all material respects with the Company’s
reporting, filing and other obligations under the securities Laws.
6.3 Exchange
Act Registration.
The
Company will continue its obligation to report to the SEC under Section 12
of
the 1934 Act and will use its best efforts to comply in all material 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 except as
permitted under the Transaction Documents until the Investors have disposed
of
all of their Shares.
6.4 Corporate
Existence; No 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.
6.5 Listing,
Securities Exchange Act of 1934 and Rule 144
Requirements.
The
Company shall not take any action or file any document (whether or not permitted
by the Securities Act or the rules promulgated thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act except as permitted under
the Transaction Documents. The Company will take all action necessary to
continue the quotation or listing of its Common Stock on the OTC Bulletin Board
or other exchange or market on which the Common Stock is trading or may be
traded in the future. If, for any time after the Closing, the Company is no
longer no longer regulated by the Securities Exchange Act of 1934 or is not
a
fully reporting Company, then, subject to the limit set forth in Section
6.27,
the Company shall pay to the Investors, pro rata, as liquidated damages and
not
as a penalty, an amount equal to fourteen percent (14%)
of the Purchase Price per annum, payable monthly in cash calculated based on
the
number of days that the Company shall not be in compliance with this Section
6.5. Subject
to the terms of the Transaction Documents, the Company further covenants that
it
will take such further action as the Investors may reasonably request, all
to
the extent required from time to time to enable the Investors to sell the Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144. Upon the request of an Investors, the Company
shall deliver to such Investor a written certification of a duly authorized
officer as to whether it has complied with such requirements.
10
6.6 Preferred
Stock.
On
or
prior to the Closing Date, the Company will cause to be canceled all preferred
stock in the Company with the exceptions of Preferred Stock issued to the
Investors. For a period of three years from the Closing Date, for so long as
the
Investors shall continue to beneficially own 20% of the Series B Preferred
Stock
issued hereunder, the Company will not issue any preferred stock of the Company
with the exception of Preferred Stock issued to the Investors.
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 three years from the Closing
Date, for so long as the Investors shall continue to beneficially own 20% of
the
Series B Preferred Stock issued hereunder, the Company will not issue any
convertible debt.
6.8 [Intentionally
omitted.]
6.9 No
Outside Interests.
Until
the Restriction Termination Date, the Company’s chairman, chief executive
officer, chief financial officer will not have any business interests or
activities other than as the Company’s, except that they may devote time which
shall not be material and which shall not interfere with his duties as the
Company’s chief executive officer, to personal passive investments and
charitable and community activities.
6.10 Debt
Limitation.
Until
the expiration of two (2) years from the Closing Date, at any given date, the
Company’s debt-to- EBITDA ratio shall not exceed 3.5:1 for the most recent
12-months period.
6.11 Independent
Directors.
No
later than sixty (60) days after the Closing Date, the Company shall increase
the size of the Board to five or seven and shall cause the appointment of the
majority of the Board of Directors to be independent directors, as defined
by
the rules of the Nasdaq Stock Market. If, for any time after the Closing, the
Company is no longer in compliance with this Section 6.11, then, subject to
the
limit set forth in Section 6.27, the
Company shall pay to the Investors, pro rata, as liquidated damages and not
as a
penalty, an amount equal to fourteen percent (14%)
of the Purchase Price per annum, payable monthly in cash as calculated
based
on the number of days that the Company shall not be in compliance with this
Section 6.11.
6.12 Independent
Directors on Audit and Compensation Committees.
No later
than sixty (60) days after the Closing Date, the Company shall have an audit
committee comprised solely of not less than three independent directors and
a
compensation committee comprised of not less than three directors, a majority
of
whom are independent directors. If, for any time after the Closing, the Company
is no longer in compliance with this Section 6.12, then, subject to the limit
set forth in Section 6.27,
the Company shall pay to the Investors, pro rata, as liquidated damages and
not
as a penalty, an amount equal to fourteen percent (14%)
of the Purchase Price per annum, payable monthly in cash as
calculated
based on the number of days that the Company shall not be in compliance with
this Section 6.12.
6.13 Use
of Proceeds.
The
Company will use the net proceeds from the sale of the Securities, after payment
of legal fees and other closing costs, for acquisitions, working capital and
other general corporate purposes.
6.14 Right
of First Refusal.
6.14.1 In
the
event that the Company seeks to raise additional funds through a private
placement of its securities, other than Exempt Issuances and issuances of the
Company’s securities in a firm underwritten IPO as to which this section does
not apply (a “Proposed
Financing”),
for a
period of thirty-six months after the Closing provided that the Investors shall
continue to beneficially own in the aggregate at least 20% of Series B Preferred
Sock or the Common Stock issued thereunder, the Investors shall have the right
to participate in such private placement at the offering price so long as such
participation does not exceed the total Purchase Price hereunder.
6.14.2 The
terms
on which the Investors shall purchase securities pursuant to the Proposed
Financing shall be the same as such securities are purchased by other investors.
The Company shall give the Investors the opportunity to participate in the
offering by giving the Investors not less than ten (10) days notice setting
forth the terms of the Proposed Financing. In the event that the terms of the
Proposed Financing are changed in a manner which is more favorable to the other
potential investors, the Company shall provide the Investors, at the same time
as the notice is provided to the other potential investors, with a new ten
(10)
day notice setting forth the revised terms that are provided to the other
potential investors.
6.14.3 In
the
event that the Investors do not exercise its right to participate in the
Proposed Financing within the time limits set forth in Section 6.14.2 of this
Agreement, the Company may sell the securities in the Proposed Financing at
a
price and on terms which are no more favorable to the other potential investors
than the terms provided to the Investors. If the Company subsequently changes
the price or terms so that the price or other terms is more favorable to the
other potential investors, the Company shall provide the Investors with the
opportunity to purchase the securities on the revised terms in the manner set
forth in Section 6.14 of this Agreement.
11
6.15 Price
Adjustment.
For
so
long as the Investors shall hold at least 20% of the Series B Preferred Stock
issued hereunder (except for Exempt Issuances not to exceed 5% of the
outstanding shares of Common Stock for every two year period and other issuances
as to which this Section 6.15 does not apply pursuant to the Certificate of
Designations), if the Company closes on the sale or issuance of Common Stock
at
a sale price, or warrants, options, convertible debt or equity securities with
a
exercise or conversion price per share which is less than the Conversion Price
(as defined in the Certificate of Designation) then in effect, the Conversion
Price in effect from and after the date of such transaction shall be adjusted
in
accordance with the terms of the Certificate of Designations.
6.16 Deliveries
from Escrow Based on Pre-Tax Income Per Share.
6.16.1 The
Company hereby represents to the Investors that (A) the Company’s consolidated
Pre-Tax Income for the fiscal year ending December 31, 2007 shall be at least
RMB 67,400,000 (or
the
Required Pre-Tax Income Per Share) (the “2007
Target Number”),
and
(B)
the Company’s consolidated Pre-Tax Income for the fiscal year ending December
31, 2008 shall be at least RMB 84,924,000 (or
the
Required Pre-Tax Income Per Share), (the “2008
Target Number”),
(C) the
Company’s consolidated Pre-Tax Income for the fiscal year ending December 31,
2009 shall be at least RMB 107,004,240 (or the Required Pre-Tax Income Per
Share). As the Investors are relying on such expected profit in making
its investment hereunder, and in order to attempt to make whole the Investors
in
the event these numbers are not met, the
Company shall deliver to the Escrow Agent at the Closing the Make Good Escrow
Stock. In
the
event the Company’s consolidated Pre-Tax income, on a fully-diluted basis, for
the year ended December 31, 2007, 2008 or 2009 is less than the Target Numbers
the percentage shortfall shall be determined by dividing the amount of the
shortfall by the applicable Target Number. The
Parties hereby agree that:
6.16.1.1 If
the
Percentage Shortfall the fiscal year 2007is greater than 50%, then the Escrow
Agent shall deliver to the Investors all of the Make Good Escrow Stock according
to the Investors’ Ownership Percentages. An Investor’s Ownership Percentage
Shall be the
ratio
of such Investor’s initial Purchase Price to the total purchase price of all
Shares in this Transaction. If
the
percentage shortfall for 2007 is less than fifty percent (50%), then the
adjustment percentage shall be determined. The adjustment percentage shall
mean
the percentage that the percentage shortfall bears to fifty percent (50%).
The
Escrow Agent shall deliver to an Investor according to such Investor’s
Ownership Percentage
of such
number of shares of Series B Preferred Stock as is determined by multiplying
the
adjustment percentage by Make Good Escrow Stock and retain the balance. For
example, if the percentage shortfall is 20%, the adjustment percentage would
be
40%, and 40% of the Make Good Escrow Shares would be delivered to the Investors,
with the balance being retained by the Escrow Agent.
6.16.1.2 If
the
percentage shortfall for 2008 is equal to or greater than fifty percent (50%),
then the Escrow Agent shall deliver all of the remaining Make Good Escrow Stock
then held by the Escrow Agent to the Investors according to the each
Investor’s
Ownership Percentage.
If the
percentage shortfall for 2008 is less than fifty percent (50%), then the
adjustment percentage for 2008 shall be determined. The adjustment percentage
shall mean the percentage that the percentage shortfall bears to fifty percent
(50%). The maximum number of shares to be delivered shall be determined by
multiplying the initial Make Good Escrow Shares. The number of shares to be
delivered to the Investors shall be the lesser of the number of shares of Make
Good Escrow Stock then held by the Escrow Agent or the number of shares
determined by the preceding sentence. The Escrow Agent shall deliver to the
Investors the number of shares of Make Good Escrow Stock as is determined
pursuant to this Section 6.16.1.2 according to the Investor’s
Ownership Percentage.
6.16.1.3 If
the
percentage shortfall for 2009 is equal to or greater than fifty percent (50%),
then the Escrow Agent shall deliver all of the remaining Make Good Escrow Stock
then held by the Escrow Agent to the Investors according to each Investor’s
Ownership Percentage.
If the
percentage shortfall for 2009 is less than fifty percent (50%), then the
adjustment percentage for 2009 shall be determined. The adjustment percentage
shall mean the percentage that the percentage shortfall bears to fifty percent
(50%). The maximum number of shares to be delivered shall be determined by
multiplying the adjustment percentage by initial Make Good Escrow Shares. The
number of shares to be delivered to the Investors shall be the lesser of the
number of shares of Make Good Escrow Stock then held by the Escrow Agent or
the
number of shares determined by the preceding sentence. The Escrow Agent shall
deliver to the Investors the number of shares of Make Good Escrow Stock as
is
determined pursuant to this Section 6.16.1.3 according to each Investor’s
Ownership Percentage.
6.16.1.4 Notwithstanding
anything to the contrary set forth herein, an Investor is only entitled to
Make
Good Escrow Stock if the Investor owns shares of Series B Preferred acquired
under the Purchase Agreement and remains shareholders of the Company at the
time
that any Make Good Escrow Stock becomes deliverable hereunder.
6.16.2 The
distribution of shares of Common Stock pursuant to this Section 6.16 shall
be
made within seven (7) business days after the date the Company is required
to
file its Form 10-KSB for the applicable fiscal year with the SEC. In the event
that the Company does not file its Form 10-KSB for the year ended December
31,
2007 or 2008 with the SEC within thirty (30) days after the date that filing
was
required, after giving effect to any extension pursuant to Rule 12b-25 of the
Exchange Act, all of the remaining shares Make Good Escrow Stock shall be
delivered to the Investors.
6.16.3 The
parties understand that, pursuant to the Escrow Agreement, the Escrow Agent
will
not make any deliveries of shares without the signed written instructions from
the Company and the Investors.
12
6.17 Insider
Selling.
No
Restricted Stockholders (as defined below) may sell any shares of Common Stock
in the public market prior to the earlier of thirty six (36) months from date
the Registration Statement is deemed effective;. “Restricted
Stockholders”
shall
mean any Person who is an officer, director or Affiliate of the Company on
the
date hereof or who becomes an officer or director of the Company subsequent
to
the Closing Date. The Company shall require any newly elected officer or
director to agree to the restriction set forth in this Section 6.17. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Investors shall not be considered “Restricted
Stockholders”.
6.18 Non
Compete.
The
Company and any affiliated or related entities, and any all of the officers
and
directors of the Company may not be involved in any business or ventures which
in any way may be deemed to be competitive or have a similar nature in any
way
to the business of the Company unless such activity is fully within the
Company.
6.19 Chief
Financial Officer.
No
later
than thirty (30) days after the Closing Date,
the Company shall hire a chief financial officer who speaks and understands
both
English and Chinese and is familiar with GAAP (a “qualified CFO”). If,
for
any time after the Closing, the Company is no longer in compliance with this
Section 6.19
the Company shall pay to the Investors, pro rata, as liquidated damages and
not
as a penalty, an amount equal to fourteen
percent (14%)
of the Purchase Price per annum, payable monthly in cash or Series B Preferred
Stock at the option of the Investors,
such payment shall be based on the number of days that such condition
exists.
Notwithstanding the foregoing, the Company shall, by Closing, engage an
accounting consultant, which may be an accounting firm, that has experience
in
preparing financial statements for public companies and in advising public
companies on the implementation of internal controls as required by the 1934
Act, and shall continue to engage such firm as a consultant until not earlier
than the date on which the Company shall have both (i) filed two consecutive
annual reports with the SEC on time and without requesting an extension, and
(ii) filed a registration statement pursuant to the Registration Rights
Agreement and shall have responded to all accounting comments raised by the
staff of the SEC to the satisfaction of the accounting examiner at the
SEC.
6.20 Employment
and Consulting Contracts.
For
three
years after the Closing, the Company shall obtain approval from the majority
of
the independent directors of the Board of Directors that any awards other than
salary are customary, appropriate and reasonable for any officer, director
or
consultants whose compensation is more than $100,000 per annum. This Section
6.20 does not apply to attorneys, accountants and other persons who provide
professional services to the Company. This section shall only apply for so
long
as that the Investors shall continue to beneficially own in the aggregate at
least 20% of Series B Preferred Sock issued hereunder.
6.21 Subsequent
Transactions.
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 transaction 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. The Investors shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages. Notwithstanding the foregoing, this
Section 6.21 shall not apply in respect of an Exempt Issuance, except that
no
Variable Rate Transaction or MFN Transaction shall be an Exempt
Issuance.
6.22 Certificate
of Designation. The
Board
of Directors has approved the Certificate of Designation. The Company shall
file
the Certificate of Designation with the Secretary of State of the State of
Florida prior to the Closing.
6.23 Amendment
to Certificate of Incorporation. At
or
before the next annual meeting of the stockholders of the Company, the Board
of
Directors shall propose and submit to the holders of the Common Stock for
approval, an amendment to the Certificate of Incorporation that provides
substantially as follows:
“Subject
to the applicable laws of Florida, the terms and conditions of any rights,
options and warrants approved by the Board of Directors may provide that any
or
all of such terms and conditions may be waived or amended only with the consent
of the holders of a designated percentage of a designated class or classes
of
capital stock of the Corporation (or a designated group or groups of holders
within such class or classes, including but not limited to disinterested
holders), and the applicable terms and conditions of any such rights, options
or
warrants so conditioned may not be waived or amended absent such
consent.”.
6.24 Stock
Splits.
Except
as permitted or required under the Transaction Documents, all forward and
reverse stock splits shall effect all equity and derivative holders
proportionately.
13
6.25 Retention
of Investor Relations Firm.
The
Company shall instruct the Escrow Agent to retain $100,000 of the proceeds
of
the sale of the Securities hereunder to be utilized for payment to investor
relations firms in approximately equal quarterly installments. The Company
shall
retain an investor relations firm within 30 days after the Closing Date. If
at
any time after 30 days from the Closing, the Company shall not have retained
an
investor relations and public relations firm, the Company shall pay to the
Investors, pro rata, as liquidated damages and not as a penalty, an amount
equal
to fourteen percent (14%) per annum of the Purchase Price for the
Shares
payable monthly in cash or Series B Preferred Stock at the option of the
Investors,
such payment shall be based on the number of days that such condition
exists.
6.26 Payment
of Due Diligence Expenses.
At
Closing the Escrow Agent shall disperse to ▇▇▇▇▇▇ Partners, LLC the sum of
seventy five thousand dollars ($75,000.00) for its due diligence expenses.
6.27 Shares
Issued as Liquidated Damages.
Notwithstanding anything provided in this Agreement, the Warrants and the
Registration Rights Statement to the contrary, in no event, shall the aggregate
liquidated damages payable by the Company under this Agreement, the Warrant
and
the Registration Rights Agreement exceed eighteen (18%) of the total Purchase
Price. If, pursuant to any Section of this Agreement and the Registration Rights
Agreement, liquidated damages are incurred by the Company and are payable by
the
Company to the Investors in cash and the Company shall have failed to pay the
Investors within 15 days following the end of the month when such cash
liquidated damages shall have become due, then, at the election of the
Investors, shares of Series B Preferred Stock are to be delivered as liquidating
damages to the Investors pro rata based on the percentage that the number of
Series B Preferred Stock beneficially owned by such Investor bears to the total
number of Series B Preferred Stock outstanding at the time when the cash
liquidated damages are due. The number of shares due will be calculated by
taking amount of liquidating damages due in dollars and divide it by $1.2 per
share and further divide it by the Conversion Ratio, as set forth in the
Certificate of Designation, which initially shall be 1 for 1. For example if
$12,000 worth of liquidating damages are due, each share of Preferred B Stock
is
convertible into 1 share of Common Stock, then the number of Preferred B Stock
received shall be 10,000 shares.
6.28 Management
Agreements and Consolidation of Financials.
Within
30 days following the Closing Date, the Company shall cause Shaanxi Tianren
Food
Company, Ltd., its indirect subsidiary in the People’s Republic of China
(“Tianren
Food”),
to
(i) extend the term of its current management agreement with HuLuDao WanJia
Factory (the “HuLuDao
WanJia Agreement”)
to 20
years under the terms and conditions similar to those in the current management
agreement, and (ii) enter into a management agreement with YinKou Trusty Factory
under the terms and conditions similar to those in the HuLuDao WanJia Agreement.
When it becomes legally and financially feasible, the Company shall cause
Shaanxi Tianren to make arrangements, including without limitation, acquisition
arrangements, with HuLuDao WanJia Factory and YinKou Trusty Factory so that
after giving effect to such arrangements, the financials of HuLuDao WanJia
Factory and YinKou Trusty Factory can be consolidated into the Company’s
financials in accordance with the principles of the US GAAP.
6.29 Amendment
of Articles of Incorporation. The
Company agrees that it shall, in good faith, promptly take any and all such
action as may, in the opinion of its counsel, be necessary to effect the Reverse
Split (as defined in the Certificate of Designations of the Series B Preferred
Stock). In the event the Reverse Split is not effected within 120 days following
the Closing Date, then, subject to the limit set forth in Section 6.27, the
Company shall pay to the Investors, pro rata, as liquidated damages and not
as a
penalty, an amount equal to one (1%) of the Purchase Price per month, payable
monthly in cash as calculated based on the number of days that the Company
shall
not be in compliance with this Section 6.29.
Article
7
COVENANTS
OF THE INVESTORS
Each
Investor covenants and agrees with the Company as follows:
7.2 Compliance
with Law.
The
Investor’s trading activities with respect to 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 Common
Stock is listed.
7.3 Limitation
on Short Sales.
The
Investor and its Affiliates shall not engage in short sales of the Company's
Common Stock.
7.4 Transfer
Restrictions. The
Investor acknowledges that (a) the Securities have not been registered under
the
provisions of the 1933 Act, and may not be transferred unless (i) subsequently
registered thereunder or (ii) 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 Securities to be sold or transferred may
be
sold or transferred pursuant to an exemption from such registration; and (b)
any
sale of the Securities made in reliance on Rule 144 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.
14
7.5 Restrictive
Legend. The
Investor acknowledges and agrees that the Securities shall bear a restrictive
legend and a stop-transfer order may be placed against transfer of any such
Securities except that the requirement for a restrictive legend shall not apply
to Shares sold pursuant to a current and effective registration statement or
a
sale pursuant Rule 144.
Article
8
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 10
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 them 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 any
Transaction Documents or the transactions contemplated hereby or thereby or
to
recover any damages or obtain other relief as a result of the transactions
proposed hereby or thereby.
8.5 Shareholder
Consent.
On the
Closing Date, shareholders of the Company holding at least a majority of shares
of the Company’s Common Stock immediately prior to the Closing shall have
consented to the Reverse Split (as defined in the Certificate of Designations
of
the Series B Preferred Stock).
Article
9
CONDITIONS
PRECEDENT TO INVESTORS’ OBLIGATIONS
The
obligation of the Investors to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to Closing Date unless
specified otherwise, of the following conditions:
9.1 No
Termination.
This
Agreement shall not have been terminated pursuant to Article 10
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 any
Transaction Document or the transactions contemplated hereby or thereby to
recover any damages or obtain other relief as a result of the transactions
proposed hereby or thereby.
9.5 Shareholder
Consent.
On the
Closing Date, shareholders of the Company holding at least a majority of shares
of the Company’s Common Stock immediately prior to the Closing shall have
consented to the Reverse Split (as defined in the Certificate of Designations
of
the Series B Preferred Stock).
15
Article
10
TERMINATION,
AMENDMENT AND WAIVER
10.1 Termination.
This
Agreement may be terminated at any time prior to the Closing Date.
10.1.1 by
mutual
written consent of the Investors and the Company;
10.1.2 by
the
Company upon a material breach of any representation, warranty, covenant or
agreement on the part of the Investors set forth in this Agreement, or by the
Investors upon a material breach of any representation, warranty, covenant
or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company or the Investors, respectively, shall
have become untrue, in either case such that any of the conditions set forth
in
Article 8 or Article 9 hereof would not be satisfied (a “Terminating
Breach”),
and
such breach shall, if capable of cure, not have been cured within ten (10)
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 Investors 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; provided,
however
that
the
4.9% Limitation may not be amended or waived.
10.4 Waiver.
At any
time prior to the Closing Date, the Company or the Investors, as appropriate,
may: (a) extend the time for the performance of any of the obligations or other
acts of the other party or; (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto
which have been made to it or them; or (c) waive compliance with any of the
agreements or conditions contained herein for its or their benefit other than
the 4.9% Limitation which may not be waived. Any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party
or
parties to be bound thereby.
Article
11
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 ▇▇▇▇▇▇
Partners, LLC the due diligence expenses as described in Section
6.26.
11.2 Indemnification.
11.2.1
The Investors agree to jointly and severally indemnify, defend and hold the
Company (following the Closing Date) and its officers, directors,
representatives and agents 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 any of them
shall incur or suffer, which arise out of or result from any breach of this
Agreement by the Investors or failure by the Investors to perform with respect
to the representations, warranties or covenants contained in this Agreement
or
in any exhibit or other instrument furnished or to be furnished under this
Agreement.
11.2.2
The Company agrees to indemnify, defend and hold the Investors (following the
Closing Date) harmless against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities or damages, including
interest, penalties and reasonable attorney’s fees, that it shall incur or
suffer, which arise out of, result from or relate to any breach of this
Agreement or failure by the Company to perform with respect to the
representations, warranties or covenants contained in this Agreement or in
any
exhibit or other instrument furnished or to be furnished under this
Agreement.
In
no
event shall the Company or the Investors be entitled to recover consequential
or
punitive damages resulting from a breach or violation of this Agreement nor
shall any party have any liability hereunder in the event of gross negligence
or
willful misconduct of the indemnified party. The indemnification by the
Investors shall be limited to $50,000.00.
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.
16
11.4 Entire
Agreement.
This
Agreement (together with the schedule, exhibits, and agreements and documents
referred to herein) constitute the entire agreement of the parties and
supersedes all prior agreements and undertakings, both written and oral, between
the parties, or any of them, with respect to the subject matter hereof.
11.5 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given (i) on the date they are delivered if delivered in
person; (ii) on the date initially received if delivered by facsimile
transmission or electronic mail 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:
Entech
Environmental Technologies, Inc.
c/o
Shaanxi Tianren Food Company, Ltd.
Attn:
▇▇.
▇▇▇▇▇▇ ▇▇▇
▇-▇/▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.▇▇,
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇&▇▇▇▇ ▇▇▇▇,
▇▇'▇▇,
▇▇▇▇▇▇▇,▇▇▇▇▇▇
Email:
▇▇▇▇▇▇@▇▇▇.▇▇▇
Fax:
88386656-86
With
a
copy to, which
copy shall not constitute a notice to the Company
Guzov
Ofsink, LLC
▇▇▇
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to
▇▇▇▇▇▇:
▇▇▇▇▇▇
Partners L.P.
c/▇
▇▇▇▇▇▇ Capital Advisors, LLC
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
E-mail:
▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Fax:
(▇▇▇)
▇▇▇-▇▇▇▇
If
to EOS Holdings LLC
Eos
Holdings LLC:
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇
▇. ▇▇▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
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.
17
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
to and is equally responsible for its preparation. In
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;
Waiver of Jury Trial. If
any action is brought among the parties with respect to this Agreement or
otherwise, by way of a claim or counterclaim, the parties agree that in any
such
action, and on all issues, the parties irrevocably waive their right to a trial
by jury.
Exclusive jurisdiction and venue for any such action shall be the federal and
state courts situated in the City, County and State of New York. In the event
suit or action is brought by any party under this Agreement to enforce any
of
its terms, or in any appeal therefrom, it is agreed that the prevailing party
shall be entitled to reasonable attorneys fees to be fixed by the arbitrator,
trial court, and/or appellate court if such party prevails on substantially
all
issues in dispute.
11.11 Preparation
and Filing of Securities and Exchange Commission
filings.
The
Investors shall reasonably assist and cooperate with the Company in the
preparation of all filings with the SEC after the Closing Date due after the
Closing Date.
11.12 Further
Assurances, Cooperation.
Each
party shall, upon reasonable request by the other party, execute and deliver
any
additional documents necessary or desirable to complete the transactions herein
pursuant to and in the manner contemplated by this Agreement. The parties hereto
agree to cooperate and use their respective best efforts to consummate the
transactions contemplated by this Agreement.
11.13 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
the Closing of the transaction contemplated hereby.
11.14 Third
Parties.
Except
as disclosed in this Agreement, nothing in this Agreement, whether express
or
implied, is intended to confer any rights or remedies under or by reason of
this
Agreement on any persons other than the parties hereto and their respective
administrators, executors, legal representatives, heirs, successors and
assignees. Nothing in this Agreement is intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement,
nor
shall any provision give any third persons any right of subrogation or action
over or against any party to this Agreement.
11.15 Failure
or Indulgence Not Waiver; Remedies Cumulative.
No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall 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.
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 or transmission via electronic
mail of a PDF version of this signed Agreement shall be legal and binding on
all
parties hereto.
[SIGNATURES
ON FOLLOWING PAGE]
18
IN
WITNESS WHEREOF,
the
Investors and the Company have as of the date first written above executed
this
Agreement.
|
THE
COMPANY:
|
|
|
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.
|
|
|
By:
|
/s/
▇▇▇▇▇▇ ▇. Emas
|
|
Name:
|
▇▇▇▇▇▇
▇. Emas
|
|
Title:
|
Director
|
|
INVESTORS:
|
|
▇▇▇▇▇▇
PARTNERS LP
|
|
By:
▇▇▇▇▇▇ Capital Advisors, LLC, its General Partner
|
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
|
|
EOS
HOLDINGS, LLC
|
|
|
By:
|
/s/
▇▇▇ ▇▇▇▇▇▇
|
|
Name:
|
▇▇▇
▇▇▇▇▇▇
|
|
Title:
|
President
|
19
Schedule
A
|
Name
and Address
|
Amount
of Investment
|
Number
of Shares
of
Series B Preferred Stock
|
Number
of
Shares
Underlying Series B Preferred Stock
|
Number
of Shares
Underlying
$3.00 Warrants
|
|||||||||
|
▇▇▇▇▇▇
Partners LP
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
|
$
|
3,300,000
|
2,750,000
|
2,750,000
|
6,794,118
|
||||||||
|
EOS
Holdings, LLC
|
$
|
100,000
|
83,333
|
83,333
|
205,882
|
||||||||
20
Exhibit
A
Form
of Certificate of Designation of Preferences, Rights and
Limitations
21
Exhibit
B
Closing
Escrow Agreement
22
Exhibit
C
Escrow
Agreement
23
Exhibit
D
Registration
Rights Agreement
24
Exhibit
E-1
$3.00
Warrants
25