UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): February 22, 2008
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.
(Exact
name of Registrant as specified in charter)
Florida
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000-32249
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98-0222013
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(State
of Incorporation)
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(Commission
File No.)
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(IRS
Employer
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Identification
Number)
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A-4F
Tongxinge, Xietong Building, Gaoxin 2
nd
Road,
Hi-Tech
Industrial
Zone
,
Xi’an,
Shaanxi
province, PRC 710065
(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code:
(011)-86-29-88386415
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3233
Grand Avenue, Suite N-353
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Chino
Hills, California 91709-1489
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(Former
name or former address, if changed since last report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
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Written
communications pursuant to Rule 425 under the Securities Act
(17CFR230.425)
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Soliciting
material pursuant to Rule14a-12 under the Exchange Act
(17CFR240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17CFR240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17CFR240.13e-4(c))
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TABLE
OF CONTENTS
Item
No
.
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Description
of Item
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Page
No
.
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Item
1.01
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Entry
Into a Material Definitive Agreement
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3
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Item
5.02
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Departure
of Directors or Principal Officers;
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Election
of Directors; Appointment of Principal
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15
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Item
5.03
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Amendments
to Articles of Incorporation or Bylaws;
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15
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Change
in Fiscal Year;
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Item
9.01
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Financial
Statements and Exhibits
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15
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Our
disclosure and analysis in this Current Report on Form 8-K contains some
forward-looking statements. Certain of the matters discussed concerning our
operations, cash flows, financial position, economic performance and financial
condition, including, in particular, future sales, product demand, the market
for our products in the People’s Republic of China and elsewhere, competition,
exchange rate fluctuations and the effect of economic conditions include
forward-looking statements.
Statements
that are predictive in nature, that depend upon or refer to future events or
conditions or that include words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates" and similar expressions are forward-looking
statements. Although we believe that these statements are based upon reasonable
assumptions, including projections of orders, sales, operating margins,
earnings, cash flow, research and development costs, working capital, capital
expenditures and other projections, they are subject to several risks and
uncertainties.
Investors
are cautioned that our forward-looking statements are not guarantees of future
performance and the actual results or developments may differ materially from
the expectations expressed in the forward-looking statements.
As
for
the forward-looking statements that relate to future financial results and
other
projections, actual results will be different due to the inherent uncertainty
of
estimates, forecasts and projections may be better or worse than projected.
Given these uncertainties, you should not place any reliance on these
forward-looking statements. These forward-looking statements also represent
our
estimates and assumptions only as of the date that they were made. We expressly
disclaim a duty to provide updates to these forward-looking statements, and
the
estimates and assumptions associated with them, after the date of this filing
to
reflect events or changes in circumstances or changes in expectations or the
occurrence of anticipated events. You are advised, however, to consult any
additional disclosures we make in our reports on Form 10-KSB, Form 10-QSB,
Form
8-K, or their successors.
Item
1.01.
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Entry
into a Material Definitive Agreement.
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Overview
Between
February 22, 2008 and February 25, 2008, Entech Environmental Technologies,
Inc., a Florida corporation (hereafter referred to as the
“
Company”,
“we” or “us”, as applicable), entered into a series of transactions whereby the
Company acquired 100% of the ownership interest in Pacific Industry Holding
Group Co. Ltd., a Vanuatu corporation (“PACIFIC”), from the shareholders of
PACIFIC in a share exchange transaction and raised $3,400,000 gross proceeds
from certain accredited investors in a private placement transaction. These
transactions, collectively hereinafter referred to as “Reverse Merger
Transactions,” were consummated simultaneously on February 26, 2008 and as a
result of the consummation of these transactions, PACIFIC is now a wholly-owned
subsidiary of the Company.
PACIFIC’s
only business is acting as a holding company for Shaanxi Tianren Organic Food
Co. Ltd., a company organized under the laws of the People’s Republic of China
(“Tianren”), in which PACIFIC hold a 99% ownership interest. Currently, Tianren
is engaged in the business of research and development, production and sales
of
organic foods, special concentrated fruit juice, fast-frozen and freeze-dried
fruits and vegetables and fruit juice drinks.
The
following sets forth the material agreements that the Company entered into
in
connection with the Reverse Merger Transactions and the material terms of these
agreements:
1.
Share Exchange Agreement
On
February 22, 2008, the Company and Terrence Leong, the Company’s then Chief
Executive Officer, entered into a Share Exchange Agreement with PACIFIC and
all
of the shareholders of PACIFIC (the “Agreement”). Pursuant to the Agreement, the
shareholders of PACIFIC agreed to exchange 100 ordinary shares of PACIFIC,
representing a 100% ownership interest in PACIFIC, for 1,000,000 shares of
a
newly designated Series A Convertible Preferred Stock of the Company, par value
$0.001 per share (the “Share Exchange Transaction”).
2.
Stock Purchase Agreement
In
connection with the Share Exchange Transaction, on February 25, 2008, the
Company entered into a Series B Convertible Preferred Stock Purchase Agreement
(the “Stock Purchase Agreement”) with certain accredited investors (the
“Investors”), pursuant to which the Company agreed to issue 2,833,333 shares of
a newly designated Series B Convertible Preferred Stock of the Company, par
value $0.001 per share (“Series B Stock”) and warrants to purchase 7,000,000
shares of the Company’s common stock (the “Warrants”) to the investors, in
exchange for a cash payment in the amount of $3,400,000. Under the Stock
Purchase Agreement, the Company also agreed to deposit 2,000,000 shares of
the
Series B Stock into an escrow account to be held by an escrow agent as make
good
shares in the event the Company’s consolidated pre-tax income and pre-tax income
per share, on a fully-diluted basis, for the years ended December 31, 2007,
2008
or 2009 are less than certain pre-determined target numbers.
The
Stock Purchase Agreement provides for the purchase by the investors referred
to
below (the “Investors”) of the securities described below.
Name
and Address
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Amount
of Investment
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Number
of Shares of Series B Preferred Stock
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Number
of Shares of Common Underlying Series B Preferred Stock
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Number
of Shares of Common Underlying Warrants
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Barron
Partners LP
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$
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3,300,000
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2,750,000
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2,750,000
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6,794,118
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Eos
Holdings, LLC
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$
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100,000
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83,333
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83,333
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205,882
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Total
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$
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3,400,000
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2,833,333
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2,833,333
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7,000,000
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Representations;
Warranties; Indemnification
:
The Stock Purchase Agreement contains representations and warranties by us
and
the investors which are customary for transactions of this type. The Stock
Purchase Agreement also obligates us to indemnify the investors for any losses
arising out of any breach of the agreement or failure by us to perform with
respect to the representations, warranties or covenants in the
agreement.
Covenants:
The Stock Purchase Agreement contains certain covenants on our part, including
the following:
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o
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Preferred
Stock
:
we may not issue any preferred stock or convertible debt for three
years
following the Closing Date for so long as the investors shall continue
to
beneficially own 20% of the Series B Preferred Stock issued under
the
Stock Purchase Agreement;
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Insider
Selling
:
No person who is an officer, director or affiliate of the Company
on
February 25, 2008 or who becomes our officer or director subsequent
to
February 26, 2008 may sell any shares of our Common Stock in the
public
market prior to the earlier of thirty six (36) months from date the
registration statement is filed pursuant to the Registration Rights
Agreement (as defined below) is deemed effective. Andrew Barron Worden,
Managing Partner of Barron Partners LP, and the Investors are not
subject
to this covenant;
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Use
of Proceeds
:
we must use the proceeds of the financing for acquisitions, working
capital and other general corporate purposes;
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Debt
:
Our debt-to- EBITDA ratio, at any given date, cannot exceed 3.5:1
for the
most recent 12-month period until the expiration of two (2) years
from the
Closing Date;
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Independent
Directors
:
prior to April 26, 2008, we are required to increase the size of
our Board
of Directors to five or seven and cause the appointment of a majority
of
the board to be “independent directors,” as defined by the rules of
the Nasdaq Stock Market. Our Board of Directors currently consists
of two
directors, one of whom is independent. We are required to pay the
investors liquidated damages equal to amount equal to fourteen percent
(14%) of the Purchase Price (as defined in the Stock Purchase Agreement)
per annum, payable monthly in cash as calculated based on the number
of
days that we are not in compliance with this
covenant;
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Independent
Directors on Audit and Compensation Committees
:
we are required, prior to April 26, 2008, to appoint (i) an audit
committee comprised solely of not less than three independent directors
and a (ii) compensation committee comprised of not less than three
directors, a majority of whom are independent directors. We are required
to pay the investors liquidated damages in an amount equal to fourteen
percent (14%) of the Purchase Price per annum, payable monthly in
cash as
calculated based on the number of days that we are not in compliance
with
this covenant;
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Chief
Financial Officer
:
we are required, prior to March 28, 2008, to hire a chief financial
officer who speaks and understands both English and Chinese and is
familiar with GAAP. We are required to pay the investors liquidated
damages equal to amount equal to fourteen percent (14%) of the Purchase
Price per annum, payable monthly in cash as calculated based on the
number
of days that we are not in compliance with this covenant;
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Listing,
Securities Exchange Act of 1934 and Rule 144
:
we are prohibited from taking any action to terminate or suspend
our
reporting and filing obligations under the Securities Exchange Act
of
1934, as amended (the “Exchange Act”), or the Securities Act of 1933, as
amended (the “Securities Act”), except as permitted under the transaction
documents for the Reverse Merger Transaction. We are required to
take all
action necessary to continue the quotation or listing of our Common
Stock
on the OTC Bulletin Board or other exchange or market on which the
Common
Stock is trading or may be traded in the future. We are required
to pay
the investors liquidated damages in an amount equal to fourteen percent
(14%) of the Purchase Price per annum, payable monthly in cash as
calculated based on the number of days that we are not in compliance
with
this covenant;
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Liquidated
Damages and Limitations
:
our aggregated obligations to pay liquidated damages under the Stock
Purchase Agreement, the Warrants and the Registration Rights Agreement
which we entered into in connection with the Stock Purchase Agreement
and
which is summarized below shall not exceed eighteen (18%) of the
total
Purchase Price. If, pursuant to the Stock Purchase Agreement and
the
Registration Rights Agreement, we incur liquidated damages and are
required to pay the Investors in cash and we fail to pay the Investors
within 15 days following the end of the month when such cash liquidated
damages become due, then, at the election of the Investors, we are
required to deliver to each Investor shares of Series B Preferred
Stock as
liquidated damages pro rata based on the percentage that the number
of
Series B Preferred Stock beneficially owned by such Investor bears
to the
total number of Series B Preferred Stock outstanding at the time
when the
cash liquidated damages are due;
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Employment
and Consulting
Contracts
:
until February 26, 2011 and for so long as the Investors continue
to
beneficially own in the aggregate at least 20% of Series B Preferred
Sock
issued under the Stock Purchase Agreement, we must obtain approval
from
the majority of the independent directors of the Board of Directors
that
any awards other than salary are customary, appropriate and reasonable
for
any officer, director or consultants whose compensation is more than
$100,000 per annum;
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Price
Adjustments
:
for so long as the Investors shall hold at least 20% of the Series
B
Preferred Stock issued (except for certain exempt issuances not to
exceed
5% of the outstanding shares of our Common Stock for every two year
period
and certain other issuances which do not apply pursuant to the Certificate
of Designations), if the Company closes on the sale or issuance of
Common
Stock at a sale price, or warrants, options, convertible debt or
equity
securities with a exercise or conversion price per share which is
less
than the Conversion Price (as defined in the Certificate of Designation)
then in effect, the Conversion Price in effect from and after the
date of
such transaction shall be adjusted in accordance with the terms of
the
Certificate of Designations;
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Retention
of Investor Relations Firm
:
we are required to retain an investor relations firm prior to April
26,
2008; and
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Agreements
Regarding HuLuDao Wanjia and YinKou Trusty Factory
:
Prior to March 28, 2008, we are required to cause Tianren, our indirect
subsidiary in the People’s Republic of China, to (i) extend the term of
its current management and lease agreement with HuLuDao WanJia Factory
(the “HuLuDao WanJia Agreement”) to 20 years under the terms and
conditions similar to those in the current management agreement,
and (ii)
enter into an agreement with YinKou Trusty Factory under the terms
and
conditions similar to those in the HuLuDao WanJia Agreement. In addition,
we are required to cause Tianren to make arrangements, including
without
limitation, acquisition arrangements, with HuLuDao WanJia Factory
and
YinKou Trusty Factory so that after giving effect to such arrangements,
the financials of HuLuDao WanJia Factory and YinKou Trusty Factory
can be
consolidated into the Company’s financials in accordance with the
principles of the US GAAP.
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Amendment
of Articles of Incorporation
:
we are required to effect a 328.72898-for-1 reverse split of our
outstanding common stock. In the event the reverse split is not effected
prior to June 2, 2008, we are required to pay to the Investors, pro
rata,
as liquidated damages, an amount equal to one (1%) of the Purchase
Price
per month, payable monthly in cash as calculated based on the number
of
days that we are not in compliance with this
covenant.
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Right
of First Refusal.
prior to February 26, 2011 and for so long that the Investors shall continue
to
beneficially own in the aggregate at least 20% of Series B Preferred Sock or
the
Common Stock issued thereunder, the Investors have the right to participate
pro
rata in any financing (other than certain exempt issuances and issuances of
the
Company’s securities in a firm underwritten IPO).
Delivery
of up to 2,000,000 additional shares of Series B Preferred Stock from Escrow
Based on Pre-Tax Income and Pre-Tax Income Per Share
:
We delivered to an escrow agent at the closing 2,000,000 shares of Series B
Preferred Stock (the “Make Good Escrow Stock”). If our consolidated “pre-tax
income” for the year ended December 31, 2007 is less than RMB 67,400,000 (or the
required pretax income per share), or our consolidated Pre-Tax Income for the
fiscal year ending December 31, 2008 is less than RMB 84,924,000 (or the
corresponding required pre-tax income per share), or our consolidated pre-tax
Income for the fiscal year ending December 31, 2009 is less than RMB 107,004,240
(or the corresponding required pre-tax income per share), then the percentage
shortfall shall be determined by dividing the amount of the shortfall by the
applicable target number. If the percentage shortfall for the fiscal year 2007
is greater than 50%, then the escrow agent will deliver to the Investors all
of
the Make Good Escrow Stock pro rata according to the Investors’ ownership
percentages which shall be the ratio of such Investor’s initial purchase price
to the total purchase paid under the Stock Purchase Agreement. If the percentage
shortfall for 2007 is less than fifty percent (50%), then the adjustment
percentage shall be determined. The adjustment percentage shall mean the
percentage that the percentage shortfall bears to fifty percent (50%). The
escrow agent shall deliver to an Investor according to such Investor’s ownership
percentage of such number of shares of Series B Preferred Stock as is determined
by multiplying the adjustment percentage by Make Good Escrow Stock and retain
the balance. If, after giving effect to the adjustment and delivery to the
Investors as described in the foregoing, there are shares of Make Good Escrow
Stock remaining, the same procedures shall apply based on our pre-tax income
for
our fiscal years 2008 and 2009.
Subsequent
Transactions
.
As long as any Investor holds any of the Series B Preferred Stock or common
stock issuable upon conversion of the Series B Preferred Stock or exercise
of
warrants issued under the Stock Purchase Agreement, we are prohibited from
effecting or entering into an agreement to effect any transaction involving
a
variable rate transaction or a MFN transaction. A “variable rate transaction”
means a transaction in which we issue or sell any debt or equity securities
that
are convertible into, exchangeable or exercisable for, or include the right
to
receive additional shares of common stock either (A) at a conversion, exercise
or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of common stock at any time
after
the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to our business or the market for our common stock. An “MFN transaction” means a
transaction in which we issue or sell any securities in a capital raising
transaction (or series of related transactions) which grants an investor the
right to receive additional shares based upon future transactions of the Company
on terms more favorable than those granted to such investor in such offering.
Investors are entitled to obtain injunctive relief against us to preclude any
such issuance.
3.
Registration Rights Agreement
In
connection with the Stock Purchase Agreement, on February 25, 2008, the Company
entered into a Registration Rights Agreement with the investors party to the
Stock Purchase Agreement (the “Registration Rights Agreement”), pursuant to
which the Company agreed to prepare and file one or more registration statements
to register for resale the shares of the common stock of the Company issuable
upon conversion of the Series B Stock and upon exercise of the warrants issued
to the investors under the Stock Purchase Agreement except for shares issued
or
issuable as liquidated damages. Under the terms of the Registration Rights
Agreement we are required to
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with
respect to the initial registration statement, prepare and file the
initial registration statement prior to March 26, 2008; provided,
however,
that, if in the opinion of the counsel to the Company that the Company’s
audited financials for the fiscal year 2007 are required to be included
in
the initial registration statement based on the applicable SEC rules,
then
such filing date shall be delayed to the earliest date when the Company’s
audited financials for the fiscal year 2007 becomes available, but
no
later than March 30, 2008, and with respect to any subsequent registration
statements, the later of (a) ninety (90) days after the Company receives
a
demand for registration of additional registrable securities or (b)
thirty
days following the earliest practical date on which the Company is
permitted by the SEC to file such additional registration statement
related to the registrable securities (which is at least 180 days
from the
effective date of the initial registration statement.)
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to
use our commercially reasonable best efforts to have that registration
declared effective on the earlier to occur of
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150
days after the closing date (February 26, 2008), however, if the
filing
date is delayed because the Company’s audited financials for the fiscal
year 2007 are required to be included in the initial registration
statement based on the applicable SEC rules, then 120 days following
the
filing date;
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10
days following receipt of a no review or similar letter from the
SEC or
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the
third business day following the day we receive notice from the
SEC that
the SEC has determined that the registration statement is eligible
to be
declared effective without further comments by the SEC.
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The
investors are also granted demand registration rights which require us, for
so
long as no more than eighty percent (80%) of the Series B Preferred Stock and
common stock issuable upon conversion of such Series B Preferred Stock and
issuable upon exercise of the warrants issued under the Stock Purchase Agreement
have been registered or sold, to use our commercially reasonable best efforts
to
file such registration statement under the Securities Act as promptly as
practicable upon our receipt of the Investors’ demand to register their
registrable securities and cause such registration statement to be declared
effective. The Company shall notify each Investor promptly when any such
registration statement has been declared effective.
Our
failure to meet this schedule and other timetables provided in the Registration
Rights Agreement could result in the imposition of liquidated damages, which
are
payable in cash to the Investors (pro rata based on the percentage of Series
B
Preferred Stock owned by the Investors at the time such liquidated damages
shall
have incurred) equal to fourteen percent (14%) of the Purchase Price payable
monthly based on the number of days such failure exists, which amount of
liquidated damages, together with all liquidated damages that the Company may
incur pursuant to the Registration Rights Agreement, the Warrant and the Stock
Purchase Agreement, shall not exceed an aggregate of eighteen percent (18%)
of
the amount of the Purchase Price. In the event the SEC does not permit all
of
the registrable securities to be included in a Registration Statement because
of
its application of Rule 415, we will not incur any liquidated damages with
respect to any registrable securities that we were not permitted to include
on
such registration statement and no liquidated damages will be payable for such
failure with respect to any warrant shares.
4.
Make Good Escrow Agreement
In
connection with the Stock Purchase Agreement, on February 25, 2008, we entered
into a Make Good Escrow Agreement with Tri-State Title & Escrow, LLC, as the
escrow agent and the Investors (the “Make Good Escrow
Agreement”),
pursuant to which 2,000,000 shares of our Series B Preferred Stock are issued
in
the name of the escrow agent to be held by the escrow agent. These make good
escrow shares do not have any voting rights. The delivery and release of these
make good shares are subject to the terms of the Stock Purchase Agreement as
described above and the Make Good Escrow Agreement.
5.
The Series A Convertible Preferred Stock
In
connection with the Share Exchange Transaction, we designated 1,000,000 shares
of Series A Convertible Preferred Stock out of our total authorized number
of
10,000, 000 shares of Preferred Stock, par value $0.001 per share. The rights
and preferences of the Series A Preferred Stock are set forth in the Certificate
of Designations, Preferences and Rights of Series A Convertible Preferred Stock
which we filed with the Secretary of State of Florida on February 22, 2008.
The
following is a summary of the rights and preferences:
No
Dividends
.
No dividends are payable with respect to the Series A Preferred Stock unless
we
pay dividends to holders of outstanding shares of Common Stock, in which event,
each outstanding share of the Series A Preferred Stock will be entitled to
receive dividends in an amount or value as would have been payable on the number
of shares of Common Stock into which each share of Series A Preferred Stock
would be convertible. The rights of holders of Series A Preferred Stock to
receive dividends are subject to the rights of any holder of our Series B
Preferred Stock or other senior stock.
Mandatory
Conversion
.
We are required to file an amendment to our Articles of Incorporation
(“Amendment”) with the Secretary of State of the State of Florida effecting a
328.72898-for-1 reverse stock split of our Common Stock (or a split using such
other ratio that may be required) (the “Reverse Split”). Upon effectiveness of
such reverse stock split, all the outstanding shares of Series A Preferred
Stock
will immediately and automatically convert into shares of Common Stock without
any notice or action required on us or on the holders of Series A Preferred
Stock or Common Stock (the “Mandatory Conversion”). In the Mandatory Conversion,
each holder of Series A Preferred will be entitled to receive twenty two and
62/10,000 (22.0062) shares of fully paid and non-assessable Common Stock for
every one (1) share of Series A held (the “Conversion Rate”).
Voting
Rights
.
The holders of shares of Series A Preferred shall be entitled to the following
voting rights:
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(a)
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Those
voting rights required by applicable law;
and
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(b)
The
right to vote together with the holders of the Common Stock and Series B
Preferred Stock, as a single class, upon all matters submitted to holders
of
Common Stock for a vote, with
each share of Series A Preferred Stock carrying a number of votes equal to
the
number of shares of Common Stock issuable in a Mandatory Conversion (as
described below).
Redemption;
Liquidation Preference
.
The Series A Preferred shall not be redeemable and shall have no liquidation
preference.
6.
Series B Convertible Preferred Stock
In
connection with the Share Exchange Transaction, we designated 7,000,000 shares
of Series B Convertible Preferred Stock out of our total authorized number
of
10,000, 000 shares of Preferred Stock, par value $0.001 per share. The rights
and preferences of the Series B Preferred Stock are set forth in the Certificate
of Designations, Preferences and Rights of Series A Convertible Preferred Stock
which we filed with the Secretary of State of Florida on February 22, 2008.
The
following is a summary of the rights and preferences:
No
Dividends
.
No dividends are payable with respect to the Series A Preferred Stock and no
dividends can be paid on our Common Stock while the Series B Preferred Stock
is
outstanding.
Voting
Rights
.
The Series B Preferred Stock shall have no voting rights, except as required
by
Florida law. However, so long as any shares of Series B Preferred Stock are
outstanding, we cannot, without the affirmative approval of the holders of
75%
of the shares of the Series B Preferred Stock then outstanding,
(a)
alter or change adversely the powers, preferences or rights given to the Series
B Preferred Stock or alter or amend the Certificate of Designations of the
Series B Preferred Stock,
(b)
authorize or create any class of stock (other than Series A Preferred Stock)
ranking as to dividends or distribution of assets upon a liquidation senior
to
or otherwise pari passu with the Series B Preferred Stock, or any series of
preferred stock possessing greater voting rights or the right to convert at
a
more favorable price than the Series B Preferred Stock,
(c)
amend our certificate of incorporation or other charter documents in breach
of
any of the provisions hereof,
(d)
increase the authorized number of shares of Series B Preferred Stock or the
number of authorized shares of Preferred Stock.
Liquidation
Preference
.
On liquidation the holders are entitled to receive $1.20 per share (out of
available assets) before any distribution or payment can be made to the holders
of any junior securities.
Conversion
at Option of Holder
.
Upon effectiveness of the Reverse Split, each share of Series B Preferred Stock
is convertible at any time into one share of common stock at the option of
the
holder. If the conversion price (initially $1.20) is adjusted, the conversion
ratio will likewise be adjusted and the new conversion ratio will be determined
by multiplying the conversion ratio in effect by a fraction, the numerator
of
which is the conversion price in effect before the adjustment and the
denominator of which is the new conversion price.
Automatic
Conversion on Change of Control
.
In the event of a “change of control” the shares of Series B Preferred Stock
will be automatically converted into common stock. A “change in control” means a
consolidation or merger of us with or into another company or entity in which
we
are not the surviving entity or the sale of all or substantially all of our
assets to another company or entity not controlled by our then existing
stockholders in a transaction or series of transactions.
4.9%
Beneficial Ownership Limitation
.
Except in certain circumstances, the right of the holder to convert the Series
B
Preferred Stock is subject to the 4.9% limitation, with the result we shall
not
effect any conversion of the Series B Preferred Stock, and the holder has no
right to convert any portion of the Series B Preferred Stock, to the extent
that
after giving effect to such conversion, the holder (together with the holder’s
affiliates) would beneficially own in excess of 4.9% of the number of shares
of
common stock outstanding immediately after giving effect to such
conversion. Beneficial ownership is determined in accordance with Section
13(d) of the Exchange Act, and Regulation 13d-3 thereunder. The 4.9% limitation
may not be waived or amended.
Liquidated
Damages for Failing to Timely Deliver Certificates
:
If we fail to deliver the appropriate stock certificates within three trading
days of the conversion date, we are required to pay the holder, in cash,
liquidated damages the amount by which (x) the holder’s total purchase price
(including brokerage commissions, if any) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of shares of Common Stock
that such holder was entitled to receive from the conversion at issue multiplied
by (2) the price at which the sell order giving rise to such purchase obligation
was executed.
Certain
Adjustments.
Stock
Dividends and Stock Splits.
Appropriate adjustments will be made to the conversion ratio in the event of
a
stock dividend, stock distribution, stock split or reverse stock split or
reclassification with respect to the outstanding shares of common
stock.
Price
Adjustment; Full Ratchet.
From
and after February 26, 2008 and until such time as the investors hold less
than
20% of the Series B Preferred Stock, except for certain exempt issuances not
to
exceed 5% of the outstanding shares of Common Stock for every two year period,
certain issuances as to which price adjustment has already been made, in the
event we issue Common Stock at a price, or issue warrants, options, convertible
debt or equity securities with a exercise price per share or conversion price
which is less than the conversion price then in effect, then the conversion
price will be reduced, concurrently with such issue or sale, to such lower
price.
Subsequent
Transactions
.
For so long as any investor holds any of the Series B Preferred Stock, we are
prohibited from effecting or entering into an agreement to effect any
transactions involving a “Variable Rate Transaction” or an “MFN
Transaction”.
Subsequent
Rights Offerings
.
We are prohibited from, at any time while the Series B Preferred Stock is
outstanding, issuing rights, options or warrants to holders of Common Stock
entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the then applicable conversion price.
Pro
Rata Distributions
.
If we distribute to the holders of common stock evidences of its indebtedness,
assets, rights or warrants to subscribe for or purchase any security, then
in
each case the conversion price shall be determined by multiplying the conversion
price by a fraction the numerator of which is the VWAP minus the then fair
market value at such record date of the portion of the assets or evidence of
indebtedness so distributed applicable to one outstanding share of the common
stock as determined by the Board of Directors in good faith and the denominator
of which is the VWAP on the record date,.
Fundamental
Transaction
.
If we effect a merger, sell all or substantially all of our assets, any tender
offer or exchange offer is completed pursuant to which holders of common stock
are permitted to tender or exchange their shares for other securities, cash
or
property, or we effect any reclassification of the common stock or any
compulsory share exchange pursuant to which the common stock is effectively
converted into or exchanged for other securities, cash or property (each, a
“fundamental transaction”), then on subsequent conversion of the Series A
Preferred Stock, the holder has the right to receive, for each share of common
stock that would have been issuable on such conversion absent such fundamental
transaction, the same kind and amount of securities, cash or property as the
holder would have been entitled to receive on the occurrence of the fundamental
transaction as if the holder had been, immediately prior to such fundamental
transaction, the holder of common stock.
7.
The Warrants
The
Warrants entitle the holders, upon the effectiveness of the Reverse Split,
to
purchase up to an aggregate of 7,000,000 shares of Common Stock at an exercise
price of $3.00 per share, subject to adjustment. The Warrants expire in five
years following their issuance.
Cashless
Exercise.
The holders may make a cashless exercise, but not until February 26, 2009
and only when the resale of the warrant shares by the holder is not covered
by
an effective registration statement.
Maximum
Exercise; 4.9% Limitation
.
The holder is not permitted to exercise the warrant to the extent that on the
date of exercise the exercise would result in beneficial ownership by the holder
and its affiliates of more than 4.9% of the outstanding shares of common stock
on such date. This provision may not be waived or amended (the “4.9%
Limitation”).
Adjustment
for Stock Splits, Stock Dividends, Recapitalizations,
Etc
.
The exercise price of the warrants and the number of shares of common stock
issuable on exercise of the warrants will be appropriately adjusted to reflect
any stock dividend, stock split, stock distribution, combination of shares,
reverse split, reclassification, recapitalization or other similar event
affecting the number of outstanding shares.
Adjustment
for Reorganization, Consolidation, Merger, Etc.
If we merge or consolidate with or into any other person, or are a party to
any
other corporate reorganization, and we are not the continuing or surviving
entity, then, in each case, the holder of the warrant (on exercise at any time
after the consummation of such transaction) will be entitled to receive, the
stock and other securities and property (including cash) which the holder would
have been entitled to receive if the holder had exercised the warrant
immediately prior to the effectiveness of the transaction.
Sales
of Common Stock at less than the Exercise Price; Weighted Average
Adjustment
.
Subject to certain exceptions (including certain exempt issuances), if we sell
or issue any common stock at a per share price, or warrants, options,
convertible debt or equity securities with an exercise or conversion price
per
share, which is less than (i) $1.20, the Warrants’ exercise price will be
adjusted concurrently with such issue or sale, to such lower price, or (ii)
2.00, but higher than $1.20 , the Warrants’ exercise price will be adjusted
according to a weighted average formula as follows:
EP(1)
= EP(1) x ((A+B) /(A+C))
EP(2)
= the Warrant Exercise Price immediately after the adjustment;
For
purposes of the foregoing formula:
EP(1)
= Exercise Price immediately prior to the adjustment;
A
= the total number of shares of Common Stock outstanding immediately prior
to
the issuance of such additional shares, including the exercise or conversion
of
all options, warrants and other convertible securities.
B
= the number of shares of Common Stock which the aggregate consideration
received or receivable for the issuance of such additional shares would purchase
at the Exercise Price immediately prior to the adjustment;
C
= the number of such additional shares to be issued.
No
exception from price adjustment for exempt issuances will be made if such exempt
issuances exceed 5% of the outstanding shares of Common Stock for every two
year
period or if such exempt issuances are employee / consultant options only and
exceed 7.5% of the outstanding shares of Common Stock for every two year
period.
Mandatory
Exercise.
We have the right to require the outstanding Warrants on at least 35 days notice
prior to the mandatory exercise date to exercise the Warrants, provided that
(i)
the market price of our Common Stock equals or exceeds $6.00 on each trading
day
in the 25 trading days period ending on the notice date, (ii) we have achieved
our pre-tax income target for 2007 fiscal year, and (iii) the “Trading Volume”
of our Common Stock equals or exceeds the 150,000 shares (which shall not be
adjusted with Reverse Split.) “Target Volume” on each trading day in the twenty
five (25) trading days in the period ending on the notice date , and (iv) a
registration statement covering the sale by the holder of the shares of Common
Stock issuable upon exercise of the Warrant is current and effective for the
25
trading days prior to the notice date and our right to mandate exercise only
applies with respect to the warrant shares included in such registration
statement. In the event that our mandate exercise of the Warrants would result
in a violation of the 4.9% Limitation, we will not have the right to mandate
such exercise of the Warrants to the extent that the exercise of the Warrants
would result in such a violation.
Item
5.02
|
Departure
of Directors or Principal Officers; Election of Directors; Appointment
of
Principal Officers
.
|
On
February 22, 2008, Terence F. Leong resigned as a director of the Company to
purse other interests and Joseph I. Emas was elected as director of the
Company.
Item
5.03
|
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year
|
Pursuant
to the Company’s Restated and Amended Articles of Incorporation, our Board of
Directors is authorized to fix the dividend rights, dividend rate, voting
rights, conversion rights, rights and terms of redemption and liquidation
preferences of any wholly unissued series of Preferred Stock and the number
of
shares constituting any series and the designation thereof. On February 22,
2008, pursuant to the written consent of the sole director of the Board of
Directors of the Company, the Company filed with the Secretary of State of
the
state of Florida, (a) a Certificate of Designations, Preferences and Rights
of
Series A Convertible Preferred Stock to designate out of the 10,000,000
authorized shares of the Company’s Preferred Stock, par value $0.001 per share,
a series of 1,000,000 shares of Series A Convertible Preferred Stock and (b)
a
Certificate of Designations, Preferences , Rights and Limitations of Series
B
Convertible Preferred Stock to designate out of the 10,000,000 authorized shares
of the Company’s Preferred Stock, pave value $0.001 per share, a series of
7,000,000 shares of Series B Convertible Preferred Stock.
On
February 13, 2008, the Company elected to change its year end from September
30
to December 31 with regard to which the Company filed a transition report on
Form 10-QSB on February 14, 2008, which was amended on February 20, 2008.
Item
9.01
|
Financial
Statements and Exhibits
.
|
(d)
The
following exhibits are filed with this Current Report:
2.1
Share
Exchange Agreement, dated as of February 22, 2008 by and among Pacific Industry
Holding Group Co. Ltd. (“Pacific”), Terrence Leong, the Company and the
shareholders of Pacific.
3.1
Certificate of Designations, Preferences and Rights of the Company’s Series A
Convertible Preferred Stock.
3.2
Certificate of Designations, Preferences, Rights and Limitations of the
Company’s Series B Convertible Preferred Stock.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this Current Report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date:
February 28, 2008
|
|
|
|
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.
|
|
|
|
|
(Registrant)
|
|
By:
|
/s/
Yongke Xue
|
|
Yongke
Xue,
|
|
Chief
Executive Officer
|
SHARE
EXCHANGE AGREEMENT
Pacific
Industry Holding Group Co. Ltd.
FOR
THE EXCHANGE OF
CAPITAL
STOCK
OF
Entech
environmental technologies, inc.
DATED
AS OF FEBRUARY 22, 2008
SHARE
EXCHANGE AGREEMENT
This
SHARE EXCHANGE AGREEMENT, dated as of February 22, 2008 (the “Agreement”) by and
among Pacific Industry Holding Group Co. Ltd.
,
a
Vanuatu
corporation (“
PACIFIC
”),
Terrence Leong, an individual residing at 221 Warren Street, Hudson, NY 12534
(“
Leong
”),
Entech Environmental Technologies, Inc., a Florida corporation (the
“SHELL
”)
and
all of the shareholders of PACIFIC, whose names are set forth on Exhibit A
attached hereto (“
SHAREHOLDERS
”).
WHEREAS,
SHAREHOLDERS own 100% of the issued and outstanding shares of Common Stock
of
PACIFIC (the
"PACIFIC
Shares"
);
WHEREAS,
SHAREHOLDERS believe it is in their best interest to exchange the PACIFIC Shares
for shares of Series A Convertible Preferred Stock of SHELL, par value $0.001
per share (
“SHELL
Shares”
),
and
SHELL believes it is in its best interests to acquire the PACIFIC Shares in
exchange for SHELL Shares, upon the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS,
it is the intention of the parties that: (i) SHELL shall acquire 100% of the
PACIFIC Shares in exchange solely for the amount of SHELL Shares set forth
herein; (ii) said exchange of shares shall qualify as a tax-free reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended
(the
“Code”)
;
and
(iii) said exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended
and
in effect on the date of this Agreement (the
“Securities
Act”
)
NOW,
THEREFORE, in consideration of the mutual terms, conditions and other agreements
set forth herein, the parties hereto hereby agree as follows:
ARTICLE
I
EXCHANGE
OF SHARES FOR COMMON STOCK
Section
1.1
Agreement
to Exchange PACIFIC Shares for SHELL Shares
.
On the
Closing Date (as hereinafter defined) and upon the terms and subject to the
conditions set forth in this Agreement, SHAREHOLDERS shall sell, assign,
transfer, convey and deliver the PACIFIC Shares (representing 100% of the issued
and outstanding PACIFIC Shares), to SHELL, and SHELL shall accept the PACIFIC
Shares from the SHAREHOLDERS in exchange for the issuance to the SHAREHOLDERS
of
the number of SHELL Shares set forth opposite the names of the SHAREHOLDERS
on
Exhibit A hereto.
Section
1.2
Capitalization.
On the
Closing Date, immediately before the transactions to be consummated pursuant
to
this Agreement, SHELL shall have authorized (a) 100,000,000 shares of Common
Stock, par value $0.001 per share, of which
87,281,218
shares
shall be issued and outstanding, all of which are duly authorized, validly
issued and fully paid and the detailed shareholdings of which are more
particularly set out in
Exhibit
B
hereto;
and (b) 10,000,000 shares of Preferred Stock, $0.001 par value, of which no
shares are issued or outstanding.
Section
1.3
Closing
.
The
closing of the exchange to be made pursuant to this Agreement (the "Closing")
shall take place at 10:00 a.m. E.D.T. on the second business day after the
conditions to closing set forth in Articles V and VI have been satisfied or
waived, or at such other time and date as the parties hereto shall agree in
writing but no later than February 29, 2008 (the "Closing Date"), at the offices
of Guzov Ofsink, LLC, 600 Madison Avenue, 14
th
Floor,
New York, New York 10022. At the Closing, SHAREHOLDERS shall (i) deliver to
SHELL the stock certificates representing 100% of the PACIFIC Shares, duly
endorsed in blank for transfer or accompanied by appropriate stock powers duly
executed in blank. In full consideration and exchange for the PACIFIC Shares
and
payment, SHELL shall issue and exchange with SHAREHOLDERS 1,000,000 SHELL Shares
representing approximately 1,000 SHELL Shares for each PACIFIC Share
exchanged.
1.4
Tax
Treatment
.
The
exchange described herein is intended to comply with Section 368(a)(1)(B) of
the
Code, and all applicable regulations thereunder. In order to ensure compliance
with said provisions, the parties agree to take whatever steps may be necessary,
including, but not limited to, the amendment of this Agreement.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF SHELL
SHELL
and
Leong hereby represent, warrant and agree as follows:
Section
2.1
Corporate
Organization
a.
SHELL
is
a corporation duly organized, validly existing and in good standing under the
laws of Florida, and has all requisite corporate power and authority to own
its
properties and assets and to conduct its business as now conducted and is duly
qualified to do business in good standing in each jurisdiction in which the
nature of the business conducted by SHELL or the ownership or leasing of its
properties makes such qualification and being in good standing necessary, except
where the failure to be so qualified and in good standing will not have a
material adverse effect on the business, operations, properties, assets,
condition or results of operation of SHELL (a
"SHELL
Material Adverse Effect"
);
b.
Copies
of
the Articles of Incorporation and By-laws of SHELL, with all amendments thereto
to the date hereof, have been furnished to PACIFIC and the SHAREHOLDERS, and
such copies are accurate and complete as of the date hereof. The minute books
of
SHELL are current as required by law, contain the minutes of all meetings of
the
Board of Directors and shareholders of SHELL from its date of incorporation
to
the date of this Agreement, and adequately reflect all material actions taken
by
the Board of Directors and shareholders of SHELL.
Section
2.2
Capitalization
of SHELL
.
The
authorized capital stock of SHELL consists of (a) 100,000,000 shares of Common
Stock, par value $0.001 per share, of which
87,281,218
shares
are issued and outstanding, all of which are duly authorized, validly issued
and
fully paid and the detailed shareholdings of which are more particularly set
out
in
Exhibit
B
hereto;
and (b) 10,000,000 shares of Preferred Stock, $0.001 par value, of which none
are issued or outstanding. The parties agree that they have been informed of
the
issuances of these SHELL Shares, and that all such issuances of SHELL Shares
pursuant to this Agreement will be in accordance with the provisions of this
Agreement. All of the SHELL Shares to be issued pursuant to this Agreement
have
been duly authorized and will be validly issued, fully paid and non-assessable
and no personal liability will attach to the ownership thereof and in each
instance, have been issued in accordance with the registration requirements
of
applicable securities laws. As of the date of this Agreement there are and
as of
the Closing Date, there will be, no outstanding options, warrants, agreements,
commitments, conversion rights, preemptive rights or other rights to subscribe
for, purchase or otherwise acquire any shares of capital stock or any un-issued
or treasury shares of capital stock of SHELL.
Section
2.3
Subsidiaries
and Equity Investments
.
SHELL
has no subsidiaries or equity interest in any corporation, partnership or joint
venture.
Section
2.4
Authorization
and Validity of Agreements
.
SHELL
has all corporate power and authority to execute and deliver this Agreement,
to
perform its obligations hereunder and to consummate the transactions
contemplated hereby and upon the execution and delivery by PACIFIC and the
PACIFIC Shareholders and the performance of their obligations herein, will
constitute, a legal, valid and binding obligation of SHELL. The execution and
delivery of this Agreement by SHELL and the consummation by SHELL of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of SHELL, and no other corporate proceedings on the part of
SHELL are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
Section
2.5
No
Conflict or Violation
.
The
execution, delivery and performance of this Agreement by SHELL do not and will
not violate or conflict with any provision of its Articles of Incorporation
or
By-laws, and does not and will not violate any provision of law, or any order,
judgment or decree of any court or other governmental or regulatory authority,
nor violate or result in a breach of or constitute (with due notice or lapse
of
time or both) a default under, or give to any other entity any right of
termination, amendment, acceleration or cancellation of, any contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which SHELL is a party or by which it is bound or to which any
of their respective properties or assets is subject, nor will it result in
the
creation or imposition of any lien, charge or encumbrance of any kind whatsoever
upon any of the properties or assets of SHELL, nor will it result in the
cancellation, modification, revocation or suspension of any of the licenses,
franchises, permits to which SHELL is bound.
Section
2.6
Consents
and Approvals
.
No
consent, waiver, authorization or approval of any governmental or regulatory
authority, domestic or foreign, or of any other person, firm or corporation,
is
required in connection with the execution and delivery of this Agreement by
SHELL or the performance by SHELL of its obligations hereunder.
Section
2.7
Absence
of Certain Changes or Events
.
Since
its inception:
a.
SHELL
has
operated in the ordinary course of business consistent with past practice and
there has not been any material adverse change in the assets, properties,
business, operations, prospects, net income or condition, financial or otherwise
of SHELL. As of the date of this Agreement, SHELL does not know or have reason
to know of any event, condition, circumstance or prospective development which
threatens or may threaten to have a material adverse effect on the assets,
properties, operations, prospects, net income or financial condition of
SHELL;
b.
there
has
not been any declaration, setting aside or payment of dividends or distributions
with respect to shares of capital stock of SHELL or any redemption, purchase
or
other acquisition of any capital stock of SHELL or any other of SHELL’s
securities; and
Section
2.8
Disclosure
.
This
Agreement and any certificate attached hereto or delivered in accordance with
the terms hereby by or on behalf of SHELL in connection with the transactions
contemplated by this Agreement, when taken together, do not contain any untrue
statement of a material fact or omit any material fact necessary in order to
make the statements contained herein and/or therein not misleading.
Section
2.9
Litigation
.
To the
knowledge of the Company, no litigation, claim, or other proceeding before
any
court or governmental agency is pending or to the knowledge of the Company,
threatened against the Company, the prosecution or outcome of which may have
a
Material Adverse Effect (as defined below).
There
is
no action, suit, proceeding or investigation pending or threatened against
the
Company or any subsidiary that may affect the validity of this Agreement or
the
right of SHELL to enter into this Agreement or to consummate the transactions
contemplated hereby. “Material Adverse Effect” means any adverse effect on the
business, operations, properties or financial condition of the Company or any
of
its Subsidiaries that is material and adverse to the Company and its
Subsidiaries taken as a whole and/or any condition, circumstance, or situation
that would prohibit or otherwise materially interfere with the ability of the
Company or any Subsidiary to perform any of its material obligations under
this
Agreement, the Registration Rights Agreement or the Warrants or to perform
its
obligations under any other material agreement.
Section
2.10
Securities
Laws
.
SHELL
has complied in all respects with applicable federal and state securities laws,
rules and regulations, including the Sarbanes Oxley Act of 2002, as such laws,
rules and regulations apply to SHELL and its securities; and (b) all shares
of
capital stock of the Company have been issued in accordance with applicable
federal and state securities laws, rules and regulations. There are no stop
orders in effect with respect to any of the Company’s securities.
Section
2.11
Tax
Returns, Payments and Elections
.
Schedule 2.11 lists the status of all tax returns of the SHELL, statements,
reports, declarations and other forms and documents that are required to be
prepared and/or filed by law as of the Closing Date. As of the date hereof
and
the Closing Date, there are no taxes incurred and unpaid. Leong will,
post-closing, assist in facilitating the filing of all unfilled tax
returns.
Section
2.12
’34
Act Reports
.
None of
SHELL’s filings with the SEC, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein
not
misleading, in light of the circumstances in which they were
made.
Section
2.13
Market
Makers
.
SHELL
has at least three (3) market makers in its Common Stock.
Section
2.14
Brokers’
Fees and Commissions
.
Neither
the SHELL nor any of its officers, directors, employees, stockholders, agents
or
representatives, nor Leong have employed any investment banker, broker, or
finder in connection with the transactions contemplated by this Agreement and
no
such person or entity is entitled to a fee with respect to the transactions
contemplated by this Agreement.
Section
2.15
Convertible
Securities
.
Schedule
2.15 hereto contains a true and accurate listing of all outstanding options,
warrants and securities convertible into, or exchangeable for, Common Stock
of
the Shell and the number of shares of Common Stock for which each is
convertible, exercisable or exchangeable.
Section
2.16
Survival
.
Each of
the representations and warranties set forth in this Article II shall be deemed
represented and made by SHELL and Leong at the Closing as if made at such time
and shall survive the Closing for a period terminating on the second anniversary
of the date of this Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PACIFIC AND SHAREHOLDERS
PACIFIC
and each of the SHAREHOLDERS, severally, represent, warrant and agree as
follows:
Section
3.1
Corporate
Organization
.
a.
PACIFIC
is a corporation with no prior business activities. It is duly organized,
validly existing and in good standing under the laws of the Republic of Vanuatu
and has all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted and is duly qualified to
do
business, is in good standing in each jurisdiction wherein the nature of the
business conducted by PACIFIC or the ownership or leasing of its properties
makes such qualification and being in good standing necessary, except where
the
failure to be so qualified and in good standing will not have a material adverse
effect on the business, operations, properties, assets, condition or results
of
operation of PACIFIC (a
"PACIFIC
Material Adverse Effect"
).
As of
the date of this Agreement, PACIFIC owns all of the issued and outstanding
equity or voting interests in Shaanxi Tianren Organic Food Co., Ltd.
(“
Tianren
”).
Tianren is duly organized, validly existing and in good standing under the
laws
of the Peoples’ Republic of China (“
PRC
”)
and
has all requisite corporate power and authority to own its properties and assets
and to conduct its business as now conducted and is duly qualified to do
business, is in good standing in each jurisdiction wherein the nature of the
business conducted by Tianren or the ownership or leasing of its properties
makes such qualification and being in good standing necessary, except where
the
failure to be so qualified and in good standing will not have a material adverse
effect on the business, operations, properties, assets, condition or results
of
operation of Tianren (a
"Tianren
Material Adverse Effect"
)
b.
Copies
of
the Certificate of Incorporation and By-laws of PACIFIC and Tianren, with all
amendments thereto to the date hereof, have been furnished to SHELL, and such
copies are accurate and complete as of the date hereof. The minute books of
PACIFIC are current as required by law, contain the minutes of all meetings
of
the Board of Directors and shareholders of PACIFIC, and committees of the Board
of Directors of PACIFIC from the date of incorporation to the date of this
Agreement, and adequately reflect all material actions taken by the Board of
Directors, shareholders and committees of the Board of Directors of
PACIFIC.
Section
3.2
Capitalization
of PACIFIC; Title to the PACIFIC Shares
.
On the
Closing Date, immediately before the transactions to be consummated pursuant
to
this Agreement, PACIFIC shall have authorized one hundred (100) PACIFIC Shares,
of which 100 PACIFIC Shares will be issued and outstanding. The PACIFIC Shares
are the sole outstanding shares of capital stock of PACIFIC, and there are
no
outstanding options, warrants, agreements, commitments, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any shares of capital stock or other equity or voting interest or any
unissued or treasury shares of capital stock of PACIFIC. As of the date hereof
and on the Closing Date, each SHAREHOLDER owns and will own the PACIFIC Shares
free and clear of any liens, claims or encumbrances and has and will have the
right to transfer the PACIFIC Shares without consent of any other person or
entity.
Section
3.3
Subsidiaries
and Equity Investments; Assets
.
As of
the date hereof and on the Closing Date, PACIFIC owns and will own 99% of the
equity or voting interests in Tianren. PACIFIC does not and will not directly
or
indirectly, own any other shares of capital stock or any other equity interest
in any entity or any right to acquire any shares or other equity interest in
any
entity and PACIFIC does not and will not have any assets or liabilities. As
of
the date hereof and on Closing Date, Tianren does not and will not directly
or
indirectly, own any shares of capital stock or any other equity interest in
any
entity or any right to acquire any shares or other equity interest in any
entity. As of the date hereof and on the Closing Date, there are and will be
no
outstanding options, warrants, agreements, commitments, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any shares of capital stock or other equity or voting interest in
Tianren.
Section
3.4
Authorization
and Validity of Agreements
.
PACIFIC
has all corporate power and authority to execute and deliver this Agreement,
to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by PACIFIC
and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of PACIFIC are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. The SHAREHOLDERS have approved
this Agreement on behalf of PACIFIC and no other stockholder approvals are
required to consummate the transactions contemplated hereby. Each SHAREHOLDER
who is a natural person is over the age of 21, is competent to execute this
Agreement, and has the power to execute and perform this Agreement. The
execution and delivery of this Agreement by each SHAREHOLDER which is not a
natural person (“Entity Shareholder”) and the consummation of the transactions
contemplated hereby by each Entity Shareholder have been duly authorized by
all
necessary action by the Entity Shareholder and no other proceedings on the
part
of PACIFIC or any SHAREHOLDER are necessary to authorize this Agreement or
to
consummate the transactions contemplated hereby.
Section
3.5
No
Conflict or Violation
.
The
execution, delivery and performance of this Agreement by PACIFIC or any
SHAREHOLDER does not and will not violate or conflict with any provision of
the
constituent documents of PACIFIC, and does not and will not violate any
provision of law, or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate, result in a breach of or
constitute (with due notice or lapse of time or both) a default under or give
to
any other entity any right of termination, amendment, acceleration or
cancellation of any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which PACIFIC
or
any SHAREHOLDER is a party or by which it is bound or to which any of its
respective properties or assets is subject, nor result in the creation or
imposition of any lien, charge or encumbrance of any kind whatsoever upon any
of
the properties or assets of PACIFIC or any SHAREHOLDER, nor result in the
cancellation, modification, revocation or suspension of any of the licenses,
franchises, permits to which PACIFIC or any SHAREHOLDER is bound.
Section
3.6
Investment
Representations
.
(a) The
SHELL Shares will be acquired hereunder solely for the account of the
SHAREHOLDERS, for investment, and not with a view to the resale or distribution
thereof. Each SHAREHOLDER understands and is able to bear any economic risks
associated with such SHAREHOLDER’S investment in the SHELL Shares. Each
SHAREHOLDER has had full access to all the information such SHAREHOLDER
considers necessary or appropriate to make an informed investment decision
with
respect to the SHELL Shares to be acquired under this Agreement. Each
SHAREHOLDER further has had an opportunity to ask questions and receive answers
from SHELL’s directors regarding SHELL and to obtain additional information (to
the extent SHELL’s directors possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any information
furnished to such SHAREHOLDER or to which such SHAREHOLDER had access. Each
SHAREHOLDER is at the time of the offer and execution of this Agreement,
domiciled and resident outside the United States (a
“PRC
Shareholder”
)
and is
an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities
Act).
(b)
No
PRC Shareholder, nor any affiliate of any PRC Shareholder, nor any person acting
on behalf of any PRC Shareholder or any behalf of any such affiliate, has
engaged or will engage in any activity undertaken for the purpose of, or that
reasonably could be expected to have the effect of, conditioning the markets
in
the United States for the SHELL Shares, including, but not limited to, effecting
any sale or short sale of securities through any PRC Shareholder or any of
affiliate of any PRC Shareholder prior to the expiration of any restricted
period contained in Regulation S promulgated under the Securities Act (any
such
activity being defined herein as a “
Directed
Selling Effort
”).
To
the best knowledge of each of the PRC Shareholders, this Agreement and the
transactions contemplated herein are not part of a plan or scheme to evade
the
registration provisions of the Securities Act, and the SHELL Shares are being
acquired for investment purposes by the PRC Shareholders. Each PRC Shareholder
agrees that all offers and sales of SHELL Shares from the date hereof and
through the expiration of the any restricted period set forth in Rule 903 of
Regulation S (as the same may be amended from time to time hereafter) shall
not
be made to U.S. Persons or for the account or benefit of U.S. Persons and shall
otherwise be made in compliance with the provisions of Regulation S and any
other applicable provisions of the Securities Act. Neither any PRC Shareholder
nor the representatives of any PRC Shareholder have conducted any Directed
Selling Effort as that term is used and defined in Rule 902 of Regulation S
and
no PRC Shareholder nor any representative of any PRC Shareholder will engage
in
any such Directed Selling Effort within the United States through the expiration
of any restricted period set forth in Rule 903 of Regulation S.
Section
3.7
Brokers’
Fees
.
No
SHAREHOLDER has any liability to pay any fees or commissions or other
consideration to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
Section
3.8
Disclosure
.
This
Agreement, the schedules hereto and any certificate attached hereto or delivered
in accordance with the terms hereby by or on behalf of PACIFIC or the
SHAREHOLDERS in connection with the transactions contemplated by this Agreement,
when taken together, do not contain any untrue statement of a material fact
or
omit any material fact necessary in order to make the statements contained
herein and/or therein not misleading.
Section
3.9
Survival
.
Each of
the representations and warranties set forth in this Article III shall be deemed
represented and made by PACIFIC and the SHAREHOLDERS at the Closing as if made
at such time and shall survive the Closing for a period terminating on the
second anniversary of the date of this Agreement.
ARTICLE
IV
COVENANTS
Section
4.1
Certain
Changes and Conduct of Business
.
a.
From
and
after the date of this Agreement and until the Closing Date, SHELL shall conduct
its business solely in the ordinary course consistent with past practices and,
in a manner consistent with all representations, warranties or covenants of
SHELL, and without the prior written consent of PACIFIC will not, except as
required or permitted pursuant to the terms hereof:
i.
|
make
any material change in the conduct of its businesses and/or operations
or
enter into any transaction other than in the ordinary course of business
consistent with past practices;
|
ii.
|
make
any change in its Articles of Incorporation or By-laws; issue any
additional shares of capital stock or equity securities or grant any
option, warrant or right to acquire any capital stock or equity securities
or issue any security convertible into or exchangeable for its capital
stock or alter in any material term of any of its outstanding securities
or make any change in its outstanding shares of capital stock or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, stock
dividend or otherwise;
|
iii.
|
A.
|
incur,
assume or guarantee any indebtedness for borrowed money, issue any
notes,
bonds, debentures or other corporate securities or grant any option,
warrant or right to purchase any thereof, except pursuant to transactions
in the ordinary course of business consistent with past practices;
or
|
|
B.
|
issue
any securities convertible or exchangeable for debt or equity securities
of SHELL;
|
iv.
|
make
any sale, assignment, transfer, abandonment or other conveyance of
any of
its assets or any part thereof, except pursuant to transactions in
the
ordinary course of business consistent with past
practice;
|
v.
|
subject
any of its assets, or any part thereof, to any lien or suffer such
to be
imposed other than such liens as may arise in the ordinary course of
business consistent with past practices by operation of law which will
not
have an SHELL Material Adverse Effect;
|
vi.
|
acquire
any assets, raw materials or properties, or enter into any other
transaction, other than in the ordinary course of business consistent
with
past practices;
|
vii.
|
enter
into any new (or amend any existing) employee benefit plan, program
or
arrangement or any new (or amend any existing) employment, severance
or
consulting agreement, grant any general increase in the compensation
of
officers or employees (including any such increase pursuant to any
bonus,
pension, profit-sharing or other plan or commitment) or grant any increase
in the compensation payable or to become payable to any employee, except
in accordance with pre-existing contractual provisions or consistent
with
past practices;
|
viii.
|
make
or commit to make any material capital
expenditures;
|
ix.
|
pay,
loan or advance any amount to, or sell, transfer or lease any properties
or assets to, or enter into any agreement or arrangement with, any
of its
affiliates;
|
x.
|
guarantee
any indebtedness for borrowed money or any other obligation of any
other
person;
|
xi.
|
fail
to keep in full force and effect insurance comparable in amount and
scope
to coverage maintained by it (or on behalf of it) on the date
hereof;
|
xii.
|
take
any other action that would cause any of the representations and
warranties made by it in this Agreement not to remain true and correct
in
all material aspect;
|
xiii.
|
make
any material loan, advance or capital contribution to or investment
in any
person;
|
xiv.
|
make
any material change in any method of accounting or accounting principle,
method, estimate or practice;
|
xv.
|
settle,
release or forgive any claim or litigation or waive any
right;
|
xvi.
|
commit
itself to do any of the foregoing.
|
b.
From
and
after the date of this Agreement, PACIFIC will and PACIFIC will cause Tianren
to:
1.
|
continue
to maintain, in all material respects, its properties in accordance
with
present practices in a condition suitable for its current
use;
|
2.
|
file,
when due or required, federal, state, foreign and other tax returns
and
other reports required to be filed and pay when due all taxes,
assessments, fees and other charges lawfully levied or assessed against
it, unless the validity thereof is contested in good faith and by
appropriate proceedings diligently
conducted;
|
3.
|
continue
to conduct its business in the ordinary course consistent with past
practices;
|
4.
|
keep
its books of account, records and files in the ordinary course and
in
accordance with existing practices; and
|
5.
continue
to maintain existing business relationships with suppliers.
c.
From
and
after the date of this Agreement, PACIFIC will not and will ensure that Tianren
does not:
xvii.
|
make
any material change in the conduct of its businesses and/or operations
or
enter into any transaction other than in the ordinary course of business
consistent with past practices;
|
xviii.
|
make
any change in its Business License, Bylaws or other governing documents;
issue any additional shares of capital stock or equity securities or
grant
any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for
its
capital stock or alter in any material term of any of its outstanding
securities or make any change in its outstanding shares of capital
stock
or its capitalization, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment
of
shares, stock dividend or otherwise;
|
xix.
|
A.
|
incur,
assume or guarantee any indebtedness for borrowed money, issue any
notes,
bonds, debentures or other corporate securities or grant any option,
warrant or right to purchase any thereof, except pursuant to transactions
in the ordinary course of business consistent with past practices;
or
|
|
B.
|
issue
any securities convertible or exchangeable for debt or equity securities
of PACIFIC or Tianren;
|
xx.
|
make
any sale, assignment, transfer, abandonment or other conveyance of
any of
its assets or any part thereof, except pursuant to transactions in
the
ordinary course of business consistent with past
practice;
|
xxi.
|
subject
any of its assets, or any part thereof, to any lien or suffer such
to be
imposed other than such liens as may arise in the ordinary course of
business consistent with past practices by operation of law which will
not
have an PACIFIC Material Adverse Effect;
|
xxii.
|
acquire
any assets, raw materials or properties, or enter into any other
transaction, other than in the ordinary course of business consistent
with
past practices;
|
xxiii.
|
enter
into any new (or amend any existing) employee benefit plan, program
or
arrangement or any new (or amend any existing) employment, severance
or
consulting agreement, grant any general increase in the compensation
of
officers or employees (including any such increase pursuant to any
bonus,
pension, profit-sharing or other plan or commitment) or grant any increase
in the compensation payable or to become payable to any employee, except
in accordance with pre-existing contractual provisions or consistent
with
past practices;
|
xxiv.
|
make
or commit to make any material capital
expenditures;
|
xxv.
|
pay,
loan or advance any amount to, or sell, transfer or lease any properties
or assets to, or enter into any agreement or arrangement with, any
of its
affiliates;
|
xxvi.
|
guarantee
any indebtedness for borrowed money or any other obligation of any
other
person;
|
xxvii.
|
fail
to keep in full force and effect insurance comparable in amount and
scope
to coverage maintained by it (or on behalf of it) on the date
hereof;
|
xxviii.
|
take
any other action that would cause any of the representations and
warranties made by it in this Agreement not to remain true and correct
in
all material aspect;
|
xxix.
|
make
any material loan, advance or capital contribution to or investment
in any
person;
|
xxx.
|
make
any material change in any method of accounting or accounting principle,
method, estimate or practice;
|
xxxi.
|
settle,
release or forgive any claim or litigation or waive any
right;
|
xxxii.
|
commit
itself to do any of the foregoing.
|
Section
4.2
Access
to Properties and Records
.
PACIFIC
shall afford SHELL’s accountants, counsel and authorized representatives, and
SHELL shall afford to PACIFIC's accountants, counsel and authorized
representatives full access during normal business hours throughout the period
prior to the Closing Date (or the earlier termination of this Agreement) to
all
of such parties’ properties, books, contracts, commitments and records and,
during such period, shall furnish promptly to the requesting party all other
information concerning the other party's business, properties and personnel
as
the requesting party may reasonably request, provided that no investigation
or
receipt of information pursuant to this Section 4.2 shall affect any
representation or warranty of or the conditions to the obligations of any party.
Section
4.3
Negotiations
.
From
and after the date hereof until the earlier of the Closing or the termination
of
this Agreement, no party to this Agreement nor its officers or directors
(subject to such director's fiduciary duties) nor anyone acting on behalf of
any
party or other persons shall, directly or indirectly, encourage, solicit, engage
in discussions or negotiations with, or provide any information to, any person,
firm, or other entity or group concerning any merger, sale of substantial
assets, purchase or sale of shares of capital stock or similar transaction
involving any party. A party shall promptly communicate to any other party
any
inquiries or communications concerning any such transaction which they may
receive or of which they may become aware of.
Section
4.4
Consents
and Approvals
.
The
parties shall:
i.
|
use
their reasonable commercial efforts to obtain all necessary consents,
waivers, authorizations and approvals of all governmental and regulatory
authorities, domestic and foreign, and of all other persons, firms
or
corporations required in connection with the execution, delivery and
performance by them of this Agreement; and
|
ii.
|
diligently
assist and cooperate with each party in preparing and filing all documents
required to be submitted by a party to any governmental or regulatory
authority, domestic or foreign, in connection with such transactions
and
in obtaining any governmental consents, waivers, authorizations or
approvals which may be required to be obtained connection in with such
transactions.
|
Section
4.5
Public
Announcement
.
Unless
otherwise required by applicable law, the parties hereto shall consult with
each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation.
Section
4.6
Stock
Issuance
.
From
and after the date of this Agreement until the Closing Date, none of SHELL,
PACIFIC nor Tianren shall issue any additional shares of its capital stock.
Section
4.7
Tax
Returns.
Within
30
days following the signing of this Agreement, Leong, in his capacity as the
former Chief Executive Officer of the SHELL prior to the consummation of the
transactions contemplated hereunder, will cause all tax returns of the SHELL
for
any and all periods prior to the Closing Date (the “Historical Tax Returns”)
that are not prepared and/or filed as of the date hereof to be prepared and
filed and shall be responsible for any and all expenses and liabilities related
thereto. SHELL will authorize Leong to sign all Historical Tax Returns on behalf
of SHELL.
Section
4.8
Notwithstanding
anything to the contrary contained herein, it is herewith understood and agreed
that both PACIFIC and SHELL may enter into and conclude agreements and/or
financing transactions as same relate to and/or are contemplated by any separate
written agreements either: (a) annexed hereto as exhibits; or (b) entered into
by SHELL with PACIFIC executed by both parties subsequent to the date hereof.
These Agreements shall become, immediately upon execution, part of this
Agreement and subject to all warranties, representations and conditions
contained herein.
ARTICLE
V
CONDITIONS
TO OBLIGATIONS OF PACIFIC AND SHAREHOLDERS
The
obligations of PACIFIC and the SHAREHOLDERS to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before
the
Closing Date, of the following conditions, any one or more of which may be
waived by both PACIFIC and the SHAREHOLDERS in their sole
discretion:
Section
5.1
Representations
and Warranties of SHELL.
All
representations and warranties made by SHELL in this Agreement shall be true
and
correct on and as of the Closing Date as if again made by SHELL as of such
date.
Section
5.2
Agreements
and Covenants
.
SHELL
shall have performed and complied in all material respects to all agreements
and
covenants required by this Agreement to be performed or complied with by it
on
or prior to the Closing Date.
Section
5.3
Consents
and Approvals
.
Consents, waivers, authorizations and approvals of any governmental or
regulatory authority, domestic or foreign, and of any other person, firm or
corporation, required in connection with the execution, delivery and performance
of this Agreement shall be in full force and effect on the Closing
Date.
Section
5.4
No
Violation of Orders
.
No
preliminary or permanent injunction or other order issued by any court or
governmental or regulatory authority, domestic or foreign, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by any
government or governmental or regulatory authority, which declares this
Agreement invalid in any respect or prevents the consummation of the
transactions contemplated hereby, or which materially and adversely affects
the
assets, properties, operations, prospects, net income or financial condition
of
SHELL shall be in effect; and no action or proceeding before any court or
governmental or regulatory authority, domestic or foreign, shall have been
instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks
to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this
Agreement.
Section
5.5
Other
Closing Documents
.
PACIFIC
shall have received such other certificates, instruments and documents in
confirmation of the representations and warranties of SHELL or in furtherance
of
the transactions contemplated by this Agreement as PACIFIC or its counsel may
reasonably request.
Section
5.6
Treasury
Shares
.
SHELL
shall have canceled all its issued treasury shares.
ARTICLE
VI
CONDITIONS
TO OBLIGATIONS OF SHELL
The
obligations of SHELL to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of
the
following conditions, any one or more of which may be waived by SHELL in its
sole discretion:
Section
6.1
Representations
and Warranties of PACIFIC and SHAREHOLDERS
.
All
representations and warranties made by PACIFIC and SHAREHOLDERS in this
Agreement shall be true and correct on and as of the Closing Date as if again
made by PACIFIC on and as of such date.
Section
6.2
Agreements
and Covenants
.
PACIFIC
and SHAREHOLDERS shall have performed and complied in all material respects
to
all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
Section
6.3
Consents
and Approvals
.
All
consents, waivers, authorizations and approvals of any governmental or
regulatory authority, domestic or foreign, and of any other person, firm or
corporation, required in connection with the execution, delivery and performance
of this Agreement, shall have been duly obtained and shall be in full force
and
effect on the Closing Date.
Section
6.4
No
Violation of Orders
.
No
preliminary or permanent injunction or other order issued by any court or other
governmental or regulatory authority, domestic or foreign, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by any
government or governmental or regulatory authority, domestic or foreign, that
declares this Agreement invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of PACIFIC or Tianren, taken as a whole,
shall
be in effect; and no action or proceeding before any court or government or
regulatory authority, domestic or foreign, shall have been instituted or
threatened by any government or governmental or regulatory authority, domestic
or foreign, or by any other person, or entity which seeks to prevent or delay
the consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement.
Section
6.5.
Other
Closing Documents
.
SHELL
shall have received such other certificates, instruments and documents in
confirmation of the representations and warranties of PACIFIC or in furtherance
of the transactions contemplated by this Agreement as SHELL or its counsel
may
reasonably request.
ARTICLE
VII
TERMINATION
AND ABANDONMENT
SECTION
7.1
Methods
of Termination
.
This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time before the Closing:
a.
By
the
mutual written consent of SHAREHOLDERS, PACIFIC and SHELL;
b.
By
SHELL,
upon a material breach of any representation, warranty, covenant or agreement
on
the part of PACIFIC or the SHAREHOLDERS set forth in this Agreement, or if
any
representation or warranty of PACIFIC or the SHAREHOLDERS shall become untrue,
in either case such that any of the conditions set forth in Article VI hereof
would not be satisfied (a
"PACIFIC
Breach"
),
and
such breach shall, if capable of cure, has not been cured within ten (10) days
after receipt by the party in breach of a notice from the non-breaching party
setting forth in detail the nature of such breach;
c.
By
PACIFIC, upon a material breach of any representation, warranty, covenant or
agreement on the part of SHELL set forth in this Agreement, or, if any
representation or warranty of SHELL shall become untrue, in either case such
that any of the conditions set forth in Article V hereof would not be satisfied
(a
"SHELL
Breach"
),
and
such breach shall, if capable of cure, not have been cured within ten (10)
days
after receipt by the party in breach of a written notice from the non-breaching
party setting forth in detail the nature of such breach;
d.
By
either
SHELL or PACIFIC, if the Closing shall not have consummated before ninety (90)
days after the date hereof; provided, however, that this Agreement may be
extended by written notice of either PACIFIC or SHELL, if the Closing shall
not
have been consummated as a result of SHELL or PACIFIC having failed to receive
all required regulatory approvals or consents with respect to this transaction
or as the result of the entering of an order as described in this Agreement;
and
further provided, however, that the right to terminate this Agreement under
this
Section 7.1(d) shall not be available to any party whose failure to fulfill
any
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before this date.
e.
By
either
PACIFIC or SHELL if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action (which order, decree or ruling the
parties hereto shall use its best efforts to lift), which permanently restrains,
enjoins or otherwise prohibits the transactions contemplated by this
Agreement.
Section
7.2
Procedure
Upon Termination
.
In the
event of termination and abandonment of this Agreement by PACIFIC or SHELL
pursuant to Section 7.1, written notice thereof shall forthwith be given to
the
other parties and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action. If this
Agreement is terminated as provided herein, no party to this Agreement shall
have any liability or further obligation to any other party to this Agreement;
provided, however, that no termination of this Agreement pursuant to this
Article VII shall relieve any party of liability for a breach of any provision
of this Agreement occurring before such termination.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1
Indemnification
.
Leong
agrees to indemnify, defend and hold PACIFIC, SHELL and their officers,
directors, employees, agents, consultants and assigns harmless from and against
any claims, losses or expenses (including reasonable attorney’s fees) resulting
from or arising out of breach by Leong or SHELL of any of their representations
or warranties under this Agreement.
ARTICLE
IX
MISCELLANEOUS
PROVISIONS
Section
9.1
Survival
of Provisions
.
The
respective representations, warranties, covenants and agreements of each of
the
parties to this Agreement (except covenants and agreements which are expressly
required to be performed and are performed in full on or before the Closing
Date) shall survive the Closing Date and the consummation of the transactions
contemplated by this Agreement, subject to Sections 2.14, 3.9 and 9.1. In the
event of a breach of any of such representations, warranties or covenants,
the
party to whom such representations, warranties or covenants have been made
shall
have all rights and remedies for such breach available to it under the
provisions of this Agreement or otherwise, whether at law or in equity,
regardless of any disclosure to, or investigation made by or on behalf of such
party on or before the Closing Date. Notwithstanding the foregoing, each party’s
liability to the other for breach of any representation, warranty or covenant
shall not exceed, in the aggregate, $500,000.
Section
9.2
Publicity
.
No
party shall cause the publication of any press release or other announcement
with respect to this Agreement or the transactions contemplated hereby without
the consent of the other parties, unless a press release or announcement is
required by law. If any such announcement or other disclosure is required by
law, the disclosing party agrees to give the non-disclosing parties prior notice
and an opportunity to comment on the proposed disclosure.
Section
9.3
Successors
and Assigns
.
This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns; provided, however, that no party
shall assign or delegate any of the obligations created under this Agreement
without the prior written consent of the other parties.
Section
9.4
Fees
and Expenses
.
Except
as otherwise expressly provided in this Agreement, all legal and other fees,
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees,
costs or expenses.
Section
9.5
Notices
.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been given or made if in writing and
delivered personally or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses:
If
to
PACIFIC or the SHAREHOLDERS, to:
Guzov
Ofsink, LLC
600
Madison Avenue, 14
th
Floor
New
York,
New York 10022
Attn:
Darren Ofsink, Esq.
Fax:
212-688-7273
If
to
SHELL, to:
Joseph
I.
Emas, Attorney at Law
1224
Washington Avenue
Miami
Beach, Florida 33139
Fax:
(305) 531-1274
If
to
Leong, to:
221
Warren Street,
Hudson,
NY 12534
Walker
Street Associates
Email:
tfleong@walkerstreet.com
Tel:
518.828.4988 and 212.279.1789
or
to
such other persons or at such other addresses as shall be furnished by any
party
by like notice to the others, and such notice or communication shall be deemed
to have been given or made as of the date so delivered or mailed. No change
in
any of such addresses shall be effective insofar as notices under this Section
9.5 are concerned unless such changed address is located in the United States
of
America and notice of such change shall have been given to such other party
hereto as provided in this Section 9.5
Section
9.6
Entire
Agreement
.
This
Agreement, together with the exhibits hereto, represents the entire agreement
and understanding of the parties with reference to the transactions set forth
herein and no representations or warranties have been made in connection with
this Agreement other than those expressly set forth herein or in the exhibits,
certificates and other documents delivered in accordance herewith. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating
to
the subject matter of this Agreement and all prior drafts of this Agreement,
all
of which are merged into this Agreement. No prior drafts of this Agreement
and
no words or phrases from any such prior drafts shall be admissible into evidence
in any action or suit involving this Agreement.
Section
9.7
Severability
.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in lieu
of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible so as to
be
valid and enforceable.
Section
9.8
Titles
and Headings
.
The
Article and Section headings contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation
of
this Agreement or of any term or provision hereof.
Section
9.9
Counterparts
.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall be considered one and the
same agreement.
Section
9.10
Convenience
of Forum; Consent to Jurisdiction
.
The
parties to this Agreement, acting for themselves and for their respective
successors and assigns, without regard to domicile, citizenship or residence,
hereby expressly and irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this Agreement,
and consent and subject themselves to the jurisdiction of, the courts of the
State of New York located in County of New York, and/or the United States
District Court for the Southern District of New York, in respect of any matter
arising under this Agreement. Service of process, notices and demands of such
courts may be made upon any party to this Agreement by personal service at
any
place where it may be found or giving notice to such party as provided in
Section 9.5.
Section
9.11
Enforcement
of the Agreement
.
The
parties hereto agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions hereto,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
Section
9.12
Governing
Law
.
This
Agreement shall be governed by and interpreted and enforced in accordance with
the laws of the State of New York without giving effect to the choice of law
provisions thereof.
Section
9.13
Amendments
and Waivers
.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the parties hereto. No waiver by any
party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
Pacific
Industry Holding Group Co. Ltd.
Name:
Yongke Xue
Title:
Chief Executive Officer
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.
Name:
Terrence Leong
Title:
Chief Executive Officer
TERRENCE
LEONG
PACIFIC
SHAREHOLDERS:
FANCYLIGHT
LIMITED
Name:
Li
Hong Wei
Title:
Director
WINSUM
LIMITED
Name:
An
Sixiao
Title:
Director
EXHIBIT
A
Name
of SHAREHOLDER
|
Number
of PACIFIC Shares Being Exchanged
|
Number
of SHELL Shares to be Received
|
|
|
|
Fancylight
Limited
|
80
|
800,000
|
Winsun
Limited
|
20
|
100,000*
|
China
Tianren Organic Food Holding Company Ltd. *
|
|
100,000*
|
*
Winsun
Limited is entitled to 200,000 shares of SHELL Shares in exchange for 20 shares
it holds in Pacific immediately prior to the consummation of this Agreement.
As
a result of the consummation of the transactions contemplated under this
Agreement, Winsun designates China Tianren Organic Food Holding Company Ltd.
to
receive 100,000 shares of SHELL Shares and Winsun will receive 100,000 SHELL
Shares.
Exhibit
B
|
Number
of Shares of
|
SHELL
Shareholders
|
Common
Stock
|
SHAREHOLDER
DETAIL LIST
ENTECH
ENVIRONMENTAL TECH
As
Of:
Wednesday,
February 06, 2008
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
GERALD
R. BARRICK
|
|
|
|
|
|
|
|
1716
BAKER ST
|
|
|
|
|
|
|
|
SAN
FRANCISCO, CA 94115
|
|
|
|
|
|
|
|
|
2029
|
5/12/2004
|
COMMON
|
RESTRICTED
|
20,000
|
|
RESTRICTED
FEDERAL
|
|
2080
|
11/12/2004
|
COMMON
|
RESTRICTED
|
20,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
40,000
|
|
|
DAVID
BATTEN
|
|
|
|
|
|
|
|
860
5TH AVE.
|
|
|
|
|
|
|
|
#
19B
|
|
|
|
|
|
|
|
NEW
YORK, NY 10021
|
|
|
|
|
|
|
|
|
2161
|
2/14/2007
|
COMMON
|
FREE
|
303,702
|
|
REMOVE
LEGEND 144
|
|
|
|
|
Total
Active:
|
303,702
|
|
|
MICHAEL
BATTISA, JR.
|
|
|
|
|
|
|
|
1719
SW MOCKINGBIRD DR.
|
|
|
|
|
|
|
|
PORT
ST. LUCIE, FL 34986
|
|
|
|
|
|
|
|
|
1001
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
SERAFINA
BATTISTA
|
|
|
|
|
|
|
|
1719
SW MOCKINGBIRD DR
|
|
|
|
|
|
|
|
PORT
LUCIE, FL 34986
|
|
|
|
|
|
|
|
|
1002
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
MIKE
BAUMGAERTEL
|
|
|
|
|
|
|
|
7469
SVL BOX
|
|
|
|
|
|
|
|
VICTORVILLE,
CA 92392
|
|
|
|
|
|
|
|
|
2059
|
6/16/2004
|
COMMON
|
RESTRICTED
|
50,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
50,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
JAMES
R BINGHAM
|
|
|
|
|
|
|
|
2746
W LA MIRADA DR
|
|
|
|
|
|
|
|
RIALTO,
CA, 92377
|
|
|
|
|
|
|
|
|
2013
|
4/20/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
BIRCH
ADVISORS LTD
|
|
|
|
|
|
|
|
MICHAEL
MORRIS
|
|
|
|
|
|
|
|
C/O
VERTICAL CAPITAL
|
|
|
|
|
|
|
|
NEW
YORK, NY 10022
|
|
|
|
|
|
|
|
|
2122
|
7/18/2005
|
COMMON
|
RESTRICTED
|
400,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
400,000
|
|
|
JOHN
M. BRAZIER
|
|
|
|
|
|
|
|
5001
102 LANE
|
|
|
|
|
|
|
|
KIRKLAND,
WA 98033
|
|
|
|
|
|
|
|
|
2120
|
6/16/2005
|
COMMON
|
RESTRICTED
|
16,667
|
|
RESTRICTED
FEDERAL
|
|
2040
|
5/12/2004
|
COMMON
|
RESTRICTED
|
33,333
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
50,000
|
|
|
STEPHEN
MICHAEL BRAZIER
|
|
|
|
|
|
|
|
2821
SECOND AVE STE 1001
|
|
|
|
|
|
|
|
SEATTLE,
WA 98121
|
|
|
|
|
|
|
|
|
2039
|
5/12/2004
|
COMMON
|
RESTRICTED
|
33,333
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
33,333
|
|
|
KENNETH
D BURDICK
|
|
|
|
|
|
|
|
1723
SW MOCKINGBIRD DR
|
|
|
|
|
|
|
|
PORT
ST LUCIE, FL 34986
|
|
|
|
|
|
|
|
|
1004
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
ROSE
BURDICK
|
|
|
|
|
|
|
|
1723
SW MOCKINGBIRD DR
|
|
|
|
|
|
|
|
PORT
ST LUCIE, FL 34986
|
|
|
|
|
|
|
|
|
1005
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
CEDE
& CO.
|
|
|
|
|
|
|
|
P.O.BOX
222, ,BOWLING GREEN STATION
|
|
|
|
|
|
|
|
NEW
YORK, NY 10274
|
|
|
|
|
|
|
|
|
2072
|
7/2/2004
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
2142
|
3/8/2006
|
COMMON
|
FREE
|
250,000
|
|
ORIGINAL
ISSUE
|
|
1059
|
2/27/2004
|
COMMON
|
FREE
|
16,000
|
|
ORIGINAL
ISSUE
|
|
1061
|
3/19/2004
|
COMMON
|
FREE
|
216,000
|
|
ORIGINAL
ISSUE
|
|
2138
|
11/17/2005
|
COMMON
|
FREE
|
30,000
|
|
REMOVE
LEGEND 144
|
|
2135
|
11/9/2005
|
COMMON
|
FREE
|
60,000
|
|
REMOVE
LEGEND 144
|
|
2003
|
4/1/2004
|
COMMON
|
FREE
|
11,000
|
|
ORIGINAL
ISSUE
|
|
2025
|
5/4/2004
|
COMMON
|
FREE
|
500
|
|
ORIGINAL
ISSUE
|
|
2005
|
4/8/2004
|
COMMON
|
FREE
|
3,500
|
|
ORIGINAL
ISSUE
|
|
2058
|
6/3/2004
|
COMMON
|
RESTRICTED
|
1,000
|
|
RESTRICTED
FEDERAL
|
|
2075
|
8/17/2004
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
2023
|
4/28/2004
|
COMMON
|
FREE
|
300
|
|
ORIGINAL
ISSUE
|
|
2024
|
4/28/2004
|
COMMON
|
FREE
|
3,200
|
|
ORIGINAL
ISSUE
|
|
2144
|
3/22/2006
|
COMMON
|
FREE
|
1,000,000
|
|
ORIGINAL
ISSUE
|
|
2077
|
9/2/2004
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
2068
|
6/24/2004
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
2154
|
1/9/2007
|
COMMON
|
FREE
|
397,263
|
|
ORIGINAL
ISSUE
|
|
2168
|
6/28/2007
|
COMMON
|
FREE
|
375,000
|
|
ORIGINAL
ISSUE
|
|
1058
|
2/23/2004
|
COMMON
|
FREE
|
45,000
|
|
ORIGINAL
ISSUE
|
|
2006
|
4/9/2004
|
COMMON
|
FREE
|
500
|
|
ORIGINAL
ISSUE
|
|
2170
|
7/10/2007
|
COMMON
|
FREE
|
935,632
|
|
ORIGINAL
ISSUE
|
|
2165
|
4/30/2007
|
COMMON
|
FREE
|
650,000
|
|
REMOVE
LEGEND 144
|
|
2158
|
1/30/2007
|
COMMON
|
FREE
|
1,750,000
|
|
ORIGINAL
ISSUE
|
|
2169
|
7/5/2007
|
COMMON
|
FREE
|
875,000
|
|
ORIGINAL
ISSUE
|
|
2182
|
8/31/2007
|
COMMON
|
FREE
|
157,500
|
|
ORIGINAL
ISSUE
|
|
2183
|
9/4/2007
|
COMMON
|
FREE
|
60,000
|
|
ORIGINAL
ISSUE
|
|
2150
|
5/22/2006
|
COMMON
|
FREE
|
75,000
|
|
ORIGINAL
ISSUE
|
|
2185
|
12/13/2007
|
COMMON
|
FREE
|
553,874
|
|
REMOVE
LEGEND 144
|
|
2190
|
1/22/2008
|
COMMON
|
FREE
|
20,000
|
|
ORIGINAL
ISSUE
|
|
2189
|
1/8/2008
|
COMMON
|
FREE
|
375,000
|
|
ORIGINAL
ISSUE
|
|
2174
|
8/14/2007
|
COMMON
|
FREE
|
1,000,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
8,865,269
|
|
|
THE
CHRISTIE FAMILY TRUST
|
|
|
|
|
|
|
|
7260
SVC BOX
|
|
|
|
|
|
|
|
VICTORVILLE,
CA 92392
|
|
|
|
|
|
|
|
|
2030
|
5/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
JAMES
R. CHRIST
|
|
|
|
|
|
|
|
|
2101
|
12/13/2004
|
COMMON
|
RESTRICTED
|
43,750
|
|
RESTRICTED
FEDERAL
|
|
2067
|
6/18/2004
|
COMMON
|
RESTRICTED
|
200,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
243,750
|
|
|
ROBERT
K. CHRISTIE
|
|
|
|
|
|
|
|
22345
SHEFFIELD DR
|
|
|
|
|
|
|
|
MORENO
VALLEY, CA 92557
|
|
|
|
|
|
|
|
|
2164
|
4/13/2007
|
COMMON
|
FREE
|
3,750,000
|
|
REMOVE
LEGEND 144
|
|
2163
|
4/13/2007
|
COMMON
|
FREE
|
1,833,333
|
|
REMOVE
LEGEND 144
|
|
|
|
|
Total
Active:
|
5,583,333
|
|
|
CITIGROUP
GLOBAL MKTS,INC.C/F DAVID
|
|
|
|
|
|
|
|
855
FRANKLIN AVE
|
|
|
|
|
|
|
|
GARDEN
CITY, NY 11530
|
|
|
|
|
|
|
|
|
2127
|
10/27/2005
|
COMMON
|
RESTRICTED
|
923,122
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
923,122
|
|
|
BRET
COVEY
|
|
|
|
|
|
|
|
|
2102
|
12/13/2004
|
COMMON
|
RESTRICTED
|
413,333
|
|
RESTRICTED
FEDERAL
|
|
2181
|
8/31/2007
|
COMMON
|
RESTRICTED
|
800,000
|
|
REG-S
|
|
|
|
|
Total
Active:
|
1,213,333
|
|
|
SCOTT
COVEY
|
|
|
|
|
|
|
|
604
CALIFORNIA ST STE 1150
|
|
|
|
|
|
|
|
SAN
FRANCISCO, CA 94108
|
|
|
|
|
|
|
|
|
2061
|
6/16/2004
|
COMMON
|
RESTRICTED
|
50,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
50,000
|
|
|
NORMAN
C. DYER
|
|
|
|
|
|
|
|
20505
BROOK PARK DR
|
|
|
|
|
|
|
|
BROOKFIELD,
WI 53045
|
|
|
|
|
|
|
|
|
2062
|
6/16/2004
|
COMMON
|
RESTRICTED
|
12,500
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
12,500
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
GERALD
FOSTER
|
|
|
|
|
|
|
|
245
EAST 40TH ST APT 33B
|
|
|
|
|
|
|
|
NY,
NY 10016
|
|
|
|
|
|
|
|
|
2107
|
12/13/2004
|
COMMON
|
RESTRICTED
|
72,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
72,000
|
|
|
FOUR
BY FOUR CONSTRUCTION INC.
|
|
|
|
|
|
|
|
1055
TORREY PINES RD
|
|
|
|
|
|
|
|
STE
201
|
|
|
|
|
|
|
|
LA
JOLLA, CA 92130
|
|
|
|
|
|
|
|
|
2071
|
7/2/2004
|
COMMON
|
RESTRICTED
|
35,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
35,000
|
|
|
WILLIAM
F GREENE
|
|
|
|
|
|
|
|
3463
CAMINITO SIERRA R302
|
|
|
|
|
|
|
|
CARLSBAD,
CA 92009
|
|
|
|
|
|
|
|
|
2146
|
4/5/2006
|
COMMON
|
RESTRICTED
|
150,000
|
|
RESTRICTED
FEDERAL
|
|
2069
|
6/28/2004
|
COMMON
|
RESTRICTED
|
250,000
|
|
RESTRICTED
FEDERAL
|
|
2151
|
8/28/2006
|
COMMON
|
RESTRICTED
|
150,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
550,000
|
|
|
GUERRILLA
PARTNERS LP
|
|
|
|
|
|
|
|
C/O
PETER SIRIS
|
|
|
|
|
|
|
|
237
PARK AVE 9TH FL
|
|
|
|
|
|
|
|
NY,
NY 10017
|
|
|
|
|
|
|
|
|
2097
|
12/13/2004
|
COMMON
|
RESTRICTED
|
33,334
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
33,334
|
|
|
ALEXANDRA
HAUGSTATTER
|
|
|
|
|
|
|
|
4
DAVIDSON DR
|
|
|
|
|
|
|
|
MANORVILLE,
NY 11949
|
|
|
|
|
|
|
|
|
1013
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
JOHN
J. HAUGSTATTER
|
|
|
|
|
|
|
|
4
DAVIDSON DR
|
|
|
|
|
|
|
|
MANORVILLE,
NY 11949
|
|
|
|
|
|
|
|
|
1014
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
HAYDEN
COMMUNICATIONS INC
|
|
|
|
|
|
|
|
1401
HAVENS DR
|
|
|
|
|
|
|
|
NORTH
MYRTLE, SC 29582
|
|
|
|
|
|
|
|
|
2145
|
4/5/2006
|
COMMON
|
RESTRICTED
|
100,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
100,000
|
|
|
THIH
HTWAR
|
|
|
|
|
|
|
|
4208
WASHINGTON WAY
|
|
|
|
|
|
|
|
SYKESVILLE,
MD 21784
|
|
|
|
|
|
|
|
|
2018
|
4/20/2004
|
COMMON
|
RESTRICTED
|
5,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
5,000
|
|
|
YE
LIN HTWAR
|
|
|
|
|
|
|
|
6109
EMERALD LANE
|
|
|
|
|
|
|
|
SYKESVILLE,
MD 21784
|
|
|
|
|
|
|
|
|
2015
|
4/20/2004
|
COMMON
|
RESTRICTED
|
5,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
5,000
|
|
|
JEFF
INGVALDSON
|
|
|
|
|
|
|
|
41
ST JOHN'S RD
|
|
|
|
|
|
|
|
CLIFTON
BRISTOL, ENG BS82HD
|
|
|
|
|
|
|
|
|
1016
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
RACHEL
INGVALDSON
|
|
|
|
|
|
|
|
41
ST JOHN'S RD
|
|
|
|
|
|
|
|
CLIFTON
BRISTOL, ENG BS82HD
|
|
|
|
|
|
|
|
|
1017
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
IPOLIS
COMMERCIAL LIMITED
|
|
|
|
|
|
|
|
PO
BOX 6532
|
|
|
|
|
|
|
|
1211
GENEVA
|
|
|
|
|
|
|
|
|
2134
|
10/27/2005
|
COMMON
|
RESTRICTED
|
496,220
|
|
RESTRICTED
FEDERAL
|
|
2038
|
5/12/2004
|
COMMON
|
RESTRICTED
|
66,665
|
|
RESTRICTED
FEDERAL
|
|
2126
|
10/27/2005
|
COMMON
|
RESTRICTED
|
119,178
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
682,063
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
PAUL
JANKA
|
|
|
|
|
|
|
|
34
E. 68TH STREET
|
|
|
|
|
|
|
|
#3A
|
|
|
|
|
|
|
|
NEW
YORK, NY 10021
|
|
|
|
|
|
|
|
|
2160
|
2/14/2007
|
COMMON
|
FREE
|
633,074
|
|
REMOVE
LEGEND 144
|
|
|
|
|
Total
Active:
|
633,074
|
|
|
BOB
JOHNSON
|
|
|
|
|
|
|
|
1508
3 RAY DR
|
|
|
|
|
|
|
|
PLACENTIA,
CA 92870
|
|
|
|
|
|
|
|
|
2064
|
6/16/2004
|
COMMON
|
RESTRICTED
|
50,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
50,000
|
|
|
NORMAN
KHAN
|
|
|
|
|
|
|
|
1510
SOUTH BASCOM AVE APT # 97
|
|
|
|
|
|
|
|
CAMPBELL,
CA 95008
|
|
|
|
|
|
|
|
|
1018
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
THE
VANGUARD GROUP FOR THE
|
|
|
|
|
|
|
|
2216
HAMPSHIRE DR
|
|
|
|
|
|
|
|
DISCOVERY
BAY, CA 94514
|
|
|
|
|
|
|
|
|
2027
|
5/11/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
TERENCE
F. LEONG
|
|
|
|
|
|
|
|
221
WARREN ST
|
|
|
|
|
|
|
|
HUDSON,
NY 12534
|
|
|
|
|
|
|
|
|
2112
|
12/13/2004
|
COMMON
|
RESTRICTED
|
950,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
950,000
|
|
|
WILLIAM
A. LEWIS IV
|
|
|
|
|
|
|
|
|
2042
|
5/12/2004
|
COMMON
|
RESTRICTED
|
70,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
70,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
STEFAN
LOREN
|
|
|
|
|
|
|
|
10749
RED DAHLIA DR
|
|
|
|
|
|
|
|
WOODSTOCK,
MD 21163
|
|
|
|
|
|
|
|
|
2091
|
11/12/2004
|
COMMON
|
RESTRICTED
|
6,250
|
|
RESTRICTED
FEDERAL
|
|
2028
|
5/12/2004
|
COMMON
|
RESTRICTED
|
12,500
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
18,750
|
|
|
G.
ROBERT MACDONALD, IRA ROLLOVER
|
|
|
|
|
|
|
|
87
SUNSET RD
|
|
|
|
|
|
|
|
WESTON,
MA 02493
|
|
|
|
|
|
|
|
|
2017
|
4/20/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
E*TRADE
CLEARING LLC FBO NICHOLAS
|
|
|
|
|
|
|
|
55
WATER ST 32 FL
|
|
|
|
|
|
|
|
NEW
YORK, NY 10041
|
|
|
|
|
|
|
|
|
2152
|
9/19/2006
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
MARVIEW
HOLDINGS INC.
|
|
|
|
|
|
|
|
201
S RIOS AVE
|
|
|
|
|
|
|
|
SOLANO
BEACH, CA 92075
|
|
|
|
|
|
|
|
|
2081
|
11/12/2004
|
COMMON
|
RESTRICTED
|
25,000
|
|
RESTRICTED
FEDERAL
|
|
2032
|
5/12/2004
|
COMMON
|
RESTRICTED
|
25,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
50,000
|
|
|
G
ROBERT MCDONALD
|
|
|
|
|
|
|
|
17
DRUMLIN RD
|
|
|
|
|
|
|
|
ROCKPORT,
MA 01966
|
|
|
|
|
|
|
|
|
2082
|
11/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
JUNE
C. MCDONALD
|
|
|
|
|
|
|
|
17
DRUMLIN RD
|
|
|
|
|
|
|
|
ROCKPORT,
MA 01966
|
|
|
|
|
|
|
|
|
2083
|
11/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
2056
|
5/26/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
20,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
MEADOWBROOK
OPPORTUNITY FUND
|
|
|
|
|
|
|
|
520
LAKE COOK RD STE 690
|
|
|
|
|
|
|
|
DEERFIELD,
IL 60069
|
|
|
|
|
|
|
|
|
2051
|
5/12/2004
|
COMMON
|
RESTRICTED
|
200,000
|
|
RESTRICTED
FEDERAL
|
|
2099
|
12/13/2004
|
COMMON
|
RESTRICTED
|
100,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
300,000
|
|
|
TOM
MONROE
|
|
|
|
|
|
|
|
6008
FIDLER AVE
|
|
|
|
|
|
|
|
LAKEWOOD,
CA 90712
|
|
|
|
|
|
|
|
|
2065
|
6/16/2004
|
COMMON
|
RESTRICTED
|
100,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
100,000
|
|
|
GROVER
G. & LINDA L. MOSS CO TTEE
|
|
|
|
|
|
|
|
|
2177
|
8/17/2007
|
COMMON
|
FREE
|
500,000
|
|
REMOVE
LEGEND 144
|
|
2178
|
8/17/2007
|
COMMON
|
FREE
|
910,000
|
|
REMOVE
LEGEND 144
|
|
|
|
|
Total
Active:
|
1,410,000
|
|
|
KEN
NAGATANI
|
|
|
|
|
|
|
|
200
SOUTH MADISON #11
|
|
|
|
|
|
|
|
PASADENA,
CA 91101
|
|
|
|
|
|
|
|
|
1020
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
CITIGROUP
CGM DAVID S NAGELBERG
|
|
|
|
|
|
|
|
PO
BOX 9765
|
|
|
|
|
|
|
|
RANCHO
SANTA FE, CA 92067
|
|
|
|
|
|
|
|
|
2092
|
11/12/2004
|
COMMON
|
RESTRICTED
|
50,000
|
|
RESTRICTED
FEDERAL
|
|
2131
|
10/27/2005
|
COMMON
|
RESTRICTED
|
246,612
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
296,612
|
|
|
DAVID
S. NAGELBERG 2003 REVOCABLE
|
|
|
|
|
|
|
|
PO
BOX 2142
|
|
|
|
|
|
|
|
RANCHO
SANTA FE, CA 92067
|
|
|
|
|
|
|
|
|
2043
|
5/12/2004
|
COMMON
|
RESTRICTED
|
100,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
100,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
JOHN
D NARDONE
|
|
|
|
|
|
|
|
34
GENOA LANE
|
|
|
|
|
|
|
|
SHAVERTOWN,
PA 18708
|
|
|
|
|
|
|
|
|
2116
|
1/6/2005
|
COMMON
|
RESTRICTED
|
75,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
75,000
|
|
|
RICHARD
NESLUND
|
|
|
|
|
|
|
|
11370
LONGWATER CHASE
|
|
|
|
|
|
|
|
FORT
MYERS, FL 33493
|
|
|
|
|
|
|
|
|
2130
|
10/27/2005
|
COMMON
|
RESTRICTED
|
600,009
|
|
RESTRICTED
FEDERAL
|
|
2055
|
5/26/2004
|
COMMON
|
RESTRICTED
|
65,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
665,009
|
|
|
BURR
NORTHROP
|
|
|
|
|
|
|
|
1181
VILLAGE DR
|
|
|
|
|
|
|
|
CHINO
HILLS, CA 91709
|
|
|
|
|
|
|
|
|
2191
|
2/6/2008
|
COMMON
|
RESTRICTED
|
2,483,524
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
2,483,524
|
|
|
ODYSSEY
TRANSPORTATION , INC
|
|
|
|
|
|
|
|
|
2054
|
5/26/2004
|
COMMON
|
RESTRICTED
|
37,500
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
37,500
|
|
|
JIMMY
D. OMAN
|
|
|
|
|
|
|
|
8727
LONG BEACH BLVD
|
|
|
|
|
|
|
|
SO
GATE, CA 90280
|
|
|
|
|
|
|
|
|
2084
|
11/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
2033
|
5/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
20,000
|
|
|
PAUL
ORRSON
|
|
|
|
|
|
|
|
7920
SHERWOOD AVE
|
|
|
|
|
|
|
|
TOWSON,
MD 21204
|
|
|
|
|
|
|
|
|
2093
|
11/12/2004
|
COMMON
|
RESTRICTED
|
37,500
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
37,500
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
GLEN
OWENS
|
|
|
|
|
|
|
|
1836
BARKER WAY
|
|
|
|
|
|
|
|
PLACENTIA,
CA 92870
|
|
|
|
|
|
|
|
|
2014
|
4/20/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
2085
|
11/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
20,000
|
|
|
DOUGLAS
L. PARKER
|
|
|
|
|
|
|
|
|
2147
|
5/11/2006
|
COMMON
|
FREE
|
323,808
|
|
REMOVE
LEGEND 144
|
|
2103
|
12/13/2004
|
COMMON
|
RESTRICTED
|
513,265
|
|
RESTRICTED
FEDERAL
|
|
2148
|
5/11/2006
|
COMMON
|
RESTRICTED
|
916,192
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
1,753,265
|
|
|
LEWIS
C. PELL
|
|
|
|
|
|
|
|
1
WEST 72
ND
|
|
|
|
|
|
|
|
NEW
YORK, NY 10023
|
|
|
|
|
|
|
|
|
2129
|
10/27/2005
|
COMMON
|
RESTRICTED
|
600,029
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
600,029
|
|
|
THE
LEWIS C PELL REVOCABLE TR U/A
|
|
|
|
|
|
|
|
1
WEST 72 ST APT 47
|
|
|
|
|
|
|
|
NEW
YORK, NY 10023-3422
|
|
|
|
|
|
|
|
|
2070
|
7/2/2004
|
COMMON
|
RESTRICTED
|
65,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
65,000
|
|
|
RBSM
ADVISORS LLC
|
|
|
|
|
|
|
|
1360
BEVERLY ROAD
|
|
|
|
|
|
|
|
SUITE103
|
|
|
|
|
|
|
|
MCLEAN,
VA 22101
|
|
|
|
|
|
|
|
|
2188
|
12/27/2007
|
COMMON
|
RESTRICTED
|
45,500
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
45,500
|
|
|
NATIONAL
INVESTOR SERVICES CORP
|
|
|
|
|
|
|
|
167
W MAIN ST, STE 1310
|
|
|
|
|
|
|
|
LEXINGTON,
KY 40507
|
|
|
|
|
|
|
|
|
2052
|
5/14/2004
|
COMMON
|
RESTRICTED
|
30,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
30,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
NORMAN
T. REYNOLDS
|
|
|
|
|
|
|
|
815
WALKER STE STE 1250
|
|
|
|
|
|
|
|
HOUSTON,
TX 77002
|
|
|
|
|
|
|
|
|
2139
|
12/15/2005
|
COMMON
|
RESTRICTED
|
625,000
|
|
RESTRICTED
FEDERAL
|
|
2140
|
12/15/2005
|
COMMON
|
RESTRICTED
|
225,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
850,000
|
|
|
JEFFREY
E. ROBINSON
|
|
|
|
|
|
|
|
7500
SAN FELIPE 500
|
|
|
|
|
|
|
|
HOUSTON,
TX 77063
|
|
|
|
|
|
|
|
|
2046
|
5/12/2004
|
COMMON
|
RESTRICTED
|
16,667
|
|
RESTRICTED
FEDERAL
|
|
2094
|
11/12/2004
|
COMMON
|
RESTRICTED
|
8,334
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
25,001
|
|
|
STEVEN
D ROSENTHAL
|
|
|
|
|
|
|
|
320
S. SECOND ST
|
|
|
|
|
|
|
|
RIO
VISTA, CA 94571
|
|
|
|
|
|
|
|
|
2186
|
12/20/2007
|
COMMON
|
RESTRICTED
|
300,000
|
|
RESTRICTED
FEDERAL
|
|
2172
|
8/6/2007
|
COMMON
|
RESTRICTED
|
1,200,000
|
|
REG-S
|
|
|
|
|
Total
Active:
|
1,500,000
|
|
|
JEFFREY
SALOMON
|
|
|
|
|
|
|
|
330
ORCHARD ST STE 205
|
|
|
|
|
|
|
|
NEW
HAVEN, CT 06511
|
|
|
|
|
|
|
|
|
2066
|
6/16/2004
|
COMMON
|
RESTRICTED
|
20,000
|
|
RESTRICTED
FEDERAL
|
|
2034
|
5/12/2004
|
COMMON
|
RESTRICTED
|
110,000
|
|
RESTRICTED
FEDERAL
|
|
2086
|
11/12/2004
|
COMMON
|
RESTRICTED
|
130,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
260,000
|
|
|
EMIL
J. SEDERSTROM
|
|
|
|
|
|
|
|
17121
WOODENEST DR NE
|
|
|
|
|
|
|
|
BOTHELL,
WA 98011
|
|
|
|
|
|
|
|
|
2087
|
11/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
2035
|
5/12/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
20,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
PETER
SIRIS
|
|
|
|
|
|
|
|
237
PARK AVE 9 FL
|
|
|
|
|
|
|
|
NEW
YORK, NY 10017
|
|
|
|
|
|
|
|
|
2047
|
5/12/2004
|
COMMON
|
RESTRICTED
|
66,667
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
66,667
|
|
|
CHUCK
SNYDER
|
|
|
|
|
|
|
|
|
2074
|
7/9/2004
|
COMMON
|
RESTRICTED
|
10,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
10,000
|
|
|
DONALD
G. ST. CLAIR
|
|
|
|
|
|
|
|
|
2104
|
12/13/2004
|
COMMON
|
RESTRICTED
|
33,869
|
|
RESTRICTED
FEDERAL
|
|
2026
|
5/10/2004
|
COMMON
|
RESTRICTED
|
40,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
73,869
|
|
|
BARBARA
TAINTER
|
|
|
|
|
|
|
|
|
2105
|
12/13/2004
|
COMMON
|
RESTRICTED
|
47,500
|
|
RESTRICTED
FEDERAL
|
|
1043
|
1/26/2004
|
COMMON
|
RESTRICTED
|
250,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
297,500
|
|
|
JEANETTE
W. THOMPSON
|
|
|
|
|
|
|
|
1421
SW OSPREY COVE
|
|
|
|
|
|
|
|
PORT
ST. LUCIE, FL 34986
|
|
|
|
|
|
|
|
|
1021
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
WRISTON
A. THOMPSON
|
|
|
|
|
|
|
|
|
1022
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
BYRON
WALKER
|
|
|
|
|
|
|
|
PO
BOX 11503
|
|
|
|
|
|
|
|
CARSON,
CA 90749
|
|
|
|
|
|
|
|
|
2088
|
11/12/2004
|
COMMON
|
RESTRICTED
|
37,500
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
37,500
|
|
|
KAREN
WEIL
|
|
|
|
|
|
|
|
17758
LITTEN DR
|
|
|
|
|
|
|
|
BOCA
RATION, FL 33498
|
|
|
|
|
|
|
|
|
2132
|
10/27/2005
|
COMMON
|
RESTRICTED
|
153,708
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
153,708
|
|
|
RALPH
& KAREN WEIL
|
|
|
|
|
|
|
|
17758
LITTEN DR
|
|
|
|
|
|
|
|
BOCA
RATON, FL 33498
|
|
|
|
|
|
|
|
|
2048
|
5/12/2004
|
COMMON
|
RESTRICTED
|
16,667
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
16,667
|
|
|
RALPH
WEIL
|
|
|
|
|
|
|
|
17758
LITTEN DR
|
|
|
|
|
|
|
|
BOCA
RATON, FL 33498
|
|
|
|
|
|
|
|
|
2095
|
11/12/2004
|
COMMON
|
RESTRICTED
|
8,334
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
8,334
|
|
|
BERNARD
WEISMAN
|
|
|
|
|
|
|
|
17061
WINDSOR PARK CT
|
|
|
|
|
|
|
|
BOCA
RATON, FL 33496
|
|
|
|
|
|
|
|
|
1026
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
CAROL
WEISMAN
|
|
|
|
|
|
|
|
|
1027
|
10/20/1998
|
COMMON
|
FREE
|
1,000
|
|
ORIGINAL
ISSUE
|
|
|
|
|
Total
Active:
|
1,000
|
|
|
SHAREHOLDER
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
BRIAN
WHIPP
|
|
|
|
|
|
|
|
2082
US HWY 71
|
|
|
|
|
|
|
|
CLARINDA,
IN 51632
|
|
|
|
|
|
|
|
|
2089
|
11/12/2004
|
COMMON
|
RESTRICTED
|
20,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
20,000
|
|
|
BRYAN
L. WHIPP
|
|
|
|
|
|
|
|
701
S 8
|
|
|
|
|
|
|
|
CLARINDA,
IA 51632
|
|
|
|
|
|
|
|
|
2036
|
5/12/2004
|
COMMON
|
RESTRICTED
|
20,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
20,000
|
|
|
WINDSTONE
CAPITAL
|
|
|
|
|
|
|
|
C/O
STEVEN GREEN
|
|
|
|
|
|
|
|
1725
LINEMAN ST
|
|
|
|
|
|
|
|
GLENVIEW,
IL 60025
|
|
|
|
|
|
|
|
|
2184
|
9/17/2007
|
COMMON
|
FREE
|
189,000
|
|
REMOVE
LEGEND 144
|
|
|
|
|
Total
Active:
|
189,000
|
|
|
WILLIAM
R WINN
|
|
|
|
|
|
|
|
4014
W. ROBINWOOD CT
|
|
|
|
|
|
|
|
VISALIA,
CA 93291
|
|
|
|
|
|
|
|
|
2113
|
12/17/2004
|
COMMON
|
RESTRICTED
|
160,000
|
|
RESTRICTED
FEDERAL
|
|
|
|
|
Total
Active:
|
160,000
|
|
|
DAVID
ZUSMAN
|
|
|
|
|
|
|
|
280
PARK AVE. SOUTH
|
|
|
|
|
|
|
|
#8B
|
|
|
|
|
|
|
|
NEW
YORK, NY 10010
|
|
|
|
|
|
|
|
|
2162
|
2/14/2007
|
COMMON
|
FREE
|
212,592
|
|
REMOVE
LEGEND 144
|
|
|
|
|
Total
Active:
|
212,592
|
|
|
SHAREHOLDER
|
|
CERT
#
|
ISSUED
|
CLASS:
|
SERIES:
|
SHARES
|
RESTRICTIONS
|
|
|
|
|
|
|
|
|
Preffered:
|
|
Certificates:
|
0
|
|
|
|
|
|
|
Shares:
|
0
|
|
|
|
|
Warrant:
|
|
Certificates:
|
0
|
|
|
|
|
|
|
Shares:
|
0
|
|
|
|
|
Options:
|
|
Certificates:
|
0
|
|
|
|
|
|
|
Shares:
|
0
|
|
|
|
|
Common
Free Trading:
|
|
Certificates:
|
53
|
|
|
|
|
|
|
Shares:
|
17,533,778
|
|
|
|
|
Common
Restricted:
|
|
Certificates:
|
88
|
|
Report
Prepared by
|
|
|
|
|
Shares:
|
15,542,562
|
|
HOLLADAY
STOCK TRANSFER, INC
|
|
|
|
|
|
|
|
2939
N 67th Place
|
|
|
Active
Total:
|
|
Certificates:
|
141
|
|
Scottsdale,
AZ 85251
|
|
|
|
|
|
|
|
tel
[480] 481-3940 fax [480]
|
|
|
|
|
Shares:
|
33,076,340
|
|
481-3941
|
|
|
Post-February
6:
|
|
|
|
Cancelled:
|
|
|
|
100,000
additional shares cancelled in the name of Burr Northrup.
|
|
|
|
Issued:
|
|
|
|
Grover
Moss
|
19,414,634
|
|
|
Joseph
I. Emas
|
12,195,122
|
|
|
Walker
Street Associates
|
12,195,122
|
|
|
Burr
Northrop
|
10,500,000
|
|
|
Total:
|
87,281,218
|
Schedule
211
Year
end
|
Entech
|
|
HB
Covey
|
|
Env
Tech
|
|
Fed
|
CA
|
FL
|
|
Fed
|
CA
|
|
Fed
|
CA
|
December
31, 2001
|
N/A
|
N/A
|
N/A
|
|
N/A
|
N/A
|
|
P
|
N/A
|
December
31, 2002
|
F
|
N/A
|
F
|
|
N/A
|
N/A
|
|
P
|
N/A
|
December
31, 2003
|
F
|
N/A
|
F
|
|
P
|
F
|
|
P
|
N/A
|
September
30, 2004
|
P
|
N/A
|
F
|
|
P
|
F
|
|
P
|
N/A
|
September
30, 2005
|
P
|
F
|
P
|
|
P
|
F
|
|
P
|
P
|
September
30, 2006
|
P
|
P
|
P
|
|
P
|
P
|
|
P
|
P
|
September
30, 2007
|
U
|
U
|
U
|
|
U
|
U
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= Prepared not filed
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= not required
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WARRANTS
FOR FOX & COMPANY, INC. On January 23, 2004, the Company issued 475,375 five
year warrants to purchase shares of common stock to Fox & Company, Inc., the
broker who arranged the investment by Barron Partners LP. The exercise price
is
$1.10. The Warrants have "piggy-back" registration rights.
CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES
A
CONVERTIBLE PREFERRED STOCK
OF
ENTECH
ENVIRONMENTAL TECHNOLOGIES INC.
(Pursuant
to Sections 607.0821 of the
Florida
Business Corporation Act)
Entech
Environmental Technologies Inc., a corporation organized and existing under
the
laws of the State of Florida (the “Corporation”), hereby certifies that,
pursuant to authority vested in its Board of Directors by the Amended and
Restated Articles of Incorporation of the Corporation, the following resolution
was adopted as of February 20, 2008 by the Board of Directors of the Corporation
pursuant to Section 607.0821 of the Florida Business Corporation Act and that
shareholder action was not required:
RESOLVED,
that, it is in the best interest of this Corporation to create a new series
of
its Preferred Stock; and be it
RESOLVED
FURTHER, that, pursuant to authority vested in the Board of Directors of the
Corporation by Article III of the Corporation's Amended and Restated Articles
of
Incorporation, of the total authorized number of 10,000,000 shares of Preferred
Stock of the Corporation, there shall be designated a series of
1,000,000
shares
of
Preferred Stock which shall be issued in and constitute a single series to
be
known as “Series A Convertible Preferred Stock”, par value $0.001 per share
(hereinafter called the “Series A Preferred”). The shares of Series A Preferred
shall have the voting powers, designations, preferences and other special
rights, and qualifications, limitations and restrictions thereof set forth
below:
Section
1.
Dividends
and Distributions
.
(a)
The
holders of Series A Preferred will not be entitled to dividends unless the
Company pays cash dividends or dividends in other property to holders of
outstanding shares of Common Stock, in which event, each outstanding share
of
the Series A Preferred will be entitled to receive dividends of cash or
property, out of any assets legally available therefore, in an amount or value
equal to the amount of dividends per share of Series A Preferred, as would
have
been payable on the number of shares of Common Stock into which each share
of
Series A Preferred would be convertible, if such shares of Series A Preferred
had been converted to Common Stock as of the record date for the determination
of holders of Common Stock entitled to receive such dividends (the
“
Post-Reverse
Split Dividends
”);
provided that if the Series A Preferred shall be entitled to receive dividends
pursuant to the foregoing prior to the effectiveness of the Reverse Split,
then
each outstanding share of the Series A Preferred will be entitled to receive
dividends of cash or property, out of any assets legally available therefor,
in
an amount or value equal to the product of Post-Reverse Split Dividends and
the
Reverse Split Ratio. Any dividend payable to the Series A Preferred will have
the same record and payment date and terms as the dividend payable on the Common
Stock. The rights of holders of Series A Preferred to receive dividends are
subject to the rights of any holder of the Corporation’s Series B Convertible
Preferred Stock, par value $0.001 per share (the “
Series
B Preferred
”)
or
other senior stock.
(b)
The
holders of Series A Preferred shall not be entitled to receive any dividends
or
other distributions except as provided in this Certificate of Designations,
Preferences and Rights of Series A Preferred.
Section
2.
Voting
Rights
.
The
holders of shares of Series A Preferred shall be entitled to the following
voting rights:
(a)
Those
voting rights required by applicable law; and
(b)
The
right
to vote together with the holders of the Common Stock and Series B Preferred,
as
a single class, upon all matters submitted to holders of Common Stock for a
vote, with
each
share of Series A Preferred carrying a number of votes equal to the number
of
shares of Common Stock issuable in a Mandatory Conversion (as defined in Section
4) based on the then applicable Conversion Rate, and each holder of Series
A
Preferred shall be entitled to notice of any stockholders’ meeting in accordance
with the bylaws of the Company.
Section
3.
Redemption;
Liquidation Preference
.
The
Series A Preferred shall not be redeemable and shall have no liquidation
preference.
Section
4.
Mandatory
Conversion
.
(a)
Automatic
Conversion
.
The
Company shall file an amendment to the Company’s Articles of Incorporation
(“Amendment”) with the Secretary of State of the State of Florida effecting a
328.72898-for-1 reverse stock split of the Common Stock (or a split using such
other ratio that may be required) (the “
Reverse
Split Ratio
”)
so
that the Company has a number of authorized and unissued shares of Common Stock
sufficient to permit the conversion of all outstanding shares of the Series
A
Preferred (the “
Reverse
Split
”).
As of
the date of the filing and acceptance of the Amendment by the Secretary of
State
of the State of Florida, all the outstanding shares of Series A Preferred will
immediately and automatically convert into shares of Common Stock without any
notice or action required on the part of the Corporation or the holders of
Series A Preferred or Common Stock (the “
Mandatory
Conversion
”).
In
the Mandatory Conversion, each
holder
of
Series A Preferred will be entitled to receive twenty two and 62/10,000
(22.0062) shares of fully paid and non-assessable Common Stock for every one
(1)
share of Series A held (the “
Conversion
Rate
”).
(b)
Obligation
.
The
Company agrees that it shall, in good faith, (i) promptly take any and all
such
corporate action as may, in the opinion of its counsel, be necessary to effect
the Reverse Split and to expeditiously effect the Mandatory Conversion and
(ii)
use its reasonable best efforts to obtain the requisite shareholder approval
of
any necessary amendment to the Articles of Incorporation to achieve the
foregoing.
(c)
Conversion
Procedure
.
The
Company shall use its reasonable best efforts to issue or cause its transfer
agent to issue the Common Stock issuable upon a Mandatory Conversion as soon
as
practicable, but in any event within five (5) business days after the Mandatory
Conversion. In a Mandatory Conversion, all fractional shares will be rounded
up
to the nearest whole share. The Common Stock issuable upon the Mandatory
Conversion shall be issued with a restrictive legend indicating that it was
issued in a transaction which is exempt from registration under the Securities
Act of 1933, as amended (“
Securities
Act
”),
and
that it cannot be
transferred
unless (i) it is registered under the Securities Act, (ii) an exemption from
registration is available in the opinion of counsel to the Company or (iii)
there is submitted to the Company such other evidence as may be satisfactory
to
the Company to the effect that any such transfer shall be in compliance with
the
Securities Act and applicable state securities law. The Common Stock issuable
upon the Mandatory Conversion shall be issued in the name of the person who
is
the holder of the Series A Preferred unless, in the opinion of counsel to the
Company, a change of name and such transfer can be made in compliance with
applicable securities laws or there is submitted to the Company such other
evidence as may be satisfactory to the Company that a change of name and such
transfer can be made in compliance with applicable securities laws. The person
in whose name the certificates of Series A Preferred are so recorded upon the
Mandatory Conversion shall be treated as a common stockholder of the Company
immediately following the filing and acceptance of the Amendment. Immediately
following the filing and acceptance of the Amendment (and upon the occurrence
of
the Mandatory Conversion), and until such time as the Company shall tender
to
the record holder thereof a certificate representing the appropriate number
of
shares of Common Stock into which such holder’s Series A Preferred were
converted in the Mandatory Conversion, each outstanding certificate representing
Series A Preferred shall represent the number of shares of Common Stock into
which such Series A Preferred shares were converted, which number shall reflect
the effects of the Reverse Split.
Section
5.
Adjustments
to Conversion Rate and Certain Other Adjustments
.
The
Conversion Rate for the number of shares of Common Stock into which the Series
A
Preferred shall be converted on a Mandatory Conversion shall be subject to
adjustment from time to time as hereinafter set forth, notice of which shall
be
promptly provided to the holders of the Series A Preferred:
(a)
Stock
Dividends, Recapitalization, Reclassification, Split-Ups
.
If,
prior
to
or on the date of Mandatory Conversion, the number of outstanding shares of
Common Stock is increased by a stock dividend payable in shares of Common Stock
or any right to acquire Common Stock or by a split-up, recapitalization or
reclassification of shares of Common Stock or other similar event, then, on
the
effective date thereof, the Conversion Rate will be adjusted so that the number
of shares of Common Stock issuable on the Mandatory Conversion of the Series
A
Preferred shall be increased in proportion to such increase in outstanding
shares of Common Stock.
(b)
Aggregation
of Shares
.
If
prior to or on the date of Mandatory Conversion, the number of outstanding
shares of Common Stock is decreased by a consolidation, combination or
reclassification of shares of Common Stock or other similar event, (including
the Reverse Split), then, upon the effective date thereof, the number of shares
of Common Stock issuable on the Mandatory Conversion of the Series A Preferred
shall be decreased in proportion to such decrease in outstanding shares of
Common Stock.
(c)
Mergers
or Consolidations
.
If at
any time or from time to time prior to the date of a Mandatory Conversion there
is a merger, consolidation or similar capital reorganization of the Common
Stock
(other than a recapitalization, subdivision, combination, reclassification,
exchange or substitution of shares provided for in Section 5(a) or 5(b) above)
(each a “
Reorganization
”),
as a
part of such capital reorganization, provision shall be made so that the holders
of the Series A Preferred shall thereafter be entitled to receive upon
conversion of the Series A Preferred the number of shares of stock or other
securities or property of the Company to which a holder of the number of shares
of Common Stock issuable upon conversion would have been entitled on such
capital reorganization, subject to adjustment in respect of such stock or
securities by the terms thereof. In any such case, the resulting or surviving
corporation (if not the Company) shall expressly assume the obligations to
deliver, upon the exercise of the conversion privilege, such securities or
property as the holders of Series A Preferred remaining outstanding, or other
convertible preferred stock received by such holders in place thereof, shall
be
entitled to receive pursuant to the provisions hereof, and to make provisions
for the protection of the conversion right as provided above. If this Section
5(c) applies to a Reorganization, then Sections 5(a) and 5(b) shall not apply
to
such Reorganization.
(d)
Successive
Changes.
The
provisions of this Section shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
Section
6.
No
Impairment
.
The
Company will not, by amendment of its Articles of Incorporation or through
any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek
to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this section and in the taking
of
all such action as
may
be
necessary or appropriate in order to protect the conversion rights of the
holders of Series A Preferred against impairment.
Section
7.
No
Fractional Shares and Certificate as to Adjustments
.
No
fractional shares shall be issued upon the conversion of any share or shares
of
the Series A Preferred, and the number of shares of Common Stock to be issued
shall be rounded up to the nearest whole share. The number of shares issuable
upon conversion shall be determined on the basis of the total number of shares
of Series A Preferred the holder is at the time converting into Common Stock
and
the number of shares of Common Stock issuable upon such aggregate
conversion.
Section
8.
Notices
of Record Date
.
In the
event of any taking by the Company of a record of the holders of any class
of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or any other right, the Company shall mail to each
holder of Series A Preferred, at least ten (10) days prior to the record date
specified therein, a notice specifying the date on which any such record is
to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
Section
9.
Notices
.
Any
notice required by the provisions of this Certificate of Designations to be
given to the holders of shares of Series A Preferred shall be deemed given
if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the
Company.
Section
10.
No
Charge for Conversion
.
The
issuance of certificates for shares of Common Stock upon the conversion of
shares of Series A Preferred shall be made without charge to the converting
holders for such certificates and without any tax in respect of the issuance
of
such certificates.
Section
11.
Return
to Status as Authorized Shares
.
Upon a
Mandatory Conversion or any other redemption or extinguishment of the Series
A
Preferred, the shares converted, redeemed or extinguished will be automatically
returned to the status of authorized and unissued shares of preferred stock,
available for future designation and issuance pursuant to the terms of the
Articles of Incorporation. Following conversion of all outstanding shares of
Series A Preferred on the Mandatory Conversion, this Certificate of Designations
shall be automatically cancelled and void and be of no further force and
effect.
Section
12.
Amendment
.
This
Certificate of Designations constitutes an agreement between the Company and
the
holders of the Series A Preferred. For as long as any shares of Series A
Preferred are outstanding, the terms hereof may be amended, modified, repealed
or waived only by the affirmative vote or written consent of holders of a
majority of the then outstanding shares of Series A Preferred, voting together
as a class and series.
IN
WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate
and does affirm the foregoing as true this 20th day of February,
2008.
/s/:
Terence Francis Leong
Name:
Terence Francis Leong
Title:
Chief Executive Officer
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.
CERTIFICATE
OF DESIGNATIONS OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
B CONVERTIBLE PREFERRED STOCK
The
undersigned,
Terence
Francis Leong
does
hereby certify that:
1.
He
is the
President and Chief Executive Officer of
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
,
a
Florida corporation (the “
Company
”).
2.
The
Company is authorized to issue 10,000,000 shares of Preferred Stock, par value
$0.001 per share (“
Preferred
Stock
”),
none
of which have been previously issued.
3.
The
following resolutions were duly adopted by the Board of Directors of the Company
(the “
Board
of Directors
”):
WHEREAS,
the Certificate of Incorporation of the Company provides for a class of its
authorized stock known as Preferred Stock, comprised of 10,000,000 shares,
$0.001 par value per share, issuable from time to time in one or more series;
WHEREAS,
the Board of Directors is authorized to fix the dividend rights, dividend rate,
voting rights, conversion rights, rights and terms of redemption and liquidation
preferences of any wholly unissued series of Preferred Stock and the number
of
shares constituting any series and the designation thereof, of any of them;
and
WHEREAS,
it is the desire of the Board of Directors, pursuant to its authority as
aforesaid, to fix the rights, preferences, restrictions and other matters
relating to a series of the preferred stock, which shall consist of up to seven
million (7,000,000) shares of the Preferred Stock, which the Company has the
authority to issue, as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide
for
the issuance of a series of Preferred Stock for cash or exchange of other
securities, rights or property and does hereby fix and determine the rights,
preferences, restrictions and other matters relating to such series of Preferred
Stock as follows:
TERMS
OF PREFERRED STOCK
Section
1
.
Definitions
.
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Securities Purchase Agreement by and between
the
Company, Barron Partners LP, a Delaware limited partnership and EOS Holdings,
LLC (the “Purchase Agreement”). For the purposes hereof, the following terms
shall have the following meanings:
“
4.9%
Limitation
”
shall
have the meaning set forth in the Purchase Agreement.
“
Bankruptcy
Event
”
means
any of the following events: (a) the Company or any Significant Subsidiary
(as
such term is defined in Rule 1.02(s) of Regulation S-X) thereof commences a
case
or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or
similar law of any jurisdiction relating to the Company or any Subsidiary;
(b)
there is commenced against the Company or any Subsidiary any such case or
proceeding that is not stayed or dismissed within 90 days after commencement;
(c) the Company or any Subsidiary is adjudicated insolvent or bankrupt or any
order of relief or other order approving any such case or proceeding is entered;
(d) the Company or any Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property that is
not
discharged or stayed within 90 days; (e) the Company or any Subsidiary makes
a
general assignment for the benefit of creditors; (f) the Company or any
Subsidiary calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or (g) the Company or
any
Subsidiary, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate
or
other action for the purpose of effecting any of the foregoing.
“
Board
of Directors
”
means
the Board of the Directors of the Company.
“
Certificate
”
means
this Certificate of Designations, Preferences and Rights.
“
Commission
”
means
the Securities and Exchange Commission.
“
Common
Stock
”
means
the Company’s common stock, par value $0.001 per share, and stock of any other
class into which such shares may hereafter have been reclassified or
changed.
“
Conversion
Date
”
shall
have the meaning set forth in Section 6(a).
“
Conversion
Ratio
”
shall
mean the number of shares of Common Stock issuable upon conversion of one share
of Series B Preferred Stock. Each share of Series B Preferred Stock shall be
initially convertible into 1 share of Common Stock, subject to adjustment as
provided in this Certificate.
“
Conversion
Price
”
shall
mean $1.20, subject to adjustment as provided in this Certificate.
“
Conversion
Shares
”
means,
collectively, the shares of Common Stock into which the shares of Series B
Preferred Stock are convertible in accordance with the terms
hereof.
“
Conversion
Shares Registration Statement
”
means
a
registration statement that meets the requirements of the Registration Rights
Agreement and registers the resale of the Conversion Shares by the Holder,
who
shall be named as a “selling stockholder” thereunder, all as provided in the
Registration Rights Agreement.
“
Conversion
Value
”
means
an amount determined by multiplying the number of Conversion Shares as to which
a value is to be determined by the average of the closing prices of the Common
Stock on the principal market or exchange on which the Common Stock is traded
or
quoted for the five days prior to the date as of which a Conversion Value is
being determined.
“
Company
”
means
ENTECH
ENVIRONMENTAL TECHNOLOGIES, INC.
,
a
Florida corporation.
“
Effective
Date
”
means
the date that the Conversion Shares Registration Statement is declared effective
by the Commission.
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as amended.
“
Fundamental
Transaction
”
shall
have the meaning set forth in Section 7(g)(iv) hereof.
“
Holder
”
shall
have the meaning given such term in Section 2 hereof.
“
Investors
”
shall
mean the persons named in Schedule A to the Purchase Agreement.
“
Person
”
means
a
corporation, an association, a partnership, a limited liability company, a
business association, an individual, a trust, a government or political
subdivision thereof or a governmental agency.
“
Purchase
Agreement
”
means
the Securities Purchase Agreement, relating to the issuance of the Company’s
Series B Preferred Stock and Warrants for an aggregate purchase price of
$3,400,000, as amended, modified or supplemented from time to time in accordance
with its terms, a copy of which is on file at the principal offices of the
Company.
“
Registration
Rights Agreement
”
means
the Registration Rights Agreement, to which the Company and the original Holders
are parties, as amended, modified or supplemented from time to time in
accordance with its terms.
“
Securities
Act
”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Series
B Preferred Stock
”
shall
have the meaning set forth in Section 2.
“
Subsidiary
”
shall
mean a corporation, limited liability company, partnership, joint venture or
other business entity of which the Company owns beneficially or of record more
than a majority of the equity interests.
“
Trading
Day
”
means
a
day on which the Common Stock is traded on a Trading Market.
“
Trading
Market
”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the New York
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market,
the
NASDAQ Capital Market or the OTC Bulletin Board.
“
VWAP
”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the primary Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based
on
a Trading Day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the
[
VAP
function
]
;
(b) if the Common Stock is not then listed or quoted on the Trading Market
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (c) in
all other cases, the fair market value of a share of Common Stock as determined
by a nationally recognized-independent appraiser selected in good faith by
persons holding a majority of the principal amount of Series B Preferred Stock
then outstanding.
Rank
of Series or Classes
.
For
purposes of this Certificate, any stock of any series or class of the Company
shall be deemed to rank:
(a)
senior to the shares of Series B Preferred Stock, as to dividends or upon
liquidation, dissolution or winding up, as the case may be, if the holders
of
such class or classes shall be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Company, as the case may be, in preference or priority to the holders of shares
of Series B Preferred Stock;
(b)
on a
parity with shares of Series B Preferred Stock, as to dividends or upon
liquidation, dissolution or winding up, as the case may be, whether or not
the
dividend rates, dividend payment dates or redemption or liquidation prices
per
share or sinking fund provisions, if any, be different from those of Series
B
Preferred Stock, if the holders of such stock shall be entitled to the receipt
of dividends or of amounts distributable upon dissolution, liquidation or
winding up of the Company, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one over
the other, as between the holders of such stock and the holders of shares of
Series B Preferred Stock;
(c)
junior to shares of Series B Preferred Stock as to dividends or upon
liquidation, dissolution or winding up, as the case may be, if such class shall
be Common Stock or if the holders of shares of Series B Preferred Stock shall
be
entitled to receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Company, as the case may be, in preference
or
priority to the holders of shares of such class or classes.
Section
2
.
Designation
and Amount
.
The
series of Preferred Stock, par value $0.001 per share shall be designated as
the
Company’s Series B Convertible Preferred Stock (the “
Series
B Preferred Stock
”)
and
the number of shares so designated shall be seven million (7,000,000) (which
shall not be subject to increase without the consent of all of the holders
of
50% of the then outstanding shares of Series B Preferred Stock (each a
“
Holder
”
and
collectively, the “
Holders
”).
In
the event of the conversion of shares of Series B Preferred Stock into Common
Stock, pursuant to Section 6 hereof, or in the event that the Company shall
otherwise acquire and cancel any shares of Series B Preferred Stock, the shares
of Series B Preferred Stock so converted or otherwise acquired and canceled
shall have the status of authorized but unissued shares of preferred stock,
without designation as to series until such stock is once more designated as
part of a particular series by the Board of Directors. In addition, if the
Company shall not issue the maximum number of shares of Series B Preferred
Stock, the Company may, from time to time, by resolution of the Board of
Directors and the approval of the holders of a majority of the outstanding
shares of Series B Preferred Stock, reduce the number of shares of Series B
Preferred Stock authorized, provided, that no such reduction shall reduce the
number of authorized shares to a number which is less than the number of shares
of Series B Preferred Stock then issued or reserved for issuance. The number
of
shares by which the Series B Preferred Stock is reduced shall have the status
of
authorized but unissued shares of Preferred Stock, without designation as to
series, until such stock is once more designated as part of a particular series
by the Company’s Board of Directors. The Board of Directors shall cause to be
filed with the Secretary of State of the State of Florida such certificate
as
shall be necessary to reflect any reduction in the number of shares constituting
the Series B Preferred Stock.
Section
3
.
Dividends
and Other Distributions
.
No
dividends shall be payable with respect to the Series B Preferred Stock. No
dividends shall be declared or payable with respect to the Common Stock while
the Series B Preferred Stock is outstanding. Except as permitted under the
Transaction Documents, the Company shall not redeem or purchase any shares
of
Common Stock or any other class or series of capital stock which is junior
to or
on a parity with the Series B Preferred Stock while the Series B Preferred
Stock
is outstanding.
Section
4
.
Voting
Rights
.
The
Series B Preferred Stock shall have no voting rights except as required by
Florida law. However, so long as any shares of Series B Preferred Stock are
outstanding, the Company shall not, without the affirmative approval of the
Holders of 75% of the shares of the Series B Preferred Stock then outstanding,
(a) alter or change adversely the powers, preferences or rights given to the
Series B Preferred Stock or alter or amend this Certificate, (b) authorize
or
create any class of stock (other than Series A Preferred Stock) ranking as
to
dividends or distribution of assets upon a Liquidation (as defined in Section
5)
senior to or otherwise pari passu with the Series B Preferred Stock, or any
series of preferred stock possessing greater voting rights or the right to
convert at a more favorable price than the Series B Preferred Stock, (c) amend
its certificate of incorporation or other charter documents in breach of any
of
the provisions hereof, (d) increase the authorized number of shares of Series
B
Preferred Stock or the number of authorized shares of Preferred Stock.
Notwithstanding any other provision of the Certificate; the provisions of
Section 6(c) of this Certificate may not be amended or waived.
Section
5
.
Liquidation
.
Upon
any liquidation, dissolution or winding-up of the Company, whether voluntary
or
involuntary (a “
Liquidation
”),
the
Holders shall be entitled to receive out of the assets of the Company, whether
such assets are capital or surplus, for each share of Series B Preferred Stock
an amount equal to one dollar and twenty cents ($1.20) per share of Series
B
Preferred Stock (the “
Liquidation
Value
,”
before
any distribution or payment shall be made to the holders of any securities
which
are junior to the Series B Preferred Stock upon voluntary or involuntary
liquidation, dissolution or winding up and after any distributions or payments
made to holders of any class or series of securities which are senior to the
Series B Preferred Stock upon voluntary or involuntary liquidation, dissolution
or winding up. If the assets of the Company shall be insufficient to pay in
full
such amounts, then the entire assets to be distributed to the Holders shall
be
distributed among the Holders ratably in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid
in
full. In the event the assets of the Company available for distribution to
the
holders of shares of Series B Preferred Stock upon dissolution, liquidation
or
winding up of the Company, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to this Section 5, no such distribution shall be made on account of
any
shares of any other class or series of capital stock of the Company ranking
on a
parity with the shares of Series B Preferred Stock upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of Series B Preferred Stock, ratably, in
proportion to the full distributable amounts for which holders of all such
parity shares are respectively entitled upon such dissolution, liquidation
or
winding up. At the election of a Holder made by written notice delivered to
the
Company at least two (2) business days prior to the effective date of the
subject transaction, as to the shares of Series B Preferred Stock held by such
Holder, a Fundamental Transaction (excluding for purposes of this Section 5
any
Fundamental Transaction described in Section 7(g)(iv)(A) or 7(g)(iv)(B)) or
Change of Control shall be treated as a Liquidation as to such
Holder.
Section
6. Conversion
.
a)
Reverse
Split
.
Within
120 days from Closing the Company shall file an amendment to the Company’s
Articles of Incorporation (the “
Amendment
”)
with
the Secretary of State of the State of Florida effecting a 328.72898-for-1
(the
“
Reverse
Split Ratio
”)
reverse stock split of the issued and outstanding Common Stock (the
“
Reverse
Split
”)
so
that the number of authorized and unissued Common Stock shall be sufficient
to
permit the conversion of all outstanding shares of the Series B.
b)
Conversions
at Option of Holder
.
Each
share of Series B Preferred Stock shall be initially convertible (subject to
the
limitations set forth in Section 6(e)), into such number of shares of Common
Stock based on the Conversion Ratio at the option of the Holders, at any time
and from time to time on or after the Amendment is filed with the State of
Florida
effecting the Reverse Split. Holders shall effect conversions by providing
the
Company with the form of conversion notice attached hereto as
Annex
A
(a
“
Notice
of Conversion
”)
as
fully and originally executed by the Holder, together with the delivery by
the
Holder to the Company of the stock certificate(s) representing the number of
shares of Series B Preferred Stock to be converted, with such stock certificates
being duly endorsed in full for transfer to the Company or with an applicable
stock power duly executed by the Holder in the manner and form as deemed
reasonable by the transfer agent of the Common Stock. Each Notice of Conversion
shall specify the number of shares of Series B Preferred Stock to be converted,
the number of shares of Series B Preferred Stock owned prior to the conversion
at issue, the number of shares of Series B Preferred Stock owned subsequent
to
the conversion at issue, the stock certificate number and the shares of Series
B
Preferred Stock represented thereby which are accompanying the Notice of
Conversion, and the date on which such conversion is to be effected, which
date
may not be prior to two Trading Days following the date the Holder mails such
Notice of Conversion and the applicable stock certificates to the Company by
overnight delivery service (the “
Conversion
Date
”).
If no
Conversion Date is specified in a Notice of Conversion, the Conversion Date
shall be the Trading Day immediately following the date that such Notice of
Conversion and applicable stock certificates are received by the Company. The
calculations and entries set forth in the Notice of Conversion shall control
in
the absence of manifest or mathematical error. Shares of Series B Preferred
Stock converted into Common Stock in accordance with the terms hereof shall
be
canceled and may not be reissued.
c)
Adjustment
of Conversion Ratio
.
If the
Conversion Price is adjusted pursuant to Section 7 or as otherwise provided
in
this Certificate, the Conversion Ratio shall likewise be adjusted and the new
Conversion Ratio shall be determined by multiplying the Conversion Ratio in
effect by a fraction, the numerator of which is the Conversion Price in effect
before the adjustment and the denominator of which is the new Conversion Price.
Thereafter, subject to any further adjustments in the Conversion Price, each
share of Series B Preferred Stock shall be initially convertible into Common
Stock based on the new Conversion Ratio.
d)
Automatic
Conversion Upon Change of Control
.
Subject
to Section 5, all of the outstanding shares of Series B Preferred Stock shall
be
automatically converted into the Conversion Shares upon the close of business
on
the business day immediately preceding the date fixed for consummation of any
transaction resulting in a Change of Control of the Company (an “
Automatic
Conversion Event
”).
A
“
Change
in Control
”
means
a
consolidation or merger of the Company with or into another company or entity
in
which the Company is not the surviving entity or the sale of all or
substantially all of the assets of the Company to another company or entity
not
controlled by the then existing stockholders of the Company in a transaction
or
series of transactions. The Company shall not be obligated to issue certificates
evidencing the Conversion Shares unless certificates evidencing the shares
of
Series B Preferred Stock so converted are either delivered to the Company or
its
transfer agent or the holder notifies the Company or its transfer agent in
writing that such certificates have been lost, stolen or destroyed and executes
an agreement satisfactory to the Company to indemnify the Company from any
loss
incurred by it in connection therewith. Upon the conversion of the Series B
Preferred Stock pursuant to this Section 6(d), the Company shall promptly send
written notice thereof, by hand delivery or by overnight delivery, to the
holders of record of all of the Series B Preferred Stock at their addresses
then
shown on the records of the Company, which notice shall state that certificates
evidencing shares of Series B Preferred Stock must be surrendered at the office
of the Company (or of its transfer agent for the Common Stock, if
applicable).
e)
Beneficial
Ownership Limitation
.
Except
as provided in Section 6(d) of this Certificate, which shall apply as stated
therein if an Automatic Conversion Event shall occur, the right of the Holder
to
convert the Series B Preferred Stock shall be subject to the 4.9% Limitation,
with the result that Company shall not effect any conversion of the Series
B
Preferred Stock, and the Holder shall not have the right to convert any portion
of the Series B Preferred Stock, to the extent that after giving effect to
such
conversion, the Holder (together with the Holder’s affiliates), as set forth on
the applicable Notice of Conversion, would beneficially own in excess of 4.9%
of
the number of shares of the Common Stock outstanding immediately after giving
effect to such conversion.
For
the
purposes of this Agreement beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act, and Regulation 13d-3
thereunder.
For
purposes of this Section 6(e), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in the most recent of the following: (A) the Company’s
most recent quarterly reports (Form 10-Q or Form 10-QSB), Annual Reports (Form
10-K or Form 10-KSB), or definitive proxy statement or information statement
as
filed with the Commission under the Exchange Act, (B) a more recent public
announcement by the Company, or (C) any other written notice by the Company
or
the Company’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of the Holder, the Company
shall within two (2) Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
the
Series B Preferred Stock, by the Holder or its affiliates since the date as
of
which such number of outstanding shares of Common Stock was publicly reported
by
the Company. This Section 6(e) may be waived or amended only with the consent
of
the Holders of all of the Series B Preferred Stock and the consent of the
holders of a majority of the shares of outstanding Common Stock of the Company
who are not Affiliates. For the purpose of the immediately preceding sentence,
the term “Affiliate” shall mean any person: (a) that directly or indirectly,
through one or more intermediaries controls, or is controlled by, or is under
common control with the Company, or (b) who beneficially owns (i) any shares
of
Series B Preferred Stock, or (ii) the Company’s Common Stock Purchase
Warrant(s). For purposes of this Section 6(c), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act..
f)
Mechanics
of Conversion
1)
Delivery
of Certificate Upon Conversion
.
Except
as otherwise set forth herein, not later than three (3) Trading Days after
each
Conversion Date (the “
Share
Delivery Date
”),
the
Company shall deliver to the Holder (A) a certificate or certificates which,
after the Effective Date, shall be free of restrictive legends and trading
restrictions (other than those required by the Purchase Agreement) representing
the number of shares of Common Stock being acquired upon the conversion of
shares of Series B Preferred Stock, and (B) if applicable, a bank check in
the
amount of accrued
and
unpaid dividends (if the Company has elected or is required to pay accrued
dividends in cash). After the Effective Date, the Company shall, upon request
of
the Holder, deliver any certificate or certificates required to be delivered
by
the Company under this Section electronically through the Depository Trust
Company or another established clearing Company performing similar functions
if
the Company’s transfer agent has the ability to deliver shares of Common Stock
in such manner. If in the case of any Notice of Conversion such certificate
or
certificates are not delivered to or as directed by the applicable Holder by
the
third Trading Day after the Conversion Date, the Holder shall be entitled to
elect by written notice to the Company at any time on or before its receipt
of
such certificate or certificates thereafter, to rescind such conversion, in
which event the Company shall immediately return the certificates representing
the shares of Series B Preferred Stock tendered for conversion.
2)
Obligation
Absolute; Partial Liquidated Damages
.
The
Company’s obligations to issue and deliver the Conversion Shares upon conversion
of Series B Preferred Stock in accordance with the terms hereof are absolute
and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation
to
the Company or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares. In the event a Holder shall elect to convert
any or all of its Series B Preferred Stock, the Company may not refuse
conversion based on any claim that such Holder or any one associated or
affiliated with the Holder of has been engaged in any violation of law,
agreement or for any other reason (other than the inability of the Company
to
issue shares of Common Stock as a result of the limitation set forth in Section
6(e) hereof) unless an injunction from a court, on notice, restraining and
or
enjoining conversion of all or part of this Series B Preferred Stock shall
have
been sought and obtained and the Company posts a surety bond for the benefit
of
the Holder in the amount of 150% of the Conversion Value of Series B Preferred
Stock which is subject to the injunction, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains judgment.
In
the absence of an injunction precluding the same, the Company shall issue
Conversion Shares or, if applicable, cash, upon a properly noticed conversion.
If the Company fails to deliver to the Holder such certificate or certificates
pursuant to Section 6(f)(1) within two Trading Days of the Share Delivery Date
applicable to such conversion, the Company shall pay to such Holder, in cash,
as
liquidated damages and not as a penalty, for each $5,000 of Conversion Value
of
Series B Preferred Stock being converted, $50 per Trading Day for each Trading
Day after the Share Delivery Date until such certificates are delivered. Nothing
herein shall limit a Holder’s right to pursue actual damages for the Company’s
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.
3)
Compensation
for “Buy-In on Failure to Timely Deliver Certificates Upon
Conversion
.
If the
Company fails to deliver to the Holder such certificate or certificates pursuant
to Section 6(f)(1) by a Share Delivery Date, and if after such Share Delivery
Date the Holder purchases (in an open market transaction or otherwise) Common
Stock to deliver in satisfaction of a sale by such Holder of the Conversion
Shares which the Holder was entitled to receive upon the conversion relating
to
such Share Delivery Date (a “
Buy-In
”),
then
the Company shall pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
of Common Stock that such Holder was entitled to receive from the conversion
at
issue multiplied by (2) the price at which the sell order giving rise to such
purchase obligation was executed. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to
an attempted conversion of shares of Series B Preferred Stock with respect
to
which the aggregate sale price giving rise to such purchase obligation is
$10,000, the Company shall be required to pay the Holder $1,000 hereunder.
The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In, together with applicable confirmations
and other evidence reasonably requested by the Company. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon conversion
of the shares of Series B Preferred Stock as required pursuant to the terms
hereof.
4)
Reservation
of Shares Issuable Upon Conversion
.
Subject
to Sections 4.3 and 6.1 of the Purchase Agreement, the Company covenants that
it
will at all times reserve and keep available out of its authorized and unissued
shares of Common Stock solely for the purpose of issuance upon conversion of
the
Series B Preferred Stock, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the
Holders, not less than such number of shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of
such
shares set forth in the Purchase Agreement) be issuable upon the conversion
of
all outstanding shares of Series B Preferred Stock. The Company covenants that
all shares of Common Stock that shall be so issuable shall, upon issue, be
duly
and validly authorized, issued and fully paid, nonassessable.
5)
Fractional
Shares
.
Upon a
conversion of the Series B Preferred Stock, the Company shall not be required
to
issue stock certificates representing fractional shares of Common Stock. All
fractional shares shall be carried forward and any fractional shares which
remain after a Holder converts all of his or her Series B Preferred Stock shall
be dropped and eliminated.
6)
Transfer
Taxes
.
The
issuance of certificates for shares of the Common Stock on conversion of the
Series B Preferred Stock shall be made without charge to the Holders thereof
for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Company shall not
be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such shares of Series B Preferred Stock so
converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been
paid.
7)
Absolute
Obligation
.
Except
as expressly provided herein, no provision of this Certificate shall alter
or
impair the obligation of the Company, which is absolute and unconditional,
to
pay the liquidated damages (if any) on, the shares of Series B Preferred Stock
at the time, place, and rate, and in the coin or currency, herein
prescribed.
Section
7
.
Certain
Adjustments
.
(a)
Stock
Dividends and Stock Splits
.
If the
Company, at any time subsequent to the Closing Date as long as the Series B
Preferred Stock is outstanding: (i) shall pay a stock dividend or otherwise
make
a distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any Securities issued pursuant to
the
Transaction Documents), (ii) subdivide outstanding shares of Common Stock into
a
larger number of shares, (iii) combine (including by way of reverse stock split
other than the Reverse Stock Split pursuant to Section 6(a) of this Agreement)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issue by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock outstanding after
such event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
(b)
Subsequent
Transactions
.
From
the date hereof until such time as no Purchaser holds any of the Securities,
the
Company shall be prohibited from effecting or entering into an agreement to
effect any transactions involving a “Variable Rate Transaction” or an “MFN
Transaction” (each as defined below). The term “Variable Rate Transaction” shall
mean a transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at
a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or
(B)
with a conversion, exercise or exchange price that is subject to being reset
at
some future date after the initial issuance of such debt or equity security
or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock.
The
term “MFN Transaction” shall mean a transaction in which the Company issues or
sells any securities in a capital raising transaction or series of related
transactions which grants to an investor the right to receive additional shares
based upon future transactions of the Company on terms more favorable than
those
granted to such investor in such offering. Any Purchaser shall be entitled
to
obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.
Notwithstanding the foregoing, this Section 7(b) shall not apply in respect
of
an Exempt Issuance, except that no Variable Rate Transaction or MFN Transaction
shall be an Exempt Issuance.
(c)
Subsequent
Rights Offerings
.
The
Company, at any time while the Series B Preferred Stock is outstanding, shall
not issue rights, options or warrants to holders of Common Stock entitling
them
to subscribe for or purchase shares of Common Stock at a price per share less
than the Conversion Price.
(d)
Price
Adjustment Upon Issuance of Additional Common Stock
.
From
and after the Closing Date and until such time as the Investors hold less than
20% of the Series B Preferred Stock, except for(i) Exempt Issuances which for
the Purpose of this Section 7 (d) are not to exceed 5% of the outstanding shares
of Common Stock for every two year period, (ii)
issuances
covered by Sections 7(a) and (iii) an issuance of Common Stock upon exercise
or
upon conversion of warrants, options or other convertible securities for which
an adjustment has already been made pursuant to this Section 7 (“
Additional
Shares of Common Stock
”)
,
as to
all of which this Section 7(d) does not apply,
in
the
event the Company closes on the sale or issuance of Common Stock at a price,
or
issues warrants, options, convertible debt or equity securities with a exercise
price per share or conversion price which is less than the Conversion Price
then
in effect (such lower sales pricer, conversion or exercise price, as the case
may be, being referred to as the “Lower Price", then and in such event, the
Conversion Price shall be reduced, concurrently with such issue or sale, to
the
Lower Price.
(e)
Pro
Rata Distributions
.
If the
Company, at any time after the Closing, shall distribute to all holders of
Common Stock (and not to Holders) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security, then in each
such
case the Conversion Price shall be determined by multiplying such Conversion
Price in effect immediately prior to the record date fixed for determination
of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the
then
fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case
the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(f)
Calculations
.
All
calculations under this Section 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held
by or
for the account of the Company or any of its subsidiaries. For purposes of
this
Section 7, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares and shares owned by subsidiaries, if
any) actually issued and outstanding.
(g)
Notice
to Holders.
(i)
Adjustment
to Conversion Price.
Whenever
the Conversion Price is adjusted pursuant to any of this Section 7, the Company
shall promptly mail to each Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. If the Company issues a variable rate security, despite the
prohibition thereon in the Purchase Agreement, the Company shall be deemed
to
have issued Common Stock at the lowest possible conversion or exercise price
at
which such securities may be converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement), or the lowest possible
adjustment price in the case of an MFN Transaction (as defined in the Purchase
Agreement).
(ii)
Notices
of Other Events
.
If (A)
the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a redemption of the Common Stock; (C)
the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock
or
any Fundamental Transaction, (E)
the
Company shall authorize the voluntary or involuntary dissolution, liquidation
or
winding up of the affairs of the Company; then in each such case, the Company
shall cause to be filed at each office or agency maintained for the purpose
of
conversion of the Series B Preferred Stock, and shall cause to be
mailed
to
the Holders at their last addresses as they shall appear upon the
stock
books
of
the
Company, at least 10 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating
(x)
the
date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled
to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification is expected to become
effective or close, and the date as of which it is expected that holders of
the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification or Fundamental Transaction;
provided
,
that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.
(h)
Exempt
Issuance
.
Notwithstanding the foregoing, no adjustment in the Conversion Price will be
made in respect of an Exempt Issuance.
(i)
Fundamental
Transaction
.
If, at
any time while this Series B Preferred Stock is outstanding, (i) the Company
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company effects any sale of all or substantially all of its assets
in
one or a series of related transactions, (iii) any tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “
Fundamental
Transaction
”),
then
upon any subsequent conversion of this Series B Preferred Stock, the Holder
shall have the right to receive, for each Conversion Share that would have
been
issuable upon such conversion absent such Fundamental Transaction, the same
kind
and amount of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of one share
of
Common Stock (the “
Alternate
Consideration
”).
For
purposes of any such conversion, the determination of the Conversion Price
shall
be appropriately adjusted to apply to such Alternate Consideration based on
the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any conversion of this Series B Preferred Stock following such
Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall file a new Certificate with the same terms and conditions
and
issue to the Holder new preferred stock consistent with the foregoing provisions
and evidencing the Holder’s right to convert such preferred stock into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (g) and
insuring that this Series B Preferred Stock (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. Notwithstanding the foregoing or any other provisions
of this Certificate, in the event that the agreement relating to a Fundamental
Transaction provides for the conversion or exchange of the Series B Preferred
Stock into equity or debt securities, cash or other consideration and the
agreement is approved by the holders of a majority of the then-outstanding
shares of Series B Preferred Stock, then the holders of the Series B Preferred
Stock shall have only the rights set forth in such agreement.
Section
8
.
Miscellaneous
.
(a)
Notices
.
Any and
all notices or other communications or deliveries to be provided by the Holders
hereunder, including, without limitation, any Notice of Conversion, shall be
in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service, addressed to the Company, at its principal address
as
reflected in its most recent filing with the Commission. Any and all notices
or
other communications or deliveries to be provided by the Company hereunder
shall
be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile
telephone number or address of such Holder appearing on the books of the
Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication
or
deliveries hereunder shall be deemed given when received, and any notice by
telecopier shall be effective if confirmation of receipt is given by the party
to whom the notice is transmitted.
(b)
Lost
or Mutilated Preferred Stock Certificate
.
If a
Holder’s Series B Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate, or in lieu
of
or in substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Series B Preferred Stock so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership thereof, and indemnity,
if
requested, all reasonably satisfactory to the Company.
(c)
Next
Business Day
.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
(d)
Headings
.
The
headings contained herein are for convenience only, do not constitute a part
of
this Certificate and shall not be deemed to limit or affect any of the
provisions hereof.
(e)
Amendment
.
This
Certificate may be amended with the consent of the holders of seventy-five
percent (75%) of the outstanding shares of Series B Preferred Stock, except
for
Beneficial Ownership Limitation which is governed by Section 6 (e).
RESOLVED,
FURTHER
,
that
the Chairman, the president or any vice-president, and the secretary or any
assistant secretary, of the Company be and they hereby are authorized and
directed to prepare and file a Certificate of Designation of Preferences, Rights
and Limitations in accordance with the foregoing resolution and the provisions
of Florida law.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate this as of this
February 20, 2008.
/s/:
Terence Francis Leong
Name:
Terence Francis Leong
Title:
Chief Executive Officer
|
ANNEX
A
NOTICE
OF CONVERSION
(TO
BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES B
PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series B
Convertible Preferred Stock indicated below, into shares of common stock, par
value $0.001 per share (the “
Common
Stock
”),
of
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
a
Florida corporation (the “
Company
”),
according to the conditions hereof, as of the date written below. If shares
are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.
Conversion
calculations:
Date
to Effect Conversion:
________________________________________
|
|
Number
of shares of Common Stock owned prior to Conversion:
_______________
|
|
Number
of shares of Series B Preferred Stock to be Converted:
________________
|
|
Value
of shares of Series B Preferred Stock to be Converted:
____________________
|
|
Number
of shares of Common Stock to be Issued:
___________________________
|
|
Certificate
Number of Series B Preferred Stock attached
hereto:_________________
|
|
Number
of Shares of Series B Preferred Stock represented by attached
certificate:_________
|
|
Number
of shares of Series B Preferred Stock subsequent to Conversion:
________________
|
[HOLDER]
By:
Name:
Title:
|