SECURITIES
PURCHASE AGREEMENT
NF
Energy Saving Corporation
21-Jia
Bei Si Dong Road, Tie Xi Qu
Shenyang,
P. R. China 110021
The
undersigned (the "
Investor
") hereby
confirms its agreement with you as follows:
1. This
Securities Purchase Agreement is made as of the date set forth below between NF
Energy Saving Corporation, a Delaware corporation (the "
Company
"), and the
Investor, which is one of _____ investors making an aggregate investment of
$_______.
2. The
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor (the “
Sale
”) a $_______
Senior Convertible Promissory Note (the “
Note
”), with an
initial conversion price of $3.00 for one share (a “
Note Share
”) of the
Company's Common Stock, par value $0.001 per share (the “Common Stock”). In
addition, at Closing, the Company will issue to the Investor that number of
warrants (“
Warrants
” and
together with the Note, the “
Securities
”) equal to
the aggregate principal amount of the Note subscribed for divided by six (6).
Each Warrant shall entitle the holder to purchase one share (a “
Warrant Share
”) of
the Company's Common Stock at an exercise price of $4.00 per share for a period
of 5 years commencing on the date of Closing (as defined in Section 2 of Annex I
attached hereto).
3. [Intentionally
omitted].
4. The
Company and the Investor agree that the purchase and sale of the Note is subject
to the Terms and Conditions for Purchase of the Securities attached hereto as
Annex I
and
incorporated herein by reference as if fully set forth herein. Unless otherwise
requested by the Investor in
Exhibit A
, the Note
and Warrants issued to the Investor will be issued in the Investor's name and
address as set forth below. The form of Note and form of Warrant are attached
hereto as
Exhibit
B
and
Exhibit
C
, respectively.
5. The
Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three years with the
Company or its affiliates, (b) neither it, nor any group of which it is a member
or to which it is related, beneficially owns (including the right to acquire or
vote) any securities of the Company, and (c) neither it, nor any affiliate of
the Investor, has any direct or indirect affiliation or association with any
Finance and Regulatory Authority, Inc. ("
FINRA
") member.
Exceptions:
(If no
exceptions, write "none." If left blank, response will be deemed to be
"none.")
Please
confirm that the foregoing correctly sets forth the agreement between us by
signing in the space provided below for that purpose
.
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Dated
as of: __________, 2010
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By:
____________________
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Name:
Title:
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Address:
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AGREED
AND ACCEPTED:
NF
ENERGY SAVING CORPORATION
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By:
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Name:
Gang Li
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Title:
Chief Executive Officer
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[SECURITIES
PURCHASE AGREEMENT SIGNATURE PAGE]
Annex
I
Terms
and Conditions for Purchase of Securities
1.
Agreement to Sell and Purchase
Securities.
1.1
Purchase and Sale.
At the
Closing (as defined in
Section 2
), the
Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and subject to the conditions set forth herein, for an
aggregate purchase price of $_______ (the “
Purchase Price
”), the
Note described in
Paragraph 2
of the
Securities Purchase Agreement attached hereto (collectively with this
Annex I
and the other
exhibits attached hereto, this “
Agreement
” and
together with the Note and the Warrants, the “
Transaction
Documents
”), and the Investor will receive from the Company Warrants to
purchase that number of shares of Common Stock equal to the Purchase Price
divided by six (6).
1.2
Investor.
The Investor must
execute and deliver a Securities Purchase Agreement, and must complete a
Certificate Questionnaire (in the form attached as
Exhibit A
hereto) and
an Investor Questionnaire (in the form attached as
Exhibit D
hereto) in
order to purchase the Securities.
1.3
Use of
Proceeds.
The Company will use the net proceeds from the sale
of the Securities for working capital, capital expenditures and to finance
future acquisitions, if any.
2.
Delivery of the Units at
Closing.
The completion of the purchase and sale of the
Securities (the “
Closing
”) shall occur
on a date mutually agreed upon by the Company and the Investor (the “
Closing Date
”), which
date shall not be later than February 26, 2010 as such date may be extended upon
the mutual agreement of the Company and the Investor (the “
Outside Date
”). At
the Closing, the Company shall deliver to the Investor a Note representing the
aggregate dollar amount of the Note set forth in
Paragraph 2
of the
Securities Purchase Agreement, along with a Warrant to purchase the number of
shares of Common Stock equal to such Investor's Purchase Price divided by six
(6). In exchange for the delivery of the Securities, the Investor shall pay the
Purchase Price to the Company, net of all closing fees and expenses, by wire
transfer of immediately available funds pursuant to the Company's written
instructions.
The
Company's obligation to issue and sell the Securities to the Investor shall be
subject to the satisfaction of the following conditions, any one or more of
which may be waived by the Company: (a) prior receipt by the Company of a copy
of this Agreement executed by the Investor; (b) the accuracy of the
representations and warranties made by the Investor in this Agreement and the
fulfillment of the obligations of the Investor under this Agreement on or prior
to the Closing; and (c) the absence of any order, writ, injunction, judgment or
decree that questions the validity of the Transaction Documents or the right of
the Company or the Investor to enter into such Transaction Documents or to
consummate the transactions contemplated hereby and thereby.
The
Investor's obligation to purchase the Securities shall be subject to the
satisfaction of the following conditions, any one or more of which may be waived
by the Investor: (a) the accuracy of the representations and warranties made by
the Company in this Agreement on the date hereof and, if different, on the
Closing Date; (b) the execution and delivery by the Company of the Note and the
Warrant; (c) the fulfillment of the obligations of the Company under this
Agreement on or prior to the Closing; and (d) the absence of any order, writ,
injunction, judgment or decree that questions the validity of the Transaction
Documents or the right of the Company or
the Investor to enter into
such Transaction Documents or to consummate the transactions contemplated hereby
and thereby.
In the
event that the Closing does not occur on or before the Outside Date as a result
of the Company's failure to satisfy any of the conditions set forth above (and
such condition has not been waived by the Investor), the Investor shall have no
further obligations hereunder. For purposes of this Agreement, "
Business Day
" shall
mean any day other than a Saturday, Sunday or other day on which the New York
Stock Exchange or commercial banks located in New York, New York are permitted
or required by law to close.
3.
Representations, Warranties and
Covenants of the Company
. Except as set forth on
Schedule 3
attached
hereto and incorporated herein by reference or in the SEC Reports (as defined
below), the Company hereby represents and warrants to, and covenants with, the
Investor as of the date hereof and the Closing Date, as follows:
3.1
Organization
. The Company is
duly incorporated and validly existing in good standing under the laws of the
State of Delaware. The Company has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and is
registered or qualified to do business and in good standing in each jurisdiction
in which it owns or leases property or transacts business and where the failure
to be so qualified would have a material adverse effect upon the Company and its
subsidiaries as a whole or the business, financial condition, properties,
operations or assets of the Company and its subsidiaries as a whole or the
Company's ability to perform its obligations under the Transaction Documents in
all material respects (“
Material Adverse
Effect
”), and no proceeding has been instituted or to the knowledge of
the Company, threatened, in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification. The Company has no "subsidiaries" (as defined in Rule 405 under
the Securities Act of 1933, as amended (the “
Securities
Act
”)).
3.2
Due Authorization
. The Company
has all requisite power and authority to execute, deliver and perform its
obligations under the Transaction Documents. The execution and delivery of the
Transaction Documents, and the consummation by the Company of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
and no further action on the part of the Company or its Board of Directors or
stockholders is required. The Transaction Documents have been validly executed
and delivered by the Company and constitute legal, valid and binding agreements
of the Company enforceable against the Company in accordance with their terms,
except to the extent (i) rights to indemnity and contribution may be limited by
state or federal securities laws or the public policy underlying such laws, (ii)
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and (iii) such enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.3
Non-Contravention
. The
execution and delivery of the Transaction Documents, the issuance and sale of
the Securities to be sold by the Company under the Securities Purchase
Agreements, the fulfillment of the terms of the Transaction Documents and the
consummation of the transactions contemplated thereby, including the issuance of
the shares of Common Stock underlying the Note and Warrants (the “
Note Shares
” and
“
Warrant
Shares
,” respectively) in accordance with the respective terms and
conditions thereof, will not (A) result in a conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
bond, debenture, note or other evidence of indebtedness, or any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any subsidiary (each, a
"
Subsidiary
"
and collectively, the "
Subsidiaries
") is a
party or by which the Company or the Subsidiaries or their respective properties
are bound, (ii) the Certificate of Incorporation, Bylaws, or other
organizational documents of the Company, as amended, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority binding upon the Company or any
Subsidiary or their respective properties, which conflict, violation or default,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect, or (B) except for the liens created under the Note (and the
promissory note of like tenor issued to the other investor), result in the
creation or imposition of any lien, encumbrance, claim, security interest or
restriction whatsoever upon any of the material properties or assets of the
Company or the Subsidiaries or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any material bond, debenture,
note or any other evidence of indebtedness or any material indenture, mortgage,
deed of trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which it is bound or to which any of the property or
assets of the Company is subject. No consent, approval, authorization or other
order of, or registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body is required for the execution
and delivery of the Transaction Documents by the Company, other than such as
have been made or obtained, and except for any filings required to be made under
federal or state securities laws.
3.4
Capitalization
. The authorized
capital stock of the Company consists of 50,000,000 shares of Common Stock, of
which 13,291,387 shares are outstanding, and (ii) warrants to purchase 102,779
shares of Common Stock that are issued and outstanding. The Note Shares and the
Warrant Shares have been duly authorized and reserved for issuance, and when
issued in accordance with the terms of the Note or the Warrants, as the case may
be, will be duly and validly issued, fully paid and nonassessable, subject to no
lien, claim or encumbrance (except for any such lien, claim or encumbrance
created, directly or indirectly, by the Investor). The outstanding shares of
capital stock of the Company have been duly and validly issued and are fully
paid and nonassessable, have been issued in compliance with the registration
requirements of federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. The Company owns all of the outstanding capital stock of
each Subsidiary, free and clear of all liens, claims and encumbrances. Other
than as set forth above, there are no outstanding rights (including, without
limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of capital stock or
other equity interest in the Company or any Subsidiary, or any contract,
commitment, agreement, understanding or arrangement of any kind to which the
Company or any Subsidiary is a party and providing for the issuance or sale of
any capital stock of the Company or of any Subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options. There are no
shareholders agreements, voting agreements or other similar agreements with
respect to the Common Stock to which the Company is a party.
3.5
Legal Proceedings
. There is no
legal or governmental proceeding pending, or to the knowledge of the Company,
threatened, to which the Company or any Subsidiary is a party or of which the
business or property of the Company or any Subsidiary is subject that is
required to be disclosed and that is not so disclosed in the SEC Reports.
Neither the Company nor any Subsidiary is subject to any injunction, judgment,
decree or order of any court, regulatory body, administrative agency or other
government body.
3.6
No Violations
. Neither the
Company nor any Subsidiary is in violation of its Certificate of Incorporation,
Bylaws or other organizational documents, as amended, or in violation of any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect, and neither the Company nor any Subsidiary is in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in the performance of any bond,
debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or such
Subsidiary or their respective properties are bound, which default is reasonably
likely to have a Material Adverse Effect.
3.7
Governmental Permits, Etc
.
Each of the Company and the Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department or body that are currently
necessary for the operation of the business of the Company and the Subsidiaries
as currently conducted, except where the failure to currently possess such
franchises, licenses, certificates and other authorizations is not reasonably
likely to have a Material Adverse Effect.
3.8
Intellectual
Property
.
(a)
Each of the Company and the Subsidiaries has ownership of, or a license or other
legal right to use, all material patents, copyrights, trade secrets, trademarks,
customer lists, designs, manufacturing or other processes, computer software,
systems, data compilation, research results or other proprietary rights used in
the business of the Company (collectively, "
Intellectual
Property
").
(b)
All material licenses or other material agreements under which (i) the Company
or any Subsidiary employs rights in Intellectual Property, or (ii) the Company
or any Subsidiary has granted rights to others in Intellectual Property owned or
licensed by the Company or any Subsidiary are in full force and effect, and
there is no default by the Company with respect thereto.
(c)
The Company has taken all steps reasonably required in accordance with sound
business practice and business judgment to establish and preserve the ownership
of all material Intellectual Property owned by the Company or any
Subsidiary.
(d)
To the knowledge of the Company, (i) the present business, activities and
products of the Company or any Subsidiary do not infringe upon any intellectual
property of any other person; (ii) neither the Company nor any Subsidiary is
making unauthorized use of any confidential information or trade secrets of any
person; and (iii) the activities of any of the employees of the Company or any
Subsidiary do not violate any agreements or arrangements related to confidential
information or trade secrets of third parties.
(e)
No proceedings are pending, or to the knowledge of the Company, threatened,
which challenge the rights of the Company or any Subsidiary to the use of
Intellectual Property.
3.9
Financial Statements
. The
financial statements of the Company and the related notes contained in the SEC
Reports present fairly and accurately in all material respects the financial
position of the Company as of the dates therein indicated, and the results of
its operations, cash flows and the changes in shareholders' equity for the
periods therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit adjustments. Such
financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (“
GAAP
”)
at the times and throughout the periods therein specified.
3.10
No Material Adverse Change
.
Except as disclosed in the SEC Reports or in any press releases issued by the
Company at least two Business Days prior to the date of this Agreement, since
January 1, 2007, there has not been (i) an event, circumstance or change that
has had or is reasonably likely to have a Material Adverse Effect, (ii) any
obligation incurred by the Company or any Subsidiary, direct or contingent, that
is material to the Company, (iii) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, (iv) any loss or
damage (whether or not insured) to the physical property of the Company or any
Subsidiary which has had a Material Adverse Effect, or (v) any issuance of any
equity securities to any officer, director or affiliate, except pursuant to
existing Company stock option plans.
3.11
Reporting Status
. The Company
has timely made all filings required under the Securities Exchange Act of 1934,
as amended (the “
Exchange Act
”), since
January 1, 2007 (the “SEC Reports”), and all of those documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the respective dates thereof
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made not
misleading.
3.12
Accountants
. ZYCPA Company
Limited, who expressed their opinion with respect to the consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2008, have advised the Company that they are, and to the knowledge
of the Company they are, independent accountants certified by and in good
standing with the Public Company Accounting Oversight Board as required by the
Securities Act and the rules and regulations promulgated
thereunder.
3.13
Contracts
. Except for those
contracts that are substantially or fully performed or expired by their terms,
the contracts listed as exhibits to or described in the SEC Reports that are
material to the Company and all amendments thereto, are in full force and effect
on the date hereof, and neither the Company nor, to the Company's knowledge, any
other party to such contracts is in breach of or default under any of such
contracts, except for any breach that is not reasonably likely to have a
Material Adverse Effect.
3.14
Taxes
. Each of the Company and
the Subsidiaries has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and the Company has no knowledge of a tax deficiency which has been asserted or
threatened against the Company or any Subsidiary.
3.15
Investment Company
. The
Company is not an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for an investment company, within the
meaning of the Investment Company Act of 1940, as amended, and will not be
deemed an "investment company" as a result of the transactions contemplated by
this Agreement.
3.16
Prohibitions
. Neither the
Company nor any person acting on its behalf or at its direction has in the past
taken any action to sell, offer for sale or solicit offers to buy any securities
of the Company which would bring the offer or sale of the Securities as
contemplated by this Agreement within the provisions of Section 5 of the
Securities Act.
3.17
Related Party Transactions
.
Except as described in the SEC Reports, to the knowledge of the Company, no
transaction has occurred between or among the Company or any of its affiliates,
officers or directors or any affiliate or affiliates of any such officer or
director that requires disclosure pursuant to Section 13, 14 or 15(d) of the
Exchange Act.
3.18
Books and Records
. The books,
records and accounts of the Company accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets of, and the
operations of, the Company. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.19
Uplisting
. The
Company will use its reasonable best efforts to obtain a listing of its Common
Stock on either the NASDAQ Capital Market, the NYSE Amex or other U.S. national
securities exchange as soon as reasonably practicable (an “
Uplisting
”).
3.20
New Auditor
. Within
ninety (90) days of an Uplisting, the Company shall have engaged an independent
public accounting firm (the "
New Auditor
")
agreeable to ARC China, Inc. (“
ARC
China
”).
3.21
New Hires
. The
Company agrees to: (i) hire a full-time Investment Manager, who can communicate
in the English language fluently, and who is agreeable to ARC China; and (ii)
use its reasonable commercial efforts to, within 30 days of the Closing Date,
hire a US-based employee, who can communicate in the English language fluently
and who is agreeable to ARC China, to attend road shows and speak at conferences
and to investors about the Company.
3.22
Affiliate
Business
. The Company agrees to cause its wholly-owned
subsidiary, LiaoNing Nengfa Weiye Energy Technology Co. LTD (“
Nengfa Energy
”), to
enter into a preferred provider agreement with Nengfa Weiye Tieling Valve
Joint-stock Co. Ltd. (“
Tieling Valve
”) as
soon as practicable, which preferred provider agreement is to provide that
Nengfa Energy shall have a right of first refusal with respect to all flow
control contracts obtained by Tieling Valve and that Tieling Valve’s aggregate
revenue on such contracts shall be capped at an average of 2.5% per each year of
the agreement..
3.23
Title to
Assets
. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property owned by them (if any) and
good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free
and clear of all liens, except for liens that do not materially affect the value
of such property and do not materially interfere with the use made and proposed
to be made of such property by the Company and the Subsidiaries and liens for
the payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance.
3.24
Sarbanes-Oxley; Internal Accounting
Controls
. The Company is in material compliance with all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the Closing Date. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the SEC Reports is recorded, processed, summarized
and reported, within the time periods specified in the SEC's rules and
forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “
Evaluation
Date
”). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no changes in the Company’s internal control over financial reporting
(as such term is defined in the Exchange Act) that has materially affected, or
is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
3.25
Certain Fees
. No
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other person with respect to the transactions
contemplated by the Transaction Documents. The Investor shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of
other persons for fees of a type contemplated in this Section 3.25 that may be
due in connection with the transactions contemplated by the Transaction
Documents.
3.26
Private
Placement
. Assuming the accuracy of the Investor’s
representations and warranties set forth in
Section 4
, no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Investor as contemplated hereby.
3.27
Registration
Rights
. Other than the piggyback registration rights of the
Investor set forth in the Note and Warrants, no person has any right to cause
the Company to effect the registration under the Securities Act of any
securities of the Company.
3.28
Solvency
. Based on
the consolidated financial condition of the Company as of the Closing Date
before giving effect to the receipt by the Company of the proceeds from the sale
of the Securities hereunder: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date.
Schedule 3.28
sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “
Indebtedness
” means
(x) any liabilities for borrowed money or amounts owed in excess of $100,000
(other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.
3.29
Foreign Corrupt
Practices
. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has: (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law or (iv) violated in any
material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended.
3.30
Furnishing of
Information
. Until the Investor no longer owns any Securities,
the Company covenants to maintain the registration of the Common Stock under
Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. As long as the Investor owns any Securities, if the Company is
not required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Investor and make publicly available in accordance with Rule
144(c) such information as is required for the Investor to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.
3.31
Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities to the
Investor in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Investor.
3.32
Indemnification of
Investor
. The Company agrees to indemnify and hold the
Investor and its directors, officers, shareholders, members, partners,
employees, agents, successors and permitted assigns (and any other persons with
a functionally equivalent role of a person holding such titles notwithstanding a
lack of such title or any other title), each person who controls such Investor
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, shareholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role
of a person holding such titles notwithstanding a lack of such title or any
other title) of such controlling person (each, an “
Investor Party
”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Investor Party may suffer or incur as a result of or
relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction
Documents or (b) any action instituted against an Investor in any capacity, or
any of them or their respective affiliates, by any stockholder of the Company
who is not an affiliate of such Investor, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of such Investor’s representations, warranties or covenants
under the Transaction Documents to which it is a party or any agreements or
understandings such Investor may have with any such stockholder or any
violations by the Investor of state or federal securities laws or any conduct by
such Investor which constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against any Investor
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Investor Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Investor Party. Any
Investor Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Investor Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Investor
Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company
will not be liable to any Investor Party under this Agreement (y) for any
settlement by a Investor Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Investor Party’s breach of any of the representations,
warranties, covenants or agreements made by such Investor Party in this
Agreement or in the other Transaction Documents to which it is a party or from
such Investor Party’s fraud, gross negligence, willful misconduct or
malfeasance.
3.33
Reservation and Listing of
Securities
. The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance of the Notes Shares and Warrant
Shares in such amount as may then be required to fulfill its obligations in full
under the Note and Warrants.
4.
Representations, Warranties and
Covenants of the Investor
.
4.1
Investor Knowledge and Status
.
The Investor represents and warrants to, and covenants with, the Company that:
(i) the Investor is an "accredited investor" as defined in Regulation D under
the Securities Act, is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in securities
presenting an investment decision similar to that involved in the purchase of
the Securities, and has requested, received, reviewed and considered all
information it deemed relevant in making an informed decision to purchase the
Securities; (ii) the Investor understands that the Securities are “restricted
securities” and have not been registered under the Securities Act and is
acquiring the Securities in the ordinary course of its business and for its own
account for investment only, has no present intention of distributing any of the
Securities and has no arrangement or understanding with any other persons
regarding the distribution of the Securities; (iii) the Investor understands
that the Note Shares and Warrant Shares (together the “
Underlying
Securities
”) will be “restricted securities” when issued and will not
have been registered under the Securities Act and will be acquiring the
Underlying Securities in the ordinary course of its business and for its own
account for investment only, has no present intention of distributing any of the
Underlying Securities and has no arrangement or understanding with any other
persons regarding the distribution of the Underlying Securities (iv) the
Investor will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Securities nor any of the Underlying
Securities except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated thereunder;
(v) the Investor has completed the Investor Questionnaire attached hereto as
Exhibit F
for
use in preparation of the Registration Statement to be filed on Form S-1 (or any
similar or successor form with the SEC (the “Registration Statement”)) and for
determining the availability of state "Blue Sky" exemptions and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the Closing Date; (vi) the Investor will notify the Company promptly of
any change in any of such information until such time as the Investor has sold
all of its registrable securities or until the Company is no longer required to
keep the Registration Statement effective; and (vii) the Investor has, in
connection with its decision to purchase the Securities, relied upon the
representations and warranties of the Company contained herein and the
information contained in the SEC Reports. The Investor understands that the
issuance of the Securities to the Investor has not been registered under the
Securities Act, or registered or qualified under any state securities law, in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the representations made by the Investor in this Agreement.
No person is authorized by the Company to provide any representation that is
inconsistent with or in addition to those contained herein or in the SEC
Reports, and the Investor acknowledges that it has not received or relied on any
such representations.
4.2
Transfer of Shares
. The
Investor agrees that it will not make any sale, transfer or other disposition of
the Note, the Note Shares, the Warrants or the Warrant Shares (a "
Disposition
") other
than Dispositions that are made pursuant to the Registration Statement in
compliance with any applicable prospectus delivery requirements or that are
exempt from registration under the Securities Act.
4.3
Power and Authority
. The
Investor represents and warrants to the Company that (i) the Investor has full
right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and (ii) this Agreement constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
to the extent (i) rights to indemnity and contribution may be limited by state
or federal securities laws or the public policy underlying such laws, (ii) such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and (iii) such enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4
Short Position
. From the
earlier of (i) 30 days prior to the date hereof and (ii) the date the Investor
learned of the Sale, neither the Investor nor any affiliate has directly or
indirectly established or agreed to establish, nor will the Investor or any
affiliate directly or indirectly establish or agree to establish, any hedge,
"put equivalent position" (as defined in Rule 16a-1 under the Exchange Act) or
other position in the Common Stock that is outstanding on the Closing Date and
that is designed to or could reasonably be expected to lead to or result in a
Disposition by the Investor or any other person or entity. For purposes hereof,
a "hedge or other position" includes, without limitation, effecting any short
sale or having in effect any short position (whether or not such sale or
position is against the box and regardless of when such position was entered
into) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to the Common Stock or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Common Stock. The Investor acknowledges that this representation is made for the
benefit of the Company, which may assert claims arising out of the breach of
this
Section
4.4
.
4.5
No Investment, Tax or Legal
Advice
. The Investor understands that nothing in the SEC Reports, this
Agreement, or any other materials presented to the Investor in connection with
the purchase and sale of the Securities constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Securities.
4.6
Confidential Information
. The
Investor covenants that from the date hereof it will maintain in confidence all
material non-public information regarding the Company received by the Investor
from the Company, including the receipt and content of any Suspension Notice (as
defined in the Registration Rights Agreement) until such information (a) becomes
generally publicly available other than through a violation of this provision by
the Investor or its agents or (b) is required to be disclosed in legal
proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority or
similar process); provided, however, that before making any disclosure in
reliance on this
Section 4.6
, the
Investor will give the Company prior written notice specifying the circumstances
giving rise thereto and will furnish only that portion of the non-public
information which is legally required and will exercise its commercially
reasonable efforts to ensure that confidential treatment will be accorded any
non-public information so furnished. The Investor will not trade, or provide
material non-public information about the Company to any other party who may or
does trade, the Company’s securities when the Investor is in possession of
material non-public information about the Company.
4.7
Due Diligence Review
. As part,
and only part, of its due diligence review, the Investor acknowledges that it
has reviewed the Company’s audited financial statements for fiscal years ended
December 31, 2007 and 2008.
4.8
Additional Acknowledgement
.
The Investor acknowledges that it has independently evaluated the merits of the
transactions contemplated by this Agreement, that it has independently
determined to enter into the transactions contemplated hereby, that it is not
relying on any advice from or evaluation by any other person, that it is relying
solely upon the representations and warranties of the Company set forth in this
Agreement in making its investment decision, and that it is not acting in
concert with any other person in making its purchase of the Securities
hereunder. The Investor acknowledges that the Investor has not taken any actions
that would deem the Investor to be a member of a "group" for purposes of Section
13(d) of the Exchange Act.
5.
Transfer
Restrictions;
Legends
. Certificates
evidencing the Note, Note Shares, the Warrants and the Warrant Shares (the
“
Legended
Shares
” shall each
bear any legend as required by the "blue sky" laws of any state and a
restrictive legend in substantially the following form, until such time as they
are not required:
[NEITHER THESE SECURITIES NOR THE
SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
REGISTERED]
[THESE
SECURITIES HAVE NOT BEEN REGISTERED]
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
The
Company acknowledges and agrees that an Investor may from time to time pledge,
and/or grant a security interest in, some or all of the Legended Shares in
connection with applicable securities laws, pursuant to a bona fide margin
agreement in compliance with a bona fide margin loan. Such a pledge would not be
subject to approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in connection with a
subsequent transfer or foreclosure following default by the Investor transferee
of the pledge. No notice shall be required of such pledge, but the Investor's
transferee shall promptly notify the Company of any such subsequent transfer or
foreclosure. The Investor acknowledges that the Company shall not be responsible
for any pledges relating to, or the grant of any security interest in, any of
the Legended Shares or for any agreement, understanding or arrangement between
the Investor and its pledgee or secured party. At the appropriate Investor's
expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Legended Shares may reasonably request in connection
with a pledge or transfer of such Legended Shares, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders thereunder.
6.
Public
Statements
. The Company agrees to disclose on a Current Report
on Form 8-K the consummation of the sale of the Securities and the material
terms thereof, including pricing, which shall be filed with the SEC within two
Business Days after the Closing. The Company will not issue any public
statement, press release or any other public disclosure listing the Investor as
a purchaser of the Securities without the Investor's prior written consent,
except as may be required by applicable law or rules of any exchange on which
the Company's securities are listed.
7.
Notices
. All
notices, requests, consents and other communications hereunder shall be in
writing, shall be delivered (A) if within the United States, by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (B) if from outside the United
States, by International Federal Express (or comparable service) or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, upon the Business Day received, (ii) if delivered by
nationally recognized overnight carrier, one Business Day after timely delivery
to such carrier, (iii) if delivered by International Federal Express (or
comparable service), two Business Days after timely delivery to such carrier,
(iv) if delivered by facsimile, upon electric confirmation of receipt and shall
be addressed as follows, or to such other address or addresses as may have been
furnished in writing by a party to another party pursuant to this
paragraph:
|
(a)
if to the Company, to:
|
NF
Energy Saving Corporation
21-Jia
Bei Si Dong Road, Tie Xi Qu
Shenyang,
P. R. China 110021
Attention:
Mr. Gang Li
Facsimile:
(8624) 2354-0536
|
|
|
|
|
with
a copy to:
|
Golenbock
Eiseman Assor Bell & Peskoe LLP
437
Madison Avenue
New
York, New York 10022
Attention:
Andrew D. Hudders, Esq.
Facsimile:
(212) 754-0330
|
(b)
if to the Investor, at its address on the signature page to the
Securities Purchase Agreement.
8.
Amendments;
Waiver
. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and the Investor. Any waiver of a
provision of this Agreement must be in writing and executed by the party against
whom enforcement of such waiver is sought.
9.
Headings
. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
10.
Entire Agreement;
Severability
. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof. If any provision contained in this Agreement is
determined to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
11.
Governing Law; Submission to
Jurisdiction
. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of Delaware,
without giving effect to conflict of laws. The parties hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way to
this Agreement shall be brought and enforced in the courts of the State of New
York or of the United States of America in the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The parties hereby waive any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum. Any process or summons to
be served upon a party may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address for notices set forth in this Agreement. Such
mailing shall be deemed personal service and shall be legal and binding upon
such party in any action, proceeding or claim. The parties agree that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys’ fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefore.
12.
Counterparts
. This Agreement
may be executed in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties.
13.
Successors and
Assigns
. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. Neither party
may assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other party (other than by merger).
14.
Fees and
Expenses
. Except as expressly set forth in the funds flow
memorandum dated as of the date hereof or the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Investor.
15.
Survival
.
Sections 3
,
4
,
6
,
10
and
12-14
shall survive
the Closing and the delivery of the Securities for the applicable statute of
limitations.
16.
Severability
. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
17.
Remedies
. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Investor and the Company will be
entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at law
would be adequate.
[Remainder
of This Page Intentionally Left Blank]
EXHIBIT
A
NF
ENERGY SAVING CORPORATION
CERTIFICATE
QUESTIONNAIRE
Pursuant
to
Section 4
of
the Agreement, please provide us with the following information:
|
1.
|
The
exact name in which your Note and Warrants are to be registered (this is
the name that will appear on your stock certificate(s) for the Note Shares
and the Warrant Shares). You may use a nominee name if
appropriate:
|
|
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|
|
|
|
|
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2.
|
If
a nominee name is listed in response to Item 1 above, the relationship
between the Investor and such nominee:
|
|
|
|
|
|
|
|
|
3.
|
The
mailing address of the registered holder listed in response to Item 1
above:
|
|
|
|
|
|
|
|
|
4.
|
The
Social Security Number or Tax Identification Number of the registered
holder listed in the response to Item 1 above:
|
|
|
Note: If
the registered holder does not have a Social Security or Tax Identification
Number, please provide a copy of the registered holder's passport, or if an
entity, a copy of the passport of one of the registered holder's
principals.
EXHIBIT
B
NF
ENERGY SAVING CORPORATION
FORM
OF NOTE
Attached
hereto.
EXHIBIT
C
NF
ENERGY SAVING CORPORATION
FORM
OF WARRANT
Attached
hereto.
EXHIBIT
D
NF
ENERGY SAVING CORPORATION
INVESTOR
QUESTIONNAIRE
(All
information will be treated confidentially)
To: NF
Energy Saving Corporation
The
undersigned hereby acknowledges the following:
This
Investor Questionnaire ("
Questionnaire
") must
be completed by a potential investor in connection with the offer and sale of a
Senior Convertible Promissory Note (the “
Note
”), and warrants
(“
Warrants
”) to
purchase shares of Common Stock, par value $0.001 per share (“
Common Stock
”), of NF
Energy Saving Corporation (the "
Company
"). The Note
and Warrants (together the “
Securities
”) are
being offered and sold by the Company without registration under the Securities
Act of 1933, as amended (the "
Securities Act
"), and
the securities laws of certain states, in reliance on the exemptions contained
in Section 4 of the Securities Act and on Regulation D promulgated thereunder
and in reliance on similar exemptions under applicable state laws. The Company
must determine that a potential investor meets certain suitability requirements
before offering or selling the Securities to such investor. The purpose of this
Questionnaire is to assure the Company that the investor will meet the
applicable suitability requirements. The information supplied by the undersigned
will be used in determining whether the undersigned meets such criteria, and
reliance upon the private offering exemption from registration is based in part
on the information herein supplied.
This
Questionnaire does not constitute an offer to sell or a solicitation of an offer
to buy any security. The undersigned's answers will be kept strictly
confidential. However, by signing this Questionnaire the undersigned will be
authorizing the Company to provide a completed copy of this Questionnaire to
such parties as the Company deems appropriate in order to ensure that the offer
and sale of the Securities will not result in a violation of the Securities Act
or the securities laws of any state and that the undersigned otherwise satisfies
the suitability standards applicable to the investor of the Securities. All
potential investors must answer all applicable questions and complete, date and
sign this Questionnaire. The undersigned shall print or type its responses and
attach additional sheets of paper if necessary to complete its answers to any
item.
A.
Background
Information
|
Name:
|
_____________________________________________________________________
|
|
|
|
|
Business
Address:
|
_____________________________________________________________________
|
|
|
(Number
and Street); (City) (State); (Zip Code)
|
|
Telephone
Number:
|
(_____)
______________________________________________________________
|
|
|
|
|
Residence
Address:
|
_____________________________________________________________________
|
|
|
_____________________________________________________________________
|
|
|
(Number
and Street); (City) (State); (Zip
Code)
|
|
Telephone Number:
|
(_____)
_______________________________________________________
|
|
Age:
_________________
|
Citizenship:
___________________
|
Where
registered to vote:
______________________
|
If a
corporation, partnership, limited liability company, trust or other
entity:
|
|
|
|
Type
of
entity:
|
_____________________________________________________________________
|
|
State
of
formation:_____________________________
|
Date
of
formation::_____________________________
|
Social Security or Taxpayer
Identification No.
__________________________________
Send all
correspondence to (check one): ____________Residence Address ____________
Business Address
B.
Status as Accredited
Investor
The
undersigned is an "accredited investor" as such term is defined in Regulation D
under the Securities Act, because at the time of the sale of the Shares the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):
_____ (1)
a bank as defined in Section 3(a)(2) of the Securities Act, or a savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary capacity; a broker
or dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934; an insurance company as defined in Section 2(13) of the Securities Act; an
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that act; a Small
Business Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with the investment decisions made solely by persons that
are accredited investors;
_____ (2)
a private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;
_____ (3)
an organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, as a corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Shares
offered, with total assets in excess of $5,000,000;
_____ (4)
a natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of such person's purchase of the Shares exceeds
$1,000,000
1
;
_____ (5)
a natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year;
_____ (6)
a trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares offered, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
_____ (7)
an entity in which all of the equity owners are accredited investors (as defined
above).
C.
Representations
The
undersigned hereby represents and warrants to the Company as
follows:
1.
Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view to any
resale, fractionalization, division, or distribution thereof.
2.
The information contained herein is complete and accurate and may be
relied upon by the Company, and the undersigned will notify the Company
immediately of any material change in any of such information occurring prior to
the closing, if any, with respect to the purchase of the Securities by the
undersigned or any co-Investor.
3.
There are no suits, pending litigation, or claims against the undersigned that
could materially affect the net worth of the undersigned as reported in this
Questionnaire.
4.
The undersigned acknowledges that there may occasionally be times when the
Company, based on the advice of its counsel, determines that it must suspend the
use of the Prospectus forming a part of the Registration Statement (as such
terms are defined in the Securities Purchase Agreement to which this
Questionnaire is attached) until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the Securities
and Exchange Commission or until the Company has amended or supplemented such
Prospectus. The undersigned is aware that, in such event, the Securities will
not be subject to ready liquidation, and that any Securities purchased by the
undersigned would have to be held during such suspension. The overall commitment
of the undersigned to investments which are not readily marketable is not
excessive in view of the undersigned's net worth and financial circumstances,
and any
purchase of
the Securities will not cause such commitment to become excessive. The
undersigned is able to bear the economic risk of an investment in the
Securities.
1
As used
in this Questionnaire, the term "net worth" means the excess of total assets
over total liabilities. In computing net worth for the purpose of subsection
(4), the principal residence of the investor must be valued at cost, including
cost of improvements, or at recently appraised value by a professional
appraiser. In determining income, the investor should add to the investor's
adjusted gross income any amounts attributable to tax exempt income received,
losses claimed as a limited partner in any limited partnership, deductions
claimed for depreciation, contributions to an IRA or KEOGH retirement plan,
alimony payments, and any amount by which income from long-term capital gains
has been reduced in arriving at adjusted gross income.
5.
The undersigned has carefully considered the potential risks relating to
the Company and a purchase of the Securities and fully understands that the
Securities are speculative investments which involve a high degree of risk of
loss of the undersigned's entire investment. Among others, the undersigned has
carefully considered each of the risks described in the Company's Annual Report
on Form 10-K for the year ended December 31, 2008.
6.
The following is a list of all states and other jurisdictions in which
blue sky or similar clearance will be required in connection with the
undersigned's purchase of the Securities:
________________________________________
________________________________________
________________________________________
The
undersigned agrees to notify the Company in writing of any additional states or
other jurisdictions in which blue sky or similar clearance will be required in
connection with the undersigned's purchase of the Shares.
IN
WITNESS WHEREOF, the undersigned has executed this Questionnaire this ____ day
of February, 2010, and declares under oath that it is truthful and
correct.
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Investor
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Name:
Title:
(required
for an Investor that is a
corporation,
partnership, trust or
other
entity)
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NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR
(B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
CONVERTIBLE
SECURED PROMISSORY NOTE
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US$______
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Shenyang,
China
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__________,
2010
Pursuant
to the terms of the Securities Purchase Agreement, dated __________, 2010 (the
“Agreement”), NF Energy Saving Corporation, a Delaware corporation (the
“Company”), HEREBY UNCONDITIONALLY PROMISES TO PAY to _______________ (the
“Holder”), or its permitted assigns, the principal sum of _______________
Dollars ($_______), together with interest from the date of this Note on the
unpaid principal balance at a rate equal to six percent (6%) simple interest per
annum, or the maximum amount permitted by law, whichever is less. The simple
interest rate shall be computed on the basis of the actual number of days
elapsed and a year of 365 days.
All
unpaid principal, together with the balance of unpaid and accrued interest shall
be due and payable
on
the earliest to occur of (i) a conversion in accordance with Section 4, (ii)
_______, 2011 (the “Maturity Date”) or (iii) an Event of Default (as defined
below) as set forth in Section 3.
The
following is a statement of the rights of the Holder and the conditions to which
this Note is subject, and to which the Holder hereof, by the acceptance of this
Note, agrees:
1.
Definitions
. All
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Agreement. In addition, as used in this Note, the following
capitalized terms have the following meanings:
(a) “Conversion
Price” shall mean $3.00 per share, subject to adjustment in accordance with
Section 5.
(b) “Conversion
Shares” shall mean those shares of Common Stock issued to Holder upon conversion
of the principal and interest owed under this Note pursuant to Section 4
below.
(c) "Obligations"
shall mean all principal, accrued interest and costs of enforcement and
collection (including court costs and reasonable attorney’s fees) due
hereunder.
2.
Events of
Default
. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a)
Insolvency
. (i)
The Company shall be dissolved, liquidated, wound up or cease its corporate
existence; or (ii) the Company (A) shall make a general assignment for the
benefit of creditors, or shall generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (B) shall voluntarily
cease to conduct its business in the ordinary course; (C) shall commence any
Insolvency Proceeding with respect to itself; or (D) shall take any action to
effectuate or authorize any of the foregoing. As used herein, "Insolvency
Proceeding" means (i) any case, action or proceeding before any court or other
governmental agency or authority relating to Bankruptcy (as such term is defined
in the Bankruptcy Code), reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (ii) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors, in each case undertaken under U.S.
federal, state or foreign law, including the Bankruptcy Code; and "Bankruptcy
Code" means Title 11 of the United States Code entitled
"Bankruptcy".
(b)
Involuntary
Proceedings
. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Company or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of the Company's properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within thirty (30) days after commencement, filing or levy; (ii) the Company
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Company acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefore), or other similar person for itself
or a substantial portion of its property or business.
(c)
Non-Payment and Certain
Other Breaches
. The Company does not pay when due the amounts
owed under this Note or breaches any material representation, warranty, covenant
or agreement set forth in this Note or the Transaction Documents.
If any
Event of Default shall occur and be continuing, the Holder may, by notice to the
Company, (i) declare the entire outstanding Obligations payable by the Company
hereunder to be forthwith due and payable, whereupon the principal hereof and
all accrued interest thereon, plus all costs of enforcement and collection
(including court costs and reasonable attorney’s fees), shall immediately become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Company, provided that if an event described in paragraph 2(b) above shall
occur, the result which would otherwise occur only upon giving of notice by the
Holder to the Company as specified above shall occur automatically, without the
giving of any such notice; (ii) convert this Note in accordance with Section 4;
and (iii) exercise all rights and remedies available to the Holder under the
Agreement and applicable law. The rights and remedies under the Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges that
may otherwise be available to the Holder. No delay or omission on the part of
the Holder in exercising any right under the Agreement shall operate as a waiver
of such right or any other right hereunder.
3.
Prepayments
. The
Company shall not make any voluntary prepayment, whether in whole or
in part, under this Note without the prior written consent of the
Holder.
4.
Conversion.
4.1
Mandatory
Conversion
. Provided an Event of Default has not occurred and
is not then continuing, upon the earlier of (A) the commencement of trading of
the Company’s Common Stock on a U.S. major securities exchange such
as the NYSE, AMEX or NASDAQ; or (B) the Maturity Date, this Note shall
automatically convert, through no action on the part of the Holder, into that
number of shares of Common Stock equal to the quotient obtained by dividing (a)
the then outstanding Obligations by (b) the Conversion Price then in
effect.
4.2
Reservation of Shares
Issuable Upon Conversion
. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, the
number of shares of Common Stock issuable upon conversion of the principal and
accrued interest due under the Note. The Company covenants that all
Conversion Shares, when issued in accordance with the terms of this Note and the
Agreement, shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable.
4.3
Fractional
Shares.
The Company shall not be required to issue fractions
of shares upon the conversion hereof or to distribute certificates that evidence
fractional shares nor shall the Company be required to make any cash payments in
lieu of fractional shares. In lieu of issuance any fractional shares or payment
therefore, the Company will round up to the nearest whole share.
5.
Certain
Adjustments
.
5.1
Stock Dividends and Stock
Splits
. If the Company, at any time while this Note is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock or any
Common Stock equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of the Notes), (ii)
subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares or (iv) issues, in the event of a
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 any
treasury shares of the Company) outstanding immediately before such event and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 5.1
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 reclassification.
5.2
Reorganization,
Reclassification, Consolidation, Merger, Sale; Company Not
Survivor
. If any capital reorganization, reclassification of
the capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company’s assets to
another corporation shall be effected, then, at the Company’s option, either (i)
the Holder of the Note shall be paid an amount equal to the outstanding
Obligations due under the Note at the time of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition, or
(ii) as a condition of such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition, lawful and adequate provision shall
be made whereby each Holder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in
lieu of the Conversion Shares immediately theretofore issuable upon conversion
of the Note, such shares of stock, securities or assets as would have been
issuable or payable with respect to or in exchange for a number of Conversion
Shares equal to the number of Conversion Shares immediately theretofore issuable
upon conversion of the Note, had such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition not taken place, and
in any such case appropriate provision shall be made with respect to the rights
and interests of Holder to the end that the provisions hereof (including,
without limitation, provision for adjustment of the Conversion Price) shall
thereafter be applicable, as nearly equivalent as may be practicable in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof. In the case of clause (ii) above, the Company shall
not effect any such consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the obligation to deliver
to the Holder, at the last address of the Holder appearing on the books of the
Company, such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase, and the other
obligations under this Note. The provisions of this Section 5.2 shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.
5.3
Issuance of Additional
Securities
. If, during the period of one year after the
original issuance date of this Note:
(a) the
Company, in connection with a private placement of its securities in which
Rodman & Renshaw, LLC acts as the lead placement agent (the “Rodman
Offering”), issues any Common Stock at a purchase price less than the Conversion
Price (then in effect) or issues any securities convertible into Common Stock at
a conversion price less than the Conversion Price (then in effect), then the
Conversion Price (then in effect) will be reduced to such lower conversion
price; or
(b) the
Company issues any Common Stock at a purchase price less than the Conversion
Price (then in effect) or issues any securities that permit the holder to
acquire Common Stock at a purchase, conversion or exercise price less than the
Conversion Price (then in effect), then the Conversion Price (then in effect)
will be reduced to such lower purchase, conversion or exercise
price. The foregoing adjustment will be made whenever the Company
issues the Common Stock or common stock equivalents. The foregoing adjustment to
the Conversion Price will not apply to any sales by the Company of any
securities (i) if the sale of the securities is for other than capital raising
purposes, (ii) if the sale of the securities is in connection with or occurs
after a private placement or public offering of Company securities, where the
Company receives at least $3,000,000 in gross proceeds, (iii) if the sale of the
securities occurs after the Conversion Shares are registered for resale pursuant
to an effective registration statement filed with the Securities and Exchange
Commission, or (iv) if the sale of securities is made in connection with the
Rodman Offering.
5.4
Calculations
. All
calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be; provided, however, that the
Company shall not be required to issue fractions of shares pursuant to Section
4.3 above.
5.5
Notice of Adjustment
.
In each case of an adjustment or readjustment of the Conversion Price or the
number and kind of any securities issuable upon conversion of the Note, the
Company will promptly calculate such adjustment in accordance with the terms of
this Note and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Conversion Price and adjusted number of shares of
Common Stock or type of alternate consideration issuable upon conversion of the
Note (as applicable), describing the transactions giving rise to such
adjustments and showing in reasonable detail the facts upon which such
adjustment is based. Upon request, the Company will promptly deliver a copy of
each such certificate to the Holder.
6.
Registration
Rights
.
6.1
Piggyback Registration
Rights
. If, at any time there is not an effective registration
statement covering the resale of the Conversion Shares (for purposes of this
Section 6, the “Registrable Securities”), the Holder of this Note shall have the
right, until such time as the Holder may sell the Registrable Securities without
regard to the holding period requirements pursuant to Rule 144 under the
Securities Act of 1933, as amended (the “Act”), to include, to the extent
allowed by the Securities and Exchange Commission, all or any of the Registrable
Securities as part of any registration of securities filed by the Company, other
than on Form S-4 or Form S-8 or their then equivalents. However, if, in the
written opinion of the Company's managing underwriter or underwriters, if any,
for such offering (the “Underwriter”), the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or the
other selling stockholder(s), will exceed the maximum amount of the Company’s
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without materially and adversely affecting the
entire offering, the Holder agrees that the Registrable Securities held by the
Holder, together with any other securities being registered pursuant to any
other piggyback registration right, shall be removed from the registration
statement, pro rata based on the number of securities being registered for such
holders of piggyback registration rights.
For purposes of clarity of the above
provisions, in the event any or all of the Holder’s Registrable Securities are
not included in a registration statement due to Underwriter cutbacks, the
Company shall not be required to prepare and file any additional registration
statement. However, to the extent there are any Registrable Securities which
have not been heretofore registered, the Holder will have the right to include
those Registrable Securities on any subsequent registration statement pursuant
to the piggyback registration rights set forth in this Section 6.1.
6.2
Registration
Terms
. The Company shall bear all fees and expenses attendant
to registering the Registrable Securities, but the Holder shall pay any and all
underwriting and other selling commissions and the expenses of any legal counsel
selected by the Holder to represent it in connection with the sale of the
Registrable Securities. In the event of such a proposed registration, the
Company shall furnish the then Holder of outstanding Registrable Securities with
not less than twenty days written notice prior to the proposed date of filing of
such registration statement. The Holder of the Registrable Securities shall
exercise the piggyback rights provided for herein by giving written notice,
within ten days of the receipt of the Company’s notice of its intention to file
a registration statement. The Company shall cause any registration statement
filed pursuant to the above piggyback rights to remain effective until the
earlier of (i) all Registrable Securities thereunder have been sold, (ii) the
date on which the Holder may sell the Registrable Securities without regard to
the holding period requirements pursuant to Rule 144 under the Act, or any
successor rule, or (iii) one year from the date of effectiveness of such
registration statement.
6.3
Indemnification
.
(a) The
Company shall indemnify the Holder of the Registrable Securities to be sold
pursuant to any registration statement hereunder and each person, if any, who
controls such Holder, within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder of the Registrable Securities to
be sold pursuant to such registration statement shall indemnify the Company
against all loss, claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which it may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holder, in writing, for specific inclusion in
such registration statement, provided, however, that the obligation to indemnify
shall be limited to the amount of the proceeds received by the Holder from the
sale of the Registrable Securities pursuant to the registration
statement.
(b) If
any action is brought against a party hereto, ("Indemnified Party") in respect
of which indemnity may be sought against the other party ("Indemnifying Party"),
such Indemnified Party shall promptly notify Indemnifying Party in writing of
the institution of such action and Indemnifying Party shall assume the defense
of such action, including the fees of counsel reasonably satisfactory to the
Indemnified Party. Such Indemnified Party shall have the right to employ its
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless (i) Indemnifying Party shall not
have employed counsel to defend such action, or (iii) Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses
available to it which may result in a conflict between the Indemnified Party and
Indemnifying Party (in which case Indemnifying Party shall not have the right to
direct the defense of such action on behalf of the Indemnified Party), in any of
which events, the reasonable fees and expenses of not more than one additional
firm of attorneys designated in writing by the Indemnified Party shall be borne
by Indemnifying Party. Notwithstanding anything to the contrary contained
herein, if Indemnified Party shall assume the defense of such action as provided
above, Indemnifying Party shall not be liable for any settlement of any such
action effected without its written consent.
(c) If
the indemnification provided for hereunder is finally judicially determined by a
court of competent jurisdiction to be unavailable to an Indemnified Party (other
than as a consequence of a final judicial determination of willful misconduct,
bad faith or gross negligence of such Indemnified Party), then Indemnifying
Party agrees, in lieu of indemnifying such Indemnified Party, to contribute to
the amount paid or payable by such Indemnified Party (i) in such proportion as
is appropriate to reflect the relative benefits received, or sought to be
received, by Indemnifying Party on the one hand and by such Indemnified Party on
the other or (ii) if (but only if) the allocation provided in clause (i) of this
sentence is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in such clause
(i) but also the relative fault of Indemnifying Party and of such Indemnified
Party; provided, however, that in no event shall the aggregate amount
contributed by the Holder exceed the amount of the proceeds received by the
Holder from the sale of the Registrable Securities pursuant to the registration
statement.
(d) The
rights accorded to Indemnified Parties hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise.
7.
Security
Interest
. To secure the payment of the Obligations, the
Company hereby grants to the Holder a continuing, security interest in and lien
upon all assets of the Company and its subsidiaries, whether now owned or
hereafter acquired, and wherever located.
8.
Successors and
Assigns
. Subject to the restrictions on transfer described in
Section 10 below, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the permitted successors, assigns,
heirs, administrators and transferees of the parties.
9.
Waiver and
Amendment
. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and the Holder.
10.
Transfer of This
Note.
Subject to the terms of the Agreement, this Note may not
be transferred in violation of any restrictive legend set forth hereon. Subject
to the terms of the Agreement, each new Note issued upon transfer of this Note
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with the Act and any applicable state securities
laws, unless in the opinion of counsel for the Company such legend is not
required in order to ensure compliance with the Act and any applicable state
securities laws, and the Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Prior to presentation of
this Note for registration of transfer, the Company shall treat the registered
Holder hereof as the owner and holder of this Note for the purpose of receiving
all payments of principal and interest hereon, in each case which are to be
satisfied through the issuance of the Conversion Shares, and for all other
purposes whatsoever, and the Company shall not be affected by notice to the
contrary.
11.
Assignment
. Neither
this Note nor any of the rights, interests or obligations hereunder may be
assigned, by operation of law or otherwise, in whole or in part, by the Company,
without the prior written consent of the Holder. This Note and the rights,
interests and obligations hereunder are freely assignable by the Holder without
the prior consent of the Company.
12.
Treatment of
Note.
To the extent permitted by generally accepted accounting
principles, the Company will treat, account and report this Note as debt and not
equity for accounting purposes and with respect to any returns filed with
federal, state or local tax authorities.
13.
No Rights as
Shareholder.
This Note, as such, creates a lender/borrower
relationship and shall not entitle the Holder to any rights as a shareholder,
officer, director other employee or agent of the Company, except until this Note
is converted in accordance with Section 4.
14.
Payment in Shares of Common
Stock.
Notwithstanding anything in this Note to the contrary,
payment of any amounts due under this Note shall be made in shares of Common
Stock valued at the then-applicable Conversion Price.
15.
Benefits of this
Note.
Nothing in this Note shall be construed to give to any
person, corporation or other entity other than the Company and any Holder of the
Note (including permitted successors and assigns) any legal or equitable right,
remedy or claim under the Note, and the Note shall be for the sole and exclusive
benefit of the Company and any Holder of the Note.
16.
Governing Law; Submission to
Jurisdiction.
This Note shall be governed by and construed and
enforced in accordance with the law of the State of Delaware, without giving
effect to conflict of laws. The parties hereby agree that any action, proceeding
or claim against it arising out of, or relating in any way to this Note shall be
brought and enforced in the courts of the State of New York or of the United
States of America in the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The parties hereby
waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any process or summons to be served upon a
party may be served by transmitting a copy thereof by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
for notices set forth in the Agreement. Such mailing shall be deemed personal
service and shall be legal and binding upon such party in any action, proceeding
or claim. The parties agree that the prevailing party(ies) in any such action
shall be entitled to recover from the other party(ies) all of its reasonable
attorneys’ fees and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefore.
IN
WITNESS WHEREOF, the Company has caused this Note to be issued as of the date
first written above.
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NF
ENERGY SAVING CORPORATION
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By:
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Name:
Gang Li
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Title:
Chief Executive Officer
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NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR
(B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
NF
ENERGY SAVING CORPORATION
COMMON
STOCK PURCHASE WARRANT
(Subject
to transfer restrictions.)
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Original
Issue Date: _______, 2010
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Number
of Warrant Shares: _______
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1.
Warrant
.
FOR VALUE
RECEIVED, subject to the provisions hereinafter set forth, the undersigned, NF
Energy Saving Corporation, a corporation incorporated under the laws of the
State of Delaware (together with its successors and assigns, the “
Company
”), hereby
grants to __________ with offices at ____________________ (the “
Holder
”), the right
to purchase up to _______ shares of common stock, par value $0.001 per share
(the “
Common
Stock
”), from the Company (each such share a “
Warrant Share
” and
all such shares, the “
Warrant Shares
”) at
an exercise price of $4.00 per share, as adjusted from time to time as provided
in Section 5 (the “
Exercise Price
”), at
any time and from time to time commencing three months after the date hereof and
through and including 5:00 p.m., New York City time, on ______, 2015 (the “
Expiration
Date
”).
2.
Exercise
.
2.1
Exercise
Form
. In order to exercise this Warrant, the Notice of
Exercise in the form attached hereto must be duly executed and completed and
delivered to the Company, together with this Warrant and payment of the Exercise
Price for the Warrant Shares being purchased. Payment of the Exercise Price
shall be paid in cash, by certified check or wire transfer. If this Warrant
shall not be exercised at or before 5:00 p.m., New York City time, on the
Expiration Date, this Warrant shall become and be void without further force or
effect, and all rights represented hereby shall cease and expire.
2.2
Legend
. Each
certificate for Warrant Shares issued under this Warrant shall bear a legend as
follows, unless such Warrant Shares have been registered under the Securities
Act of 1933, as amended (the "
Securities
Act
"):
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”
3.
Transfer
.
3.1
General
Restrictions
. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable Federal, national, state and local securities
laws. In order to make any permitted assignment, the Holder must
deliver to the Company the assignment form attached hereto duly executed and
completed, together with this Warrant and payment of all transfer taxes, if any,
payable in connection therewith. The Company shall immediately
transfer this Warrant on the books of the Company and shall execute and deliver
a new Warrant or Warrants substantially similar in all material terms to the
appropriate assignee(s) expressly evidencing the right and obligation to
purchase the aggregate number of shares of Common Stock purchasable hereunder or
such portion of such number as shall be contemplated by any such
assignment.
3.2
Restrictions Imposed by the
Securities Act
. This Warrant and the Warrant Shares underlying
this Warrant shall not be transferred unless and until (i) the Company has
received the opinion of counsel for the Holder that such securities may be
transferred without compliance with the registration requirements under Section
5 of the Securities Act, which opinion is reasonably satisfactory to the
Company, or (ii) a registration statement relating to such Warrant Shares has
been filed by the Company and declared effective by the Securities and Exchange
Commission.
4.
New Warrants to be
Issued
.
4.1
Partial Exercise or
Transfer
. Subject to the restrictions set forth herein, this
Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and satisfaction of the Exercise Price and/or transfer tax, if applicable,
the Company shall cause to be delivered to the Holder without charge a new
Warrant or Warrants substantially similar in all material terms to this Warrant
in the name of the Holder evidencing the right of the Holder to purchase the
aggregate number of shares of Common Stock purchasable hereunder as to which
this Warrant has not been exercised or assigned.
4.2
Lost
Certificate
. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
(or an affidavit from the Holder certifying the same) and of reasonably
satisfactory indemnification, the Company shall execute and deliver a new
Warrant or Warrants substantially similar in all material terms and date. Any
such new Warrant executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute a substitute contractual obligation
on the part of the Company.
5.
Adjustments
.
5.1
Adjustments to Exercise
Price and Number of Securities
. The Exercise Price and the
number of shares of Common Stock underlying this Warrant shall be subject to
adjustment from time to time as hereinafter set forth:
5.1.1
Stock Dividends -
Recapitalization, Reclassification, Split-Ups
. If after the
date hereof, and subject to the provisions of Section 5.2, the number of
outstanding shares of Common Stock is increased by a stock dividend on the
Common Stock payable in shares of 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 number of shares of Common Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares.
5.1.2
Aggregation of
Shares
. If, after the date hereof and subject to the
provisions of Section 5.2, 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, then, upon the effective date thereof, the
number of shares of Common Stock issuable on exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares of Common
Stock.
5.1.3
Adjustments in Exercise
Price
. Whenever the number of shares of Common Stock
purchasable upon the exercise of this Warrant is adjusted, as provided in this
Section 5.1, the Exercise Price shall be adjusted (to the nearest cent) by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise of this Warrant immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter.
5.1.4
Replacement of Securities
upon Reorganization, etc
. In case the Company at any
time prior to the Expiration Date shall consolidate with or merge into any other
person, company or entity and the Company shall not be the continuing or
surviving corporation of such consolidation or merger (each, a “
Triggering Event
”),
the Holder of this Warrant shall have the right, upon the exercise hereof at any
time after the consummation of such Triggering Event, but prior to
the Expiration Date and to the extent this Warrant is not exercised prior to
such Triggering Event, to receive, and shall accept, at the aggregate Exercise
Price in effect at the time immediately prior to the consummation of such
Triggering Event, in lieu of the shares of Common Stock issuable upon such
exercise of this Warrant prior to such Triggering Event, the securities and/or
cash to which such Holder would have been entitled upon the consummation of such
Triggering Event, if such Holder had exercised the rights represented by this
Warrant immediately prior thereto, subject to adjustments (subsequent to such
corporate action) as nearly equivalent as possible to the adjustments provided
for in this Section 5.
5.1.5
Issuance
of Additional Warrants
. If, during the period of
one year after the original issuance date of this Warrant:
(a) the
Company, in connection with a private placement of its securities in which
Rodman & Renshaw, LLC acts as the lead placement agent (the “Rodman
Offering”), issues any warrants having an exercise price less than the Exercise
Price (then in effect), then the Exercise Price (then in effect) will be reduced
to such lower exercise price; or
(b) the
Company issues any warrants having an exercise price less than the Exercise
Price (then in effect), then the Exercise Price (then in effect) will be reduced
to such lower exercise price. The foregoing adjustment will be made
whenever the Company issues warrants. The foregoing adjustment to the Exercise
Price will not apply to any sales by the Company of any securities (i) if the
sale of the securities is for other than capital raising purposes, (ii) if the
sale of the securities is in connection with or occurs after a private placement
or public offering of Company securities, where the Company receives at least
$3,000,000 in gross proceeds, (iii) if the sale of the securities occurs after
the Warrant Shares are registered for resale pursuant to an effective
registration statement filed with the Securities and Exchange Commission, or
(iv) if the sale of securities is made in connection with the Rodman
Offering.
5.1.6
Changes in Form of
Warrant
. The form of this Warrant need not be changed because
of any adjustments in the Exercise Price or the number and kind of securities
issuable upon the exercise of this Warrant.
5.2
Elimination of Fractional
Interests
. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock upon the exercise
of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
any fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or other securities, properties or
rights.
6.
Validity and
Reservation
. The Company represents and warrants that this
Warrant has been duly authorized and validly issued and is the binding
obligation of the Company enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and
equitable principles relating to or affecting creditors’ rights. The Company
shall reserve and keep available out of its authorized but unissued shares of
Common Stock such number of shares of Common Stock for which this Warrant may
from time to time be issuable. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefore, the
Warrant Shares shall be duly and validly issued, fully paid and non-assessable
and not subject to preemptive rights of any stockholder.
7.
Certain Notice
Requirements
.
7.1
Holder's Right to Receive
Notice
. Nothing herein shall be construed as conferring upon
the Holder the right to vote or consent or to receive notice as a stockholder
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company with respect to this Warrant or the
Warrant Shares. If, however, at any time prior to the Expiration
Date, any of the events described in Section 7.2 shall occur, then the Company
shall give written notice of such event at least ten days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on a proposed dissolution, liquidation, winding up or sale of all or
substantially all of its property, assets and business. The notice
shall specify the record date or the date of the closing of the transfer books,
as the case may be.
7.2
Events Requiring
Notice
. The Company will use its reasonable commercial efforts
to give the notice described in this Section 7 upon one or more of the following
events: (i) if the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend,
distribution, conversion of or in respect of its Common Stock, (ii) the Company
shall offer to all the holders of its Common Stock any additional shares of
capital stock of the Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right or warrant to
subscribe therefore, (iii) a merger or reorganization in which the Company is
not the surviving party, or (iv) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business shall be
proposed.
7.3
Notice of Change in Exercise
Price
. The Company promptly after an event requiring a change
in the Exercise Price pursuant to Section 5 hereof, will send notice to the
Holders of such event and change (“Price Notice”). The failure to
give such notice will not be a material breach of this Warrant.
7.4
Transmittal of
Notices
. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if
to the registered Holder of this Warrant, to the address of such Holder as shown
on the books of the Company, or (ii) if to the Company, to its principal
executive office.
8.
Registration
Rights
.
8.1
Piggyback Registration
Rights
. If, at any time there is not an effective registration
statement covering the resale of the Warrant Shares (for purposes of this
Section 8, the “Registrable Securities”), the Holder of this Warrant shall have
the right, until such time as the Holder may sell the Registrable Securities
without regard to the holding period requirements pursuant to Rule 144 under the
Securities Act of 1933, as amended (the “Act”), to include, to the extent
allowed by the Securities and Exchange Commission, all or any of the Registrable
Securities as part of any registration of securities filed by the Company, other
than on Form S-4 or Form S-8 or their then equivalents. However, if, in the
written opinion of the Company's managing underwriter or underwriters, if any,
for such offering (the “Underwriter”), the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or the
other selling stockholder(s), will exceed the maximum amount of the Company’s
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without materially and adversely affecting the
entire offering, the Holder agrees that the Registrable Securities held by the
Holder, together with any other securities being registered pursuant to any
other piggyback registration right, shall be removed from the registration
statement, pro rata based on the number of securities being registered for such
holders of piggyback registration rights.
For purposes of clarity of the above
provisions, in the event any or all of the Holder’s Registrable Securities are
not included in a registration statement due to Underwriter cutbacks, the
Company shall not be required to prepare and file any additional registration
statement. However, to the extent there are any Registrable
Securities which have not been heretofore registered, the Holder will have the
right to include those Registrable Securities on any subsequent registration
statement pursuant to the piggyback registration rights set forth in this
Section 8.1.
8.2
Registration
Terms
. The Company shall bear all fees and expenses attendant
to registering the Registrable Securities, but the Holder shall pay any and all
underwriting and other selling commissions and the expenses of any legal counsel
selected by the Holder to represent it in connection with the sale of the
Registrable Securities. In the event of such a proposed registration, the
Company shall furnish the then Holder of outstanding Registrable Securities with
not less than twenty days written notice prior to the proposed date of filing of
such registration statement. The Holder of the Registrable Securities shall
exercise the piggyback rights provided for herein by giving written notice,
within ten days of the receipt of the Company’s notice of its intention to file
a registration statement. The Company shall cause any registration statement
filed pursuant to the above piggyback rights to remain effective until the
earlier of (i) all Registrable Securities thereunder have been sold, (ii) the
date on which the Holder may sell the Registrable Securities without regard to
the holding period requirements pursuant to Rule 144 under the Securities Act of
1933, as amended (the “Act”), or any successor rule, or (iii) one year from the
date of effectiveness of such registration statement.
8.3
Indemnification
.
(a) The
Company shall indemnify the Holder of the Registrable Securities to be sold
pursuant to any registration statement hereunder and each person, if any, who
controls such Holder, within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder of the Registrable
Securities to be sold pursuant to such registration statement shall indemnify
the Company against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which it
may become subject under the Act, the Exchange Act or otherwise, arising from
information furnished by or on behalf of such Holder, in writing, for specific
inclusion in such registration statement, provided, however, that the obligation
to indemnify shall be limited to the amount of the proceeds received by the
Holder from the sale of the Registrable Securities pursuant to the registration
statement.
(b) If
any action is brought against a party hereto, ("Indemnified Party") in respect
of which indemnity may be sought against the other party ("Indemnifying Party"),
such Indemnified Party shall promptly notify Indemnifying Party in writing of
the institution of such action and Indemnifying Party shall assume the defense
of such action, including the fees of counsel reasonably satisfactory to the
Indemnified Party. Such Indemnified Party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i)
Indemnifying Party shall not have employed counsel to defend such action, or
(iii) Indemnified Party shall have been advised by counsel that there may be one
or more legal defenses available to it which may result in a conflict between
the Indemnified Party and Indemnifying Party (in which case Indemnifying Party
shall not have the right to direct the defense of such action on behalf of the
Indemnified Party), in any of which events, the reasonable fees and expenses of
not more than one additional firm of attorneys designated in writing by the
Indemnified Party shall be borne by Indemnifying
Party. Notwithstanding anything to the contrary contained herein, if
Indemnified Party shall assume the defense of such action as provided above,
Indemnifying Party shall not be liable for any settlement of any such action
effected without its written consent.
(c) If
the indemnification provided for hereunder is finally judicially determined by a
court of competent jurisdiction to be unavailable to an Indemnified Party (other
than as a consequence of a final judicial determination of willful misconduct,
bad faith or gross negligence of such Indemnified Party), then Indemnifying
Party agrees, in lieu of indemnifying such Indemnified Party, to contribute to
the amount paid or payable by such Indemnified Party (i) in such proportion as
is appropriate to reflect the relative benefits received, or sought to be
received, by Indemnifying Party on the one hand and by such Indemnified Party on
the other or (ii) if (but only if) the allocation provided in clause (i) of this
sentence is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in such clause
(i) but also the relative fault of Indemnifying Party and of such Indemnified
Party; provided, however, that in no event shall the aggregate amount
contributed by the Holder exceed the amount of the proceeds received by the
Holder from the sale of the Registrable Securities pursuant to the registration
statement.
(d) The
rights accorded to Indemnified Parties hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise.
9.
Miscellaneous
.
9.1
Headings
. The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Warrant.
9.2
Entire
Agreement
. This Warrant constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
9.4
Governing Law; Submission to
Jurisdiction
. This Warrant shall be governed by and construed
and enforced in accordance with the law of the State of Delaware, without giving
effect to conflict of laws. The parties hereby agree that any action, proceeding
or claim against it arising out of, or relating in any way to this Warrant shall
be brought and enforced in the courts of the State of New York or of the United
States of America in the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The parties hereby
waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any process or summons to be served upon a
party may be served by transmitting a copy thereof by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
for notices as contemplated in Section 7.4 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon such party in any action,
proceeding or claim. The parties agree that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefore.
9.5
Waiver,
Etc
. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
9.6
Enforcement
. In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
9.7
Amendments
. No
amendment or variation of this specific Warrant shall be effective unless made
in writing and signed by the persons subject thereto.
IN WITNESS WHEREOF
, the
Company has caused this Warrant to be signed by its duly authorized officer as
of the date first set forth above.
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NF
ENERGY SAVING CORPORATION
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By:
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Name:
Gang Li
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Title: Chief
Executive Officer
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[Signature
page to Warrant]
Form
of
Notice
of Exercise
(to be
executed by the Holder)
To NF
Energy Saving Corporation:
The
undersigned hereby elects irrevocably to exercise this Warrant on ______________
(date), and to purchase thereunder _____________ full shares of NF Energy Saving
Corporation common stock issuable upon exercise of the Warrant and delivery of
$_________ (in specie, certified check, or wire transfer as provided for in the
foregoing Warrant) and any applicable taxes payable by the undersigned pursuant
to such Warrant.
The
undersigned requests that certificates for such shares be issued in the name
of:
(Please
print name, address and social security or federal employer
identification
number (if applicable))
If the
shares issuable upon this exercise of the Warrant are not all of the Warrant
Shares which the Holder is entitled to acquire upon the exercise of the Warrant,
the undersigned requests that a new Warrant evidencing the rights not so
exercised be issued in the name of and delivered to:
(Please
print name, address and social security or federal employer
identification
number (if applicable))
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Date: _______________________
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Name
of Holder
(print): ___________________________
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(Signature):
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(By:)
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(Title:)
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Dated:
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Note: Signature must
conform in all respects to the name of the Warrant Holder as specified on
the face of the
Warrant
.
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Form to
be used to assign Warrant where permitted:
ASSIGNMENT
(To be
executed by the registered Holder to effect a transfer of the within
Warrant):
FOR VALUE
RECEIVED, and subject to the limitations set forth in the Warrant, the
Holder, ________________________________, does hereby
sell, assign and transfer unto _________________________________ the right to
purchase _____________________ shares of Common Stock of NF Energy Saving
Corporation ("the Company") evidenced by the within Warrant and does hereby
authorize the Company to transfer such right on the books of the
Company.
Dated:____________________,
20___
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Name
of Warrant Holder:
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(Print)
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(By:)
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(Name:)
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(Title:)
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Note:
Signature must conform in all respects to name of Warrant Holder as
specified on the face of the
Warrant.
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