UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of January 2021.

 

Commission File Number: 001-38146

 

ZK INTERNATIONAL GROUP CO., LTD.

(Translation of registrant’s name into English)

 

c/o Zhejiang Zhengkang Industrial Co., Ltd.

No. 678 Dingxiang Road, Binhai Industrial Park

Economic & Technology Development Zone

Wenzhou, Zhejiang Province

People’s Republic of China 325025

Tel: +86-577-86852999

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

  Form 20-F x Form 40-F ¨  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

 

 

 

Entry into Material Definitive Agreements in Connection with a Registered Direct Offering.

 

On January 8, 2021, ZK International Group Co., Ltd. (the “Company”) closed a registered offering with a group of investors pursuant to certain securities purchase agreements (each a “Securities Purchase Agreement” and together, the “Securities Purchase Agreements”), pursuant to which the Company agreed to sell to the investors a total of 1,784,992 ordinary shares, with no par value, of the Company (the “Shares”) at a price per share of $1.40.

 

The Company received gross proceeds in the amount of approximately $2,499,000. The Company currently plans to use the proceeds for working capital and other general corporate purposes. The sales and offering of the Shares were effected as a takedown off the Company’s shelf registration statement on Form F-3 (File No. 333-230860) filed by the Company on April 15, 2019, which was declared effective by the Securities and Exchange Commission (the “SEC”) on April 29, 2019, pursuant to a prospectus supplement filed with the SEC on December 22, 2020 (collectively, the “Registration Statement”).

 

A copy of the Form of Securities Purchase Agreement is filed as Exhibits 10.1 to this report and is incorporated by reference herein. The foregoing summaries of such document is subject to, and qualified in their entirety by reference to, such exhibit. The Securities Purchase Agreement contains representations and warranties that the parties made to, and solely for the benefit of, the others in the context of all of the terms and conditions of that agreement and in the context of the specific relationship between the parties. The provisions of such documents, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreements and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties to those documents and agreements. Rather, investors and the public should look to other disclosures contained in the Company’s filings with the SEC.

 

 

 

 

Financial Statements and Exhibits.

 

Exhibits

 

Exhibit
Number
  Description of Exhibit
5.1   Opinion of Mourant Ozannes, BVI counsel of the Company
10.1   Form of Securities Purchase Agreement between the Company and the investors

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: January 8, 2021 ZK INTERNATIONAL GROUP CO., LTD. 
     
  By: /s/ Jiancong Huang
  Name:  Jiancong Huang
  Title: Chief Executive Officer and Chairman of the Board

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 5.1

 

  Mourant Ozannes
5th Floor
Waters Edge Building
Meridian Plaza
Road Town
  Tortola
  British Virgin Islands

 

ZK International Group Co., Ltd (正康国际集团有限公司)

c/o Zhejiang Zhengkang Industrial Co., Ltd.

No. 678 Dingxiang Road, Binhai Industrial Park

Economic & Technology Development Zone

Wenzhou, Zhejiang Province

People's Republic of China 325025

 

 

8 January 2021

 

Our ref:   8051172/79678870/3

 

Dear Sir or Madam

 

ZK International Group Co., Ltd (正康国际集团有限公司) (the Company)

 

We have acted as the Company's British Virgin Islands legal advisers in connection with the offering and issuance of 1,784,992 ordinary shares of no par value each in the Company (the Ordinary Shares).

 

The Company has asked us to provide this opinion in connection with the Registration Statement and the issuance of the Ordinary Shares.

 

1. Documents, searches and definitions

 

1.1 We have reviewed a copy of each of the following documents for the purposes of this opinion:

 

(a) the registration statement on Form F-3 which was filed with the US Securities and Exchange Commission (the SEC) under the US Securities Act of 1933 (the Securities Act) on 15 April 2019 and declared effective on 29 April 2019 (the Registration Statement);

 

(b) the prospectus supplement filed pursuant to Rule 424(b)(5) of the Securities Act on 22 December 2020 (the Prospectus Supplement);

 

(c) each subscription agreement between the Company and each subscriber relating to the issuance of a specific number of Ordinary Shares by the Company to that subscriber, as listed in Schedule 1 (each, an Agreement and together, the Agreements);

 

(d) the resolutions passed by the directors of the Company (or an authorised committee thereof) dated 21 December 2020 authorising the Company's entry into the Agreements and the issuance of the Ordinary Shares (the Authorising Resolutions);

 

(e) the Company's certificate(s) of incorporation and memorandum and articles of association (the M&A) obtained from the Company Search (defined below);

 

(f) a certificate of the Company's registered agent dated 7 January 2021 (the Registered Agent's Certificate);

 

(g) a copy of the Company's register of members; and

 

Mourant Ozannes is a British Virgin Islands partnership

 

BVI  |  CAYMAN ISLANDS  |  GUERNSEY  |  HONG KONG  |  JERSEY  |  LONDON   mourant.com

 

 

 

 

(h) a certificate of good standing for the Company dated 6 January 2021 issued by the Registrar (defined below) (the Certificate of Good Standing).

 

1.2 We have carried out the following searches (together, the Searches) in relation to the Company:

 

(a) a search of the records maintained by the Registrar (defined below) that were on file and available for public inspection on 8 January 2021 (the Company Search); and

 

(b) a search of the records of proceedings in the BVI Courts (defined below) available for public inspection contained in the judicial enforcement management system (the electronic register of proceedings) maintained at the registry of the High Court of Justice of the Virgin Islands (the High Court) on 8 January 2021 (the High Court Search).

 

1.3 In this opinion:

 

(a) agreement includes an agreement, deed or other instrument;

 

(b) BVI means the territory of the British Virgin Islands;

 

(c) BVI Courts means the Eastern Caribbean Supreme Court, Court of Appeal (Virgin Islands) and the High Court (Civil and Commercial Divisions), and BVI Court means any of them;

 

(d) Companies Act means the BVI Business Companies Act 2004;

 

(e) Company Records means the Company's M&A, the Certificate of Good Standing and the Registered Agent's Certificate;

 

(f) execute and it other grammatical forms means (unless the context requires otherwise) that a document has been signed, dated and unconditionally delivered;

 

(g) Insolvency Act means the Insolvency Act 2003;

 

(h) insolvent has the meaning given in the Insolvency Act;

 

(i) non-assessable means, in relation to an Ordinary Share, that the purchase price for which the Company agreed to issue that Ordinary Share has been paid in full to the Company and that no further sum is payable to the Company in respect of that Ordinary Share;

 

(j) Prospectus means the prospectus that forms part of the Registration Statement;

 

(k) Registrar means the Registrar of Corporate Affairs appointed under the Companies Act; and

 

(l) signed means that a document has been duly signed or sealed.

 

2. Assumptions

 

We have assumed (and have not independently verified) that:

 

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2.1 each document examined by us:

 

(a) whether it is an original or copy, is (along with any date, signature, initial, stamp or seal on it) genuine and complete, up-to-date and (where applicable) in full force and effect; and

 

(b) was (where it was executed after we reviewed it) executed in materially the same form as the last draft of that document examined by us;

 

2.2 in approving the issuance of the Ordinary Shares in accordance with the Registration Statement and the relevant Agreement, each director of the Company:

 

(a) acted or will act honestly, in good faith and in what the director believed or believes to be the best interests of the Company;

 

(b) exercised or will exercise the director's powers as a director for a proper purpose; and

 

(c) exercised or will exercise the care, diligence and skill that a reasonable director would exercise in the same circumstances;

 

2.3 each director of the Company (and any alternate director):

 

(a) has disclosed or will disclose to each other director any interest of that director (or alternate director) in the transactions contemplated by the Registration Statement and the relevant Agreement in accordance with the Company's M&A and the Companies Act; and

 

(b) disclosed or will disclose to each other director any interest of that director (or alternate director) in the issuance of the Ordinary Shares in accordance with the Company's M&A and the Companies Act;

 

2.4 the Authorising Resolutions were duly passed, are in full force and effect and are effective under all applicable laws in authorising the Company to issue any Ordinary Shares and enter into any relevant Agreement;

 

2.5 each document examined by us that has been signed by the Company:

 

(a) has been signed by the person(s) authorised by the Company to sign it;

 

(b) (where any signatory is a body corporate) it has been signed in accordance with that body corporate's constitution and then current signing authorities; and

 

(c) has been dated and unconditionally delivered by the Company;

 

2.6 each party to each Agreement has:

 

(a) the capacity and power;

 

(b) taken or will take all necessary action; and

 

(c) obtained or made (or will obtain and will make) all necessary agreements, approvals, authorisations, consents, filings, licences, registrations and qualifications (whether as a matter of any law or regulation applicable to it or as a matter of any agreement binding upon it), to execute, and perform its obligations under, that Agreement;

 

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2.7 the Registration Statement has been authorised and executed by each party to it and each Agreement has, or will be, authorised and executed by each party to it;

 

2.8 there are no documents or arrangements to which the Company is party or resolutions of the Company's directors or shareholders that conflict with, or would be breached by, any term of the Registration Statement, each Agreement or the issuance of any of the Ordinary Shares;

 

2.9 the Company has executed, or will execute, each document, and did, or will do, each other act and thing, that it is required to execute or do under each relevant document in connection with the issuance of the Ordinary Shares (including the Registration Statement and each Agreement);

 

2.10 the Ordinary Shares have been (or will be) issued in accordance with all applicable laws, the Company's M&A and the terms of the Registration Statement and the relevant Agreement, and any Agreement will be in full force and effective and legal, binding and enforceable under all applicable laws at the time that the Ordinary Shares are issued;

 

2.11 the Registration Statement and any required amendment thereto have all become effective under the Securities Act and the Prospectus and any and all future supplements to the Prospectus (including the Prospectus Supplement) required by applicable laws have been delivered and filed as required by such laws;

 

2.12 the Company was not insolvent and will not become insolvent as a result of executing, or performing its obligations under, any document relating to the issuance of the Ordinary Shares (including the Registration Statement and each Agreement) and at the time the Company issues Ordinary Shares to the subscriber of the relevant Ordinary Shares no steps will have been taken, or resolutions passed, to appoint a liquidator of the Company or a receiver in respect of the Company or any of its assets;

 

2.13 none of our opinions will be affected by the laws or public policy of any foreign jurisdiction;

 

2.14 in relation to the Searches:

 

(a) all public records of the Company we have examined are complete and accurate;

 

(b) all filings required to be made in relation to the Company with the Registrar have been made and there was no information which had been filed that did not appear on the records of the Company at the time of the Company Search; and

 

(c) the information disclosed by the Searches was at the time of each search, and continues to be, accurate and complete; and

 

2.15 the Company Records were and remain at the date of this opinion accurate and complete.

 

3. Opinion

 

Subject to the assumptions, observations, qualifications and limitations set out in this opinion, and to matters not disclosed to us, we are of the following opinion.

 

3.1 Status:  the Company is registered under the Companies Act, validly exists under the laws of the BVI and is of good standing with the Registrar. The Company is of good standing if it (i) is listed on the register of companies maintained by the Registrar, (ii) has paid to the Registrar all fees, annual fees and penalties due and payable and (iii) has filed with the Registrar a copy of its register of directors which is complete (to the satisfaction of the Registrar as to the requisite information relating to each director and is properly filed) or is not yet due to file its register of directors with the Registrar.

 

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3.2 Ordinary Shares: the issuance of the Ordinary Shares has been specifically authorised by the Company pursuant to the Authorising Resolutions and the terms of the issuance and sale of the Ordinary Shares have been duly established in conformity with the Company's M&A and the Authorising Resolutions, and when (i) the Ordinary Shares have been issued and delivered as contemplated by the Registration Statement, the Prospectus and the Prospectus Supplement in accordance with the Agreements against payment therefor, (ii) the Company has received the consideration provided for in the Authorising Resolutions and the Agreements and such consideration per share is not less than the par value per Ordinary Share, and (iii) the name of the respective shareholder is entered in the Company's register of members, such Ordinary Shares will be validly issued, fully paid and non-assessable.

 

4. Qualifications and observations

 

This opinion is subject to the following qualifications and observations.

 

4.1 This opinion is subject to all laws relating to bankruptcy, dissolution, insolvency, re-organisation, liquidation, moratorium, court schemes and other laws and legal procedures of general application affecting or relating to the rights of creditors.

 

4.2 When the term enforceable or binding is used in paragraph 3 (Opinion) of our opinion, it means that an obligation is of a type that the BVI Courts will enforce. It does not mean that the obligation will necessarily be enforced in all circumstances or in accordance with its terms or that any particular remedy will be available. In particular, but without limitation:

 

(a) enforcement may be prevented by statutory provisions relating to the setting aside of unfair preferences, undervalue transactions, voidable floating charges, extortionate credit transactions and disclaiming of onerous property;

 

(b) enforcement may be limited by general principles of equity (for example, equitable remedies like specific performance and injunction are discretionary and may not be available where damages are considered to be an adequate remedy);

 

(c) enforcement of obligations may be invalidated by reason of duress, fraud, misrepresentation, mistake or undue influence;

 

(d) contractual provisions that require a defaulting party to pay a sum that is out of all proportion to the innocent party's legitimate interest in the agreement being performed or which seek to punish a defaulting party may be held to be unenforceable on the ground that they constitute penalties;

 

(e) provisions in an agreement or in a BVI company's memorandum or articles of association that fetter any statutory power may not be enforceable;

 

(f) the BVI Courts will not enforce the terms of an agreement if:

 

(i) they are, or their performance would be, illegal or contrary to public policy in the BVI or in any other jurisdiction; or

 

(ii) they would conflict with or breach applicable sanctions or exchange control regulations;

 

(g) the BVI Courts may not enforce the terms of an agreement:

 

(i) for the payment or reimbursement of, or indemnity against, the costs of enforcement (actual or contemplated) or of litigation brought before the BVI Courts or foreign courts or where the BVI Courts or foreign courts have themselves made an order for costs;

 

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(ii) that constitute an agreement to negotiate or an agreement to agree;

 

(iii) that would involve the enforcement of any foreign revenue, penal or other public laws or an indemnity in respect of any of these laws;

 

(iv) that seek to exclude the jurisdiction of the BVI Courts;

 

(v) that relate to confidentiality (which may be overridden by the requirements of legal process);

 

(vi) that provide that any of the terms of that agreement can only be amended or waived in writing (and not orally or by course of conduct); or

 

(vii) that permit the severance of illegal, invalid or unenforceable terms;

 

(h) a judgment of a BVI Court or a foreign court given in respect of contractual obligations may be held to supersede them (so they may not survive the judgment even if expressed to do so);

 

(i) the BVI Courts may refuse to allow unjust enrichment;

 

(j) claims may become time barred or may be subject to rights and defences of abatement, acquiescence, counter-claim, estoppel, frustration, laches, set-off, waiver and similar defences;

 

(k) the effectiveness of terms that seek to exclude or limit a liability or duty otherwise owed, or to indemnify a person in respect of a loss caused by the act or omission of that person, may be limited by law; and

 

(l) where any party to an agreement is party to it in more than one capacity that party may not be able to enforce obligations owed by it to itself.

 

4.3 Where a director fails, in accordance with the Companies Act, to disclose an interest in a transaction entered into by a BVI company, the transaction is voidable.

 

4.4 The Company Search will not reveal any document which has not been filed with the Registrar or which was filed but was not registered or did not appear on the Company's file at the time of the Company Search.

 

4.5 The High Court Search will not reveal (among other things) if there are any:

 

(a) proceedings or appointments that have not been filed or that have been filed but have not been recorded in the High Court's judicial enforcement management system or that have been filed but did not appear on the High Court's judicial enforcement management system at the time of the High Court Search;

 

(b) proceedings commenced prior to 1 January 2000 if no document has been filed since that date;

 

(c) proceedings against the Company that have been threatened but not filed;

 

(d) files that have been sealed pursuant to a court order; or

 

(e) arbitration proceedings in which the Company is a defendant or respondent.

 

4.6 The Insolvency Act requires a receiver appointed in respect of a BVI company (or any of its assets) to file a notice of appointment with the Registrar and (if the company is or has been a regulated person (as defined in the Insolvency Act)) with the British Virgin Islands Financial Services Commission. If the receiver fails to do so, the receiver will be guilty of an offence and liable to a fine. This does not, however, invalidate the receiver's appointment.

 

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5. Limitations

 

5.1 This opinion is limited to the matters expressly stated in it and it is given solely in connection with the Registration Statement and the issuance of the Ordinary Shares.

 

5.2 For the purposes of this opinion, we have only examined the documents listed in paragraph 1.1 above and carried out the Searches. We have not examined any term or document incorporated by reference, or otherwise referred to, whether in whole or part, in the Registration Statement and we offer no opinion on any such term or document.

 

5.3 We have made no investigation of, and express no opinion with respect to, the laws of any jurisdiction other than the BVI or the effect of the Registration Statement under those laws. In particular, we express no opinion as to the meaning or effect of any foreign statutes referred to in the Registration Statement.

 

5.4 We assume no obligation to advise the Company (or any person we give consent to rely on this opinion) in relation to changes of fact or law that may have a bearing on the continuing accuracy of this opinion.

 

6. Governing law

 

This opinion, and any non-contractual obligations arising out of it, are governed by, and to be interpreted in accordance with, BVI laws in force on the date of this opinion.

 

7. Consent

 

7.1 This opinion may only be used in connection with the offer and sale of the Ordinary Shares while the Registration Statement is effective.

 

7.2 We consent to:

 

(a) the filing of a copy of this opinion as an exhibit 5.1 to the Company’s Report of Foreign Private Issuer on Form 6-K to be filed with the SEC on or about 21 December 2020; and

 

(b) reference to us being made in the section of the Prospectus and Prospectus Supplement under the heading Legal Matters and elsewhere in the Prospectus and Prospectus Supplement.

 

7.3 In giving this consent, we do not admit that we are included in the category of persons whose consent is required under section 7 of the Securities Act or the rules and regulations promulgated by the SEC under the Securities Act.

 

Yours faithfully

 

 

Mourant Ozannes

 

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Schedule 1

 

Agreements

 

Subscriber Subscription
Amount (US$)
No. of Ordinary
Shares
Date of Agreement
Noah Boeken 150,000 107,142 23 December 2020
Barry Alter 100,000 71,428 23 December 2020
Whole Earth Holdings Inc. 125,000 89,285 23 December 2020
Tim Gulla 250,000 178,571 23 December 2020
Deborah Grazioso 100,000 71,428 23 December 2020
Simon Kearney 150,000 107,142 23 December 2020
Andjelko Andrejevic 125,000 89,285 23 December 2020
Adam Gefvert 50,000 35,714 23 December 2020
Honey Tree Trading LLC 575,000 410,714 23 December 2020
Pacific Seaboard Investments Ltd. 340,000 242,857 23 December 2020
Jianfang Qian 200,000 142,857 23 December 2020
Barbara Knight 149,000 106,428 23 December 2020
Ross Himber 75,000 53,571 23 December 2020
Anthony Cirillo 50,000 35,714 23 December 2020
Bryan Dear 25,000 17,857 23 December 2020
Crown Ocean International Ltd 25,000 17,857 23 December 2020
Pardeep Sarai 10,000 7,142 23 December 2020

 

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Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of December 23, 2020, is between ZK INTERNATIONAL GROUP CO., LTD, a company incorporated under the laws of the British Virgin Islands, with headquarters located at No. 678 Dingxiang Road, Binhai Industrial Park, Economic & Technology Development Zone, Wenzhou, Zhejiang Province, China 325025 (the “Company”), and the investor as set forth on the signature page (each a “Buyer”).

 

WITNESSETH

 

WHEREAS, the Company and each Buyer desire to enter into this transaction for the Company to sell and the Buyer to purchase the Ordinary Shares (as defined below) pursuant to a registration statement on Form F-3 (File Number: 333-230860) (together with all the amendments and supplements, the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) on April 15, 2019 and declared effective on April 29, 2019;

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer(s), as provided herein, and the Buyer(s) shall purchase an aggregate of 1,785,000 Company’s ordinary shares (the “Securities”), with no par value (the “Ordinary Shares”), at $1.40 per ordinary share, for a total purchase price of up to $2,499,000 in principal (the “Purchase Price”) in the respective amounts set forth on each Buyer’s signature page hereof (the “Subscription Amount”);

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Company is delivering Irrevocable Transfer Agent Instructions (the “Irrevocable Transfer Agent Instructions”) to its transfer agent; and

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

1. PURCHASE AND SALE OF SECURITIES.

 

(a)            Purchase of the Securities. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company at the Closing (as defined below) Securities in amounts corresponding with the Subscription Amount set forth on each Buyer’s the signature page hereof.

 

(b)            Closing Dates. The date and time of the closing of the purchase of Ordinary Shares by the Buyer(s) (the “Closing”) shall be 10:00 a.m., New York time, within two (2) Business Days on which the conditions to the Closing set forth in Sections 5 and 6 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer) (the “Closing Date”). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.

 

 

 

 

(c)            Form of Payment; Deliveries. Subject to the satisfaction of the terms and conditions of this Agreement, on the Closing Date, (i) the Buyer shall deliver to the Company such aggregate proceeds for the Ordinary Shares to be issued and sold to such Buyer at such Closing, minus the fees to be paid directly from the proceeds of such Closing as set forth in a closing statement, and (ii) the Company shall issue and deliver to each Buyer, the number of Ordinary Shares which such Buyer is purchasing at such Closing in amounts on such Buyer’s signature page hereof, duly executed on behalf of the Company.

 

2. BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:

 

(a)            Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

(b)            Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

 

(c)            No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

(d)            Certain Trading Activities. The Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving the Company's securities) during the period commencing as of the time that the Buyer first contacted the Company or the Company's agents regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement by such Buyer. The Buyer hereby agrees that it shall not directly or indirectly, engage in any Short Sales involving the Company’s securities. "Short Sales" means all "short sales" as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “1934 Act”) (as defined below). The Buyer is aware that Short Sales and other hedging activities may be subject to applicable federal and state securities laws, rules and regulations and the Buyer acknowledges that the responsibility of compliance with any such federal or state securities laws, rules and regulations is solely the responsibility of the Buyer.

 

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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as set forth under the corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof and to qualify any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes the representations and warranties set forth below to The Buyer:

 

(a)            Organization and Qualification. The Company and each of its Subsidiaries is an entity duly formed, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or formed, and has the requisite power and authority to own its properties and to carry on its business as now being conducted and as presently proposed to be conducted. The Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into by the Company in connection herewith or therewith or (iii) the authority or ability of the Company to perform any of its obligations under any of the Transaction Documents. “Subsidiaries” means any Person in which the Company, directly or indirectly, owns a majority of the outstanding capital stock having voting power or holds a majority of the equity or similar interest of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary”.

 

(b)            Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Ordinary Shares), have been duly authorized by the Company's board of directors and no further filing, consent or authorization is required by the Company, its board of directors or its shareholders or other governmental body. This Agreement has been, and the other Transaction Documents to which the Company is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement, the Ordinary Shares, the Irrevocable Transfer Agent Instructions, and each of the other agreements and instruments entered into by the Company or delivered by the Company in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.

 

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(c)            Issuance of Securities. The issuance of the Securities are duly authorized and, upon issuance and payment in accordance with the terms of the Transaction Documents the Securities shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. Upon issuance, the Securities, when issued, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Ordinary Shares.

 

(d)            No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Securities) will not (i) result in a violation of the articles of incorporation, bylaws, certificate of incorporation or formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any shares, capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations, the securities laws of the jurisdictions of the Company's incorporation or in which it or its subsidiaries operate and the rules and regulations of the Nasdaq (the “Principal Market”) and including all applicable laws, rules and regulations of the British Virgin Islands) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of (ii) and (iii) for any conflict, default, right or violation that would not reasonably be expected to result in a Material Adverse Effect.

 

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(e)            Consents. The Company is not required to obtain any material consent from, authorization or order of, or make any filing or registration with (other than any filings as may be required by any federal or state securities agencies and any filings as may be required by the Principal Market), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Ordinary Shares in the foreseeable future. The Company has notified the Principal Market of the issuance of all of the Securities hereunder, which does not require obtaining the approval of the shareholders of the Company or any other Person or Governmental Entity, and the Principal Market has completed its review of the related Listing of Additional Share form. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.

 

(f)            Equity Capitalization.

 

(i)            Authorized and Outstanding Ordinary Shares. As of the date hereof, the authorized maximum number of Ordinary Shares of the Company consists of (A) 50,000,000 ordinary shares of a single class with no par value each, of which, 17,952,290 are issued and outstanding.

 

(ii)            Valid Issuance; Available Shares. All of such outstanding shares are duly authorized and have been validly issued and are fully paid and non-assessable.

 

(g)            Registration Statement and Prospectus. The Registration Statement is a “shelf registration statement” as defined under Rule 405 of the Securities Act that has been filed with the Commission not earlier than three years prior to the date hereof; and no notice of objection of the Commission to the use of such registration statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by Seller. No order suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against Seller or related to the offering of the Shares has been initiated or threatened by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment thereto, the Registration Statement and any such post-effective amendment complied and will comply in all material respects with the Securities Act, and did not and will 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 not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; “Prospectus” means the prospectus in the form first used (or made available upon request of Buyer pursuant to Rule 173 under the Securities Act) in connection with the sale of the Securities.

 

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(h)            Incorporated Documents. The documents incorporated by reference in the Registration Statement and the Prospectus, when they were filed with the Commission conformed in all material respects to the requirements of the Exchange Act, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Registration Statement and the Prospectus, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(i)            Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose, pursuant to Rule 401(g)(2) or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission; the Prospectus shall have been timely filed with the Commission under the Securities Act and in accordance with Section 4(a) hereof; and all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives.

 

4. COVENANTS.

 

(a)            Reporting Status. The Company shall use its best efforts to file on a timely basis all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.

 

(b)            Use of Proceeds. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein to repay any loans to any executives or employees of the Company.

 

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(c)            Listing. To the extent applicable, the Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Ordinary Shares (as defined below) upon each national securities exchange and automated quotation system, if any, upon which the Ordinary Shares are then listed or designated for quotation (as the case may be, each an “Eligible Market”), subject to official notice of issuance, and shall use reasonable efforts to maintain such listing or designation for quotation (as the case may be) of all Securities from time to time issuable under the terms of the Transaction Documents on such Eligible Market for the Reporting Period. Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Ordinary Shares on an Eligible Market during the Reporting Period. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c).

 

(d)            Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.

 

5. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the Company hereunder to issue and sell the Ordinary Shares to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

 

(a)            Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

 

(b)            Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for the Ordinary Shares being purchased by such Buyer at the Closing by wire transfer of immediately available funds.

 

(c)            The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to such Closing Date.

 

6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

 

The obligation of each Buyer hereunder to purchase its Ordinary Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

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(a)            The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer such aggregate principal amount of Securities as set forth thereof.

 

(b)            The Ordinary Shares (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market.

 

(c)            The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

 

7. TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 7 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer's breach of this Agreement and (ii) the abandonment of the sale and purchase of the Securities shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described herein. Nothing contained in this Section 7 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

 

8. MISCELLANEOUS.

 

(a)            Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

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(b)            Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

(c)            Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms "including," "includes," "include" and words of like import shall be construed broadly as if followed by the words "without limitation." The terms "herein," "hereunder," "hereof" and words of like import refer to this entire Agreement instead of just the provision in which they are found.

 

(d)            Entire Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyer, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

 

(e)            Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered personally or (ii) one (1) Business Day after deposit with an overnight courier service with next-day international delivery specified, in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and e-mail addresses for such communications shall be:

 

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If to the Company, to: ZK INTERNATIONAL GROUP CO., LTD
 

No. 678 Dingxiang Road, Binhai Industrial Park

Economic & Technology Development Zone

Wenzhou, Zhejiang Province

People’s Republic of China 325025

Telephone: +86-577-86852999

Email: zjzk@cn-zk.cn

 

With Copy to:

Mengyi “Jason” Ye, Esq.

Ortoli Rosenstadt LLP

366 Madison Avenue, 3rd Floor

New York, NY 10017

Telephone:  212-588-0022
E-Mail:  jye@orllp.legal

   
If to a Buyer, to its address and e-mail address as set forth on the signature page hereof.
   

or to such other address, e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) electronically generated by the sender's e-mail service provider containing the time, date, recipient e-mail address or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively

 

(f)            Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Securities. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. In connection with any transfer of any or all of its Securities, a Buyer may assign all, or a portion, of its rights and obligations hereunder in connection with such Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such transferred Securities.

 

(g)            No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

 

 

COMPANY:

   
 

ZK INTERNATIONAL GROUP CO., LTD

   
  By:  
  Name: Jiancong Huang
  Title: Chief Executive Officer and Chairman of the Board

 

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

 

 

   
(Amount of Subscription in USD)   (Name of Buyer – Please type or print)

 

 

   
    (Signature and, if applicable, Office)

 

 

   
    (Address of Buyer)

 

 

   

 

  (City, State/Province, Zip code/Postal Code of Buyer)

 

 

   
    (Country of Buyer)

 

 

   
    (Email Address of Buyer)

 

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