HRDQ GROUP, INC. SERIES A PREFERRED AND COMMON STOCK PURCHASE AGREEMENT
Exhibit
10.1
HRDQ
GROUP,
INC.
SERIES
A PREFERRED AND
COMMON
STOCK PURCHASE AGREEMENT
THIS
SERIES
A PREFERRED
AND
COMMON
STOCK
PURCHASE
AGREEMENT
(this
“Agreement”)
is
made and entered into as of June 16, 2006, by and between HRDQ
GROUP,
INC.,
a
Delaware corporation (the “Company”),
and
Top Rider Group Limited, a BVI corporation (the “Purchaser”).
RECITALS
Whereas,
the
Company has authorized the sale and issuance of an aggregate of two hundred
thousand (200,000) shares of its Series A Preferred Stock (the “Preferred
Shares”)
and an
aggregate of five hundred thousand (500,000) shares of its Common Stock (the
“Common
Shares,”
and
together with the Preferred Shares, the “Shares”);
Whereas,
Purchaser desires to purchase the Shares on the terms and conditions set forth
herein; and
Whereas,
the
transactions contemplated by this Agreement and the transactions contemplated
by
the Contribution Agreement (as defined below) are intended to constitute a
single transaction for purposes of Section 351 of the Internal Revenue Code
of
1986, as amended.
Whereas,
the
Company desires to issue and sell the Shares to Purchaser on the terms and
conditions set forth herein.
Now,
Therefore,
in
consideration of the foregoing recitals and the mutual promises,
representations, warranties, and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as
follows:
AGREEMENT
| 1. |
AGREEMENT
TO SELL AND PURCHASE.
|
1.1 Authorization
of Shares. The
Company has authorized (a) the sale and issuance to Purchaser of the Shares
and
(b) the issuance of such shares of Common Stock to be issued upon the proper
conversion of the Preferred Shares (the “Conversion
Shares”).
The
Shares and the Conversion Shares have the rights, preferences, privileges and
restrictions set forth in the Certificate of Incorporation of the Company,
in
the form attached hereto as Exhibit
B
(the
“Charter”).
1.2 Sale
and Purchase. Subject
to the terms and conditions hereof, at the Closing (as hereinafter defined)
the
Company hereby agrees to issue and sell to Purchaser, and Purchaser agrees
to
purchase from the Company, (a) 200,000
Preferred Shares at a purchase price of three dollars and thirty cents ($3.30)
per share, and (b) 500,000 Common Shares at a purchase price of two dollars
and
twenty cents ($2.20) per share.
| 2. |
CLOSING
DELIVERY AND PAYMENT.
|
2.1 Closing.
The
closing of the sale and purchase of the Shares under this Agreement (the
“Closing”)
shall
take place at 1:00 p.m. on the date hereof, at the offices of the Company,
2/F Huiridianqi Shayu Road, Panyu, Guangzhou, GD511490 China, or at such other
time or place as the Company and Purchaser may mutually agree (such date is
hereinafter referred to as the “Closing
Date”).
2.2 Delivery.
At
the
Closing, subject to the terms and conditions hereof, the Company will deliver
to
Purchaser a certificate representing the number of Preferred Shares and a
certificate representing the number of Common Shares to be purchased at the
Closing by such Purchaser, against payment of the purchase price therefor by
wire transfer of immediately available funds to an account designated by the
Company.
| 3. |
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
|
Except
as
set forth on a Schedule of Exceptions delivered by the Company to Purchaser
at
the Closing, the Company hereby represents and warrants to Purchaser as of
the
date of this Agreement (after giving effect to the consummation of the
transactions contemplated by the Acquisition
Agreement, unless otherwise noted below) as set forth below:
3.1 Organization,
Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite corporate
power and authority to own and operate its properties and assets, to execute
and
deliver this Agreement and the Stockholders’ Agreement in the form attached
hereto as Exhibit
C
(the
“Stockholders’
Agreement”),
the
Registration Rights Agreement in the form attached hereto as Exhibit
D
(the
“Registration
Rights Agreement”),
the
Acquisition Agreement in the form attached hereto as Exhibit
E
(the
“Acquisition
Agreement”),
to
issue and sell the Shares and the Conversion Shares, and to carry out the
provisions of this Agreement, and the Charter and to carry on its business
as
presently conducted and as presently proposed to be conducted. The Company
is
duly qualified to do business and is in good standing as a foreign corporation
in all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
3.2 Subsidiaries.
The
Company owns
19% of
the ownership interests of Guangzhou Aixi Software Limited, a P.R.China limited
liability company. In addition, until December 31, 2006, the Company has a
right to purchase an additional 32% of the ownership interests of Guangzhou
Aixi
Software Limited expire date December 31, 2006.
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3.3 Capitalization;
Voting Rights.
(a) The
authorized capital stock of the Company, immediately prior to the Closing,
consists of (i) 300,000,000
shares of Common Stock, par value $0.001 per
share,
430,880 shares of which
are
issued and outstanding, and (ii) 50,000,000 shares of Preferred Stock, par
value
$0.001 per share, all shares of which are designated Series A Preferred Stock,
none of which are issued and outstanding. Immediately after giving effect to
the
transactions contemplated by this Agreement and the Acquisition Agreement,
there
will
be
3,753,819 shares of
Common
Stock issued and outstanding and 200,000 shares of Series A Preferred Stock
issued and outstanding.
(b) No
shares
or options to purchase shares of Common Stock have been issued or granted under
the Company’s 2006 Equity Incentive Plan (the “Plan”),
and 401,618
shares
of
Common Stock remain available for future issuance under the Plan to officers,
directors, employees and consultants of the Company. The Company has not made
any representations regarding equity incentives to any officer, employee,
director or consultant that are inconsistent with the share amounts and terms
set forth in the Company’s board minutes.
(c) Other
than the shares reserved for issuance under the Plan and except as may be
granted pursuant to this Agreement and the Related Agreements, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements
of
any kind for the purchase or acquisition from the Company of any of its
securities.
(d) All
issued and outstanding shares of the Company’s Common Stock (i) have been duly
authorized and validly issued and are fully paid and nonassessable, (ii) were
issued in compliance with all applicable state and federal laws concerning
the
issuance of securities, and (iii) are subject to a right of first refusal in
favor of the Company on transfer.
(e) The
rights, preferences, privileges and restrictions of the Shares are as stated
in
the Charter. The Conversion Shares have been duly and validly reserved for
issuance. When issued in compliance with the provisions of this Agreement and
the Charter, the Shares and the Conversion Shares will be validly issued, fully
paid and nonassessable, and will be free of any liens or encumbrances other
than
liens and encumbrances created by or imposed upon the Purchaser; provided,
however,
that
the Shares and the Conversion Shares may be subject to restrictions on transfer
and subject to a purchase option under the Related Agreements and under state
and/or federal securities laws as set forth herein or as otherwise required
by
such laws at the time a transfer is proposed. The sale of the Shares and the
subsequent conversion of the Preferred Shares into Conversion Shares are not
and
will not be subject to any preemptive rights or rights of first refusal that
have not been properly waived or complied with.
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(f) No
stock
plan, stock purchase, stock option or other agreement or understanding between
the Company and any holder of any equity securities or rights to purchase equity
securities provides for acceleration or other changes in the vesting provisions
or other terms of such agreement or understanding as the result of (i) (i)
any
merger, consolidated sale of stock or assets, change in control or any other
transaction(s) by the Company; or (ii) the occurrence of any other event or
combination of events.
(g) All
outstanding shares of Common Stock, and all outstanding shares of Common Stock
and Preferred Stock issuable upon the exercise or conversion, as the case may
be, of outstanding options, warrants or other exercisable or convertible
securities, are subject to a market standoff or “lockup” agreement of not less
than 180 days following the Company’s initial public offering.
3.4 Authorization;
Binding Obligations. All
corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization of this Agreement and the Related
Agreements, the performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, sale, issuance and delivery
of
the Shares pursuant hereto and the Conversion Shares pursuant to the Charter
has
been taken. The Agreement and the Related Agreements, when executed and
delivered, will be valid and binding obligations of the Company enforceable
in
accordance with their terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights, (b) general principles of equity
that restrict the availability of equitable remedies, and (c) to the extent
that
the enforceability of the indemnification provisions in the Investor Rights
Agreement may be limited by applicable laws.
3.5 Liabilities.
The
Company has no material liabilities that would be required to be reflected
on a
balance sheet in accordance with United States generally acceptable accounting
principles (“GAAP”)
and,
to the best of its knowledge, no material contingent liabilities that would
be
required to be disclosed in footnotes to the Company’s financial statements in
accordance with GAAP, except in each case current liabilities incurred in the
ordinary course of business which would not reasonably be expected to materially
and adversely affect the business, assets, properties or financial condition
of
the Company.
3.6 Agreements;
Action.
(a) Except
for agreements explicitly contemplated hereby and agreements between the Company
on the one hand and its employees with respect to the sale of the Company’s
outstanding Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, employees,
affiliates or any affiliate thereof on the other hand.
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(b) There
are
no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or to its
knowledge by which it is bound which involve (i) future obligations (contingent
or otherwise) of, or payments to, the Company in excess of $100,000, or (ii)
the
transfer or license of any material patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses by the Company
of
“off the shelf” or other standard products), or (iii) provisions restricting the
development, manufacture or distribution of the Company’s products or services
in any material respect, or (iv) indemnification by the Company with respect
to
infringements of proprietary rights.
(c) The
Company has not (i) accrued, declared or paid any dividends, or authorized
or
made any distribution upon or with respect to any class or series of its capital
stock, (ii) incurred or guaranteed any indebtedness for money borrowed or any
other liabilities (other than trade payables incurred in the ordinary course
of
business) individually in excess of $100,000 or, in the case of indebtedness
and/or liabilities individually less than $100,000, in excess of $300,000 in
the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed
of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For
the
purposes of subsections (b) and (c) above, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities the Company
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of meeting the individual minimum dollar amounts of such subsections.
3.7 Obligations
to Related Parties. Except
pursuant to the Related Agreements and the transactions contemplated thereby,
there are no obligations of the Company to officers, directors, stockholders,
or
employees of the Company other than (a) for payment of salary for services
rendered, (b) reimbursement for reasonable expenses incurred on behalf of the
Company and (c) for other standard employee benefits made generally available
to
all employees (including stock option agreements outstanding under any stock
option plan approved by the Board of Directors of the Company). Other than
ownership of shares of stock of any stockholder of the Company that is itself
a
corporation or limited liability company, none of the officers, directors or,
to
the best of the Company’s knowledge, key employees or stockholders of the
Company or any members of their immediate families, is indebted to the Company
or has any direct or indirect ownership interest in any firm or corporation
with
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, other
than (i) passive investments in publicly traded companies (representing less
than 1% of such company) which may compete with the Company and (ii) investments
by venture capital funds with which directors of the Company may be affiliated
and service as a board member of a company in connection therewith due to a
person’s affiliation with a venture capital fund or similar institutional
investor in such company. No officer, director or stockholder, or any member
of
their immediate families, is, directly or indirectly, interested in any material
contract with the Company (other than the Related Agreements and the
transactions contemplated thereby and other than such contracts as relate to
any
such person’s ownership of capital stock or other securities of the Company).
5
3.8 Changes.
Since
the
formation of the Company (and after giving effect to consummation of the
transactions contemplated by the Contribution Agreement), there has not been
to
the Company’s knowledge:
(a) Any
change in the assets, liabilities, financial condition or operations of the
Company, other than changes in the ordinary course of business, none of which
individually or in the aggregate has had or is reasonably expected to have
a
material adverse effect on such assets, liabilities, financial condition or
operations of the Company;
(b) Any
resignation or termination of any officer, key employee or group of employees
of
the Company;
(c) Any
material change, except in the ordinary course of business, in the contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise;
(d) Any
damage, destruction or loss, whether or not covered by insurance, materially
and
adversely affecting the properties, business or prospects or financial condition
of the Company;
(e) Any
waiver by the Company of a valuable right or of a material debt owed to it;
(f) Any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(g) Any
labor
organization activity related to the Company;
(h) Any
sale,
assignment, or exclusive license or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(i) Any
change in any material agreement to which the Company is a party or by which
it
is bound which materially and adversely affects the business, assets,
liabilities, financial condition, operations or prospects of the Company;
(j) Any
other
event or condition of any character that, either individually or cumulatively,
has materially and adversely affected the business, assets, liabilities,
financial condition or operations of the Company; or
(k) Any
arrangement or commitment by the Company to do any of the acts described in
subsection (a) through (j) above.
6
3.9 Title
to Properties and Assets; Liens, Etc. The
Company has good and marketable title to its owned properties and assets and
a
valid leasehold interest in its leasehold estates, in each case subject to
no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) minor liens
and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and (c)
those that have otherwise arisen in the ordinary course of business.
3.10 Intellectual
Property.
(a) The
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and
other proprietary rights and processes necessary for its business as now
conducted and as presently proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding material options,
licenses or agreements of any kind relating to the foregoing proprietary rights,
nor is the Company bound by or a party to any material options, licenses or
agreements with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or
agreements arising from the purchase of “off the shelf” or standard products.
(b) The
Company has not received any written communications alleging that the Company
has violated or, by conducting its business as presently proposed to be
conducted, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity.
(c) The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company’s business as proposed to be conducted. Each employee,
officer and consultant of the Company has executed a proprietary information
and
inventions agreement in the form previously provided to the Purchaser or their
respective counsel. No employee, officer or consultant of the Company has
excluded works or inventions made prior to his or her employment with the
Company from his or her assignment of inventions pursuant to such employee,
officer or consultant’s proprietary information and inventions agreement. The
Company does not believe it is or will be necessary to utilize any inventions,
trade secrets or proprietary information of any of its employees made prior
to
their employment by the Company, except for inventions, trade secrets or
proprietary information that have been assigned to the Company.
7
(d) The
Company is not subject to any “open source” or “copyleft” obligations or
otherwise required to make any public disclosure or general availability of
source code either used or developed by the Company.
3.11 Compliance
with Other Instruments. The
Company is not in violation or default of any term of its charter documents,
each as amended. The Company is not in violation or default under any provision
of any mortgage, indenture, contract, lease, agreement, instrument or contract
to which it is party or by which it is bound or of any judgment, decree, order
or writ which would materially adversely affect the Company’s business, assets,
properties or financial condition. The execution, delivery, and performance
of
and compliance with this Agreement, and the Related Agreements, and the issuance
and sale of the Shares pursuant hereto and of the Conversion Shares pursuant
to
the Charter, will not, with or without the passage of time or giving of notice,
result in any such violation, or be in conflict with or constitute a default
under any such term or provision, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
the
Company or the suspension, revocation, impairment, forfeiture or nonrenewal
of
any permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
3.12 Litigation.
To
the
Company’s knowledge, there is no action, suit, proceeding or investigation
pending or currently threatened against the Company that would reasonably be
expected to result, either individually or in the aggregate, in any material
adverse change in the assets, business, properties or financial condition of
the
Company or any change in the current equity ownership of the Company or that
questions the validity of this Agreement or the Related Agreements or the right
of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby. The foregoing includes, without
limitation, actions to the Company’s knowledge pending or threatened involving
the prior employment of any of the Company’s employees, their use in connection
with the Company’s business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers. To the Company’s knowledge, the Company is not
a party or subject to the provisions of any order, writ, injunction, judgment
or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or which
the
Company intends to initiate.
3.13 Tax
Returns and Payments. The
Company is and always has been a subchapter C corporation. The Company has
not
been required to file any tax returns (federal, state and local) prior to the
date hereof (and no such tax returns have been filed). The Company has no
knowledge of any liability of any tax to be imposed upon its properties or
assets as of the date of this Agreement that is not adequately provided for.
3.14 Employees.
The
Company has no collective bargaining agreements with any of its employees.
There
is no labor union organizing activity pending or, to the Company’s knowledge,
threatened with respect to the Company. The Company is not a party to or bound
by any currently effective employment contract, deferred compensation
arrangement, bonus plan, incentive plan, profit sharing plan, retirement
agreement or other employee compensation plan or agreement. No employee of
the
Company has been granted the right to continued employment by the Company or
to
any material compensation following termination of employment with the Company.
To the Company’s knowledge, no employee of the Company, nor any consultant with
whom the Company has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating
to
the right of any such individual to be employed by, or to contract with, the
Company; and to the Company’s knowledge the continued employment by the Company
of its present employees, and the performance of the Company’s contracts with
its independent contractors, will not result in any such violation. The Company
has not received any notice alleging that any such violation has occurred.
The
Company is not aware that any officer, key employee or group of employees
intends to terminate his, her or their employment with the Company, nor does
the
Company have a present intention to terminate the employment of any officer,
key
employee or group of employees. Each former employee of the Company whose
employment was terminated by the Company has entered into an agreement with
the
Company providing for the full release of any claims against the Company or
any
related party arising out of such employment. There are no actions pending,
or
to the Company’s knowledge, threatened, by any former or current employee
concerning such person’s employment by the Company.
8
3.15 Registration
Rights and Voting Rights. Except
as
required pursuant to the Registration Rights Agreement, the Company is presently
not under any obligation, and has not granted any rights, to register under
the
Securities Act of 1933, as amended (the “Securities Act”),
any
of the Company’s presently outstanding securities or any of its securities that
may hereafter be issued. To the Company’s knowledge, except as contemplated in
the Stockholders’ Agreement, no stockholder of the Company has entered into any
agreement with respect to the voting of equity securities of the Company.
3.16 Compliance
with Laws; Permits. The
Company is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality
or
agency thereof in respect of the conduct of its business or the ownership of
its
properties, which violation would materially and adversely affect the business,
assets, properties or financial condition of the Company. No domestic
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to
be
filed in connection with the execution and delivery of this Agreement or the
issuance of the Shares or the Conversion Shares, except such as have been duly
and validly obtained or filed, or with respect to any filings that must be
made
after the Closing, as will be filed in a timely manner. The Company has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, assets, properties or financial
condition of the Company and believes it can obtain, without undue burden or
expense, any similar authority for the conduct of its business as planned to
be
conducted.
3.17 Environmental
and Safety Laws. To
its
knowledge, the Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety in
any
material respect, and to its knowledge, no material expenditures are or will
be
required in order to comply with any such existing statute, law or regulation.
9
3.18 Offering
Valid. Assuming
the accuracy of the representations and warranties of Purchaser contained in
Section 4.2 hereof, the offer, sale and issuance of the Shares and the
Conversion Shares will be exempt from the registration requirements of the
Securities Act, and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or
has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act or any state securities laws.
3.19 Full
Disclosure. The
Company has provided Purchaser with all information requested by the Purchaser
in connection with their decision to purchase the Shares. To the Company’s
knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition or operations of the Company that have not been set forth in the
Agreement, the exhibits hereto, the Related Agreements or in other documents
delivered to Purchaser or their attorneys or agents in connection herewith.
3.20 Qualified
Small Business. The
Company represents and warrants to Purchaser that, to the best of its knowledge,
the Company is a “qualified small business” within the meaning of Section
1202(d) of the Internal Revenue Code of 1986, as amended (the “Code”),
as of
the date hereof and the Shares should qualify as “qualified small business
stock” as defined in Section 1202(c) of the Code as of the date hereof. The
Company further represents and warrants that, as of the date hereof, it meets
the “active business requirement” of Section 1202(e) of the Code, and it has
made no “significant redemptions” within the meaning of Section 1202(c)(3)(B) of
the Code.
3.21 Minute
Books. The
minute books of the Company made available to Purchaser contain a complete
summary of all meetings of directors and stockholders since the time of
incorporation.
3.22 Real
Property Holding Corporation. The
Company is not a real property holding corporation within the meaning of Code
Section 897(c)(2) and any regulations promulgated thereunder.
3.23 Insurance.
The
Company has or will obtain (or arrange to be covered by) promptly following
the
Closing general commercial, product liability, fire and casualty insurance
policies with coverage customary for companies similarly situated to the
Company.
| 4. |
REPRESENTATIVES
AND WARRANTIES OF
PURCHASER.
|
10
Purchaser
hereby
represents and warrants to the Company as follows (provided,
that
such representations and warranties do not lessen or obviate the representations
and warranties of the Company set forth in this Agreement):
4.1 Requisite
Power and Authority. Purchaser
has all necessary power and authority to execute and deliver this Agreement
and
the Related Agreements and to carry out their provisions. All action on
Purchaser’s part required for the lawful execution and delivery of this
Agreement and the Related Agreements has been taken. Upon their execution and
delivery, this Agreement and the Related Agreements will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except
(a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or
other laws of general application affecting enforcement of creditors’ rights,
(b) as limited by general principles of equity that restrict the availability
of
equitable remedies, and (c) to the extent that the enforceability of the
indemnification provisions of the Investor Rights Agreement may be limited
by
applicable laws.
4.2 Investment
Representations. Purchaser
understands that neither the Shares nor the Conversion Shares have been
registered under the Securities Act. Purchaser also understands that the Shares
are being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon Purchaser’s representations contained
in the Agreement. Purchaser hereby represents and warrants as follows:
(a) Purchaser
Bears Economic Risk.
Purchaser has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the Company so
that
it is capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. Purchaser must bear
the economic risk of this investment indefinitely unless the Shares (or the
Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. Purchaser understands that the Company
has no present intention of registering the Shares, the Conversion Shares or
any
shares of its Common Stock. Purchaser also understands that there is no
assurance that any exemption from registration under the Securities Act will
be
available and that, even if available, such exemption may not allow Purchaser
to
transfer all or any portion of the Shares or the Conversion Shares under the
circumstances, in the amounts or at the times Purchaser might propose.
(b) Acquisition
for Own Account. Purchaser
is acquiring the Shares and the Conversion Shares for Purchaser’s own account
for investment only, and not with a view towards their distribution.
(c) Purchaser
Can Protect Its Interest.
Purchaser represents that by reason of its, or of its management’s, business or
financial experience, Purchaser has the capacity to protect its own interests
in
connection with the transactions contemplated in this Agreement, and the Related
Agreements. Further, Purchaser is aware of no publication of any advertisement
in connection with the transactions contemplated in this Agreement.
11
(d) Accredited
Investor. Purchaser
represents that it is an accredited investor within the meaning of Regulation
D
under the Securities Act.
(e) Company
Information.
Purchaser has had an opportunity to discuss the Company’s business, management
and financial affairs with the directors, officers and management of the Company
and has had the opportunity to review the Company’s operations and facilities.
Purchaser has also had the opportunity to ask questions of and receive answers
from, the Company and its management regarding the terms and conditions of
this
investment.
(f) Rule
144. Purchaser
acknowledges and agrees that the Shares, and, if issued, the Conversion Shares
are “restricted securities” as defined in Rule 144 promulgated under the
Securities Act as in effect from time to time and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Purchaser has been advised or is aware
of
the provisions of Rule 144, which permits limited resale of shares purchased
in
a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public
information about the Company, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations.
(g) Residence.
If
Purchaser is a partnership, corporation, limited liability company or other
entity, then the office or offices of Purchaser in which its investment decision
was made is located at the address or addresses of Purchaser set forth on
signature page.
(h) Foreign
Investors. If
Purchaser is not a United States person (as defined by Section 7701(a)(30)
of
the Internal Revenue Code of 1986, as amended), Purchaser hereby represents
that
it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Shares
or
any use of this Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Shares, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any government or other consents
that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Shares. The Company’s offer and sale and Purchaser’s
subscription and payment for and continued beneficial ownership of the Shares
will not violate any applicable securities or other laws of Purchaser’s
jurisdiction.
4.3 Transfer
Restrictions.
Purchaser
acknowledges and agrees that the Shares and, if issued, the Conversion Shares
are subject to restrictions on transfer as set forth in the Stockholders’
Agreement.
12
| 5. |
CONDTIONS
TO CLOSING.
|
5.1 Conditions
to Obligations of the Purchaser.
Purchaser’s
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
(a) Representations
and Warranties True; Performance of Obligations.
The
representations and warranties made by the Company in Section 3 hereof shall
be
true and correct as of the Closing Date with the same force and effect as if
they had been made as of the Closing Date, and the Company shall have performed
all obligations and conditions herein required to be performed or observed
by it
on or prior to the Closing.
(b) Legal
Investment. On
the
Closing Date, the sale and issuance of the Shares and the proposed issuance
of
the Conversion Shares shall be legally permitted by all laws and regulations
to
which Purchaser and the Company are subject.
(c) Consents,
Permits, and Waivers.
The
Company shall have obtained any and all consents, permits and waivers necessary
or appropriate for consummation of the transactions contemplated by the
Agreement and the Related Agreements (including any filing required to comply
with the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976) except for such
as may be properly obtained subsequent to the Closing.
(d) Filing
of Charter.
The
Charter shall have been filed with the Secretary of State of the State of
Delaware and shall continue to be in full force and effect as of the Closing
Date.
(e) Corporate
Documents.
The
Company shall have delivered to Purchaser or their counsel copies of all
corporate documents of the Company as Purchaser shall reasonably request.
(f) Reservation
of Conversion Shares.
The
Conversion Shares issuable upon conversion of the Preferred Shares shall have
been duly authorized and reserved for issuance upon such conversion.
(g) Compliance
Certificate.
The
Company shall have delivered to Purchaser a Compliance Certificate, executed
by
the President of the Company, dated the Closing Date, to the effect that the
conditions specified in subsections (a), (c), (d) and (f) of this Section 5.1
have been satisfied.
(h) Secretary’s
Certificate.
Purchaser shall have received from the Company’s Secretary, a certificate having
attached thereto (i) the Company’s Charter as in effect at the time of the
Closing, (ii) the Company’s Bylaws as in effect at the time of the Closing, and
(iii) resolutions approved by the Board of Directors authorizing the
transactions contemplated hereby.
13
(i) Related
Agreements.
The
Stockholders’ Agreement, Registration Rights Agreement, Contribution Agreement,
License Agreement and Services Agreement shall each have been executed and
delivered by the parties thereto.
(j) Board
of Directors.
Upon the
Closing, the authorized size of the Board of Directors of the Company shall
be
five (5) members and the Board shall consist of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and there will be one vacancy.
(k) Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
at the Closing hereby and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to Purchaser
and their special counsel, and Purchaser and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(l) Management
Rights.
A
Management Rights Letter substantially in the form attached hereto as
Exhibit
H
shall
have been executed by the Company and delivered to Purchaser to whom it is
addressed.
5.2 Conditions
to Obligations of the Company. The
Company’s obligation to issue and sell the Shares at each Closing is subject to
the satisfaction, on or prior to such Closing, of the following conditions:
(a) Representations
and Warranties True.
The
representations and warranties in Section 4 made by those Purchaser acquiring
Shares hereof shall be true and correct at the date of the Closing, with the
same force and effect as if they had been made on and as of said date.
(b) Performance
of Obligations.
Such
Purchaser shall have performed and complied with all agreements and conditions
herein required to be performed or complied with by such Purchaser on or before
the Closing.
(c) Related
Agreements.
The
Stockholders’ Agreement, Registration Rights Agreement, Acquisition Agreement,
License Agreement and Services Agreement shall have been executed and delivered
by the parties hereto.
(d) Consents,
Permits, and Waivers.
The
Company shall have obtained any and all consents, permits and waivers necessary
or appropriate for consummation of the transactions contemplated by the
Agreement and the Related Agreements (including any filing required to comply
with the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, and except for
such as may be properly obtained subsequent to the Closing).
| 6. |
MISCELLANEOUS.
|
14
6.1 Governing
Law. This
Agreement shall be governed by and construed under the laws of the State of
New
York
in all respects as such laws are applied to agreements among New York residents
entered into and performed entirely within New York, without giving effect
to
conflict of law principles thereof.
6.2 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered
by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by
the
Company hereunder solely as of the date of such certificate or instrument.
The
representations, warranties, covenants and obligations of the Company, and
the
rights and remedies that may be exercised by the Purchaser, shall not be limited
or otherwise affected by or as a result of any information furnished to, or
any
investigation made by or knowledge of, any of the Purchaser or any of their
representatives.
6.3 Successors
and Assigns. Except
as
otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon the parties hereto and their respective
successors, assigns, heirs, executors and administrators and shall inure to
the
benefit of and be enforceable by each person who shall be a holder of the Shares
from time to time; provided,
however,
that
prior to the receipt by the Company of adequate written notice of the transfer
of any Shares specifying the full name and address of the transferee, the
Company may deem and treat the person listed as the holder of such Shares in
its
records as the absolute owner and holder of such Shares for all purposes.
6.4 Entire
Agreement. This
Agreement, the exhibits and schedules hereto, the Related Agreements and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable for or bound to any other in any manner
by
any oral or written representations, warranties, covenants and agreements except
as specifically set forth herein and therein.
6.5 Severability.
In
the
event one or more of the provisions of this Agreement should, for any reason,
be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal
or
unenforceable provision had never been contained herein.
6.6 Amendment
and Waiver. This
Agreement may be amended or modified, and the obligations of the Company and
the
rights of the holders of the Shares and the Conversion Shares under the
Agreement may be waived, only upon the written consent of the Company and
holders of a majority of the Shares purchased or agreed to be purchased pursuant
to this Agreement (treated as if converted and including any Conversion Shares
into which the then outstanding Shares have been converted that have not been
sold to the public).
6.7 Delays
or Omissions. It
is
agreed that no delay or omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by another party under
this Agreement shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent
or
approval of any kind or character on any party’s part of any breach, default or
noncompliance under this Agreement or any waiver on such party’s part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement by law, or otherwise afforded to any
party, shall be cumulative and not alternative.
15
6.8 Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b)
when sent by confirmed electronic mail, telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c)
five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the Company and
to
Purchaser at the address as set forth on the signature page hereof or at such
other address or electronic mail address as the Company or Purchaser may
designate by ten (10) days advance written notice to the other parties hereto.
6.9 Expenses.
Each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of the Agreement; provided,
however, that the Company shall, at the Closing, reimburse reasonable fees
of
the Purchaser actually incurred not to exceed $20,000.
6.10 Attorneys’
Fees. In
the
event that any suit or action is instituted under or in relation to this
Agreement, including without limitation to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
6.11 Titles
and Subtitles. The
titles of the sections and subsections of the Agreement are for convenience
of
reference only and are not to be considered in construing this Agreement.
6.12 Counterparts.
This
Agreement may be executed in any number of counterparts, including by facsimile,
each of which shall be an original, but all of which together shall constitute
one instrument.
6.13 Broker’s
Fees. Each
party hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker’s or finder’s fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each party hereto further agrees to indemnify each other party for any claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 6.13 being untrue.
16
6.14 Exculpation
by Purchaser. Purchaser
acknowledges that it is not relying upon any person, firm, or corporation,
other
than the Company and its officers and directors, in making its investment or
decision to invest in the Company. Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of the
Purchaser shall be liable to the Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Shares and Conversion Shares.
6.15 Pronouns.
All
pronouns contained herein, and any variations thereof, shall be deemed to refer
to the masculine, feminine or neutral, singular or plural, as to the identity
of
the parties hereto may require.
6.16 Delaware
Corporate Securities Law. THE
SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF BVI
AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF
THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN
EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH
CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING AVAILABLE.
**End
of Agreement
- Signature Page Follows**
17
In
Witness Whereof,
the
parties hereto have executed the Series
A Preferred And
Common Stock Purchase Agreement
as of
the date set forth in the first paragraph hereof.
|
COMPANY:
|
|
|
HRDQ
GROUP, INC.
|
|
| By: |
/s/ ▇▇▇▇▇
▇▇▇▇
|
|
Name:
|
▇▇▇▇▇
▇▇▇▇
|
| Title: |
President
|
|
Address:
|
2/F.,
Huiridianqi Shayu Road
|
|
Panyu
Guangzhou, GD511490
|
|
| China | |
|
PURCHASER:
|
|
|
Top
Rider Group Limited,
|
|
| By: |
/s/ ▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
▇▇▇▇▇▇
▇▇▇▇▇, Manager
|
|
Address:
|
▇/▇.,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
|
|
Panyu
Guangzhou, GD511400
|
|
| China | |
18