Attached files
PROPOSED
FINANCING
OF
GC
CHINA TURBINE CORP.
By
reading the information contained within this document, the recipient agrees
with GC China Turbine Corp. (the "Company") to maintain in confidence such
information, together with any other non-public information regarding the
Company obtained from the Company or its agents during the course of the
proposed financing. The Company has caused these materials to be
delivered to you in reliance upon such agreement and upon Rules promulgated
under Regulation FD by the Securities and Exchange Commission.
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
OFFERED TO SALE, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT
PURSUANT TO (i) A REGISTRATION STATEMENT RELATING TO THE SECURITIES WHICH IS
EFFECTIVE UNDER THE SECURITIES ACT, (ii) RULE 144 PROMULGATED UNDER THE
SECURITIES ACT OR (iii) AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT AN EXEMPTION FROM THE REGISTRATION REQUIRMENTS
OF THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS IS AVAILABLE.
CONFIDENTIAL
SUMMARY
OF OFFERING
This
Confidential Summary of Offering is not intended to be contractually binding,
other than the section entitled “Confidential Information” and is subject in all
respects (other than with respect to such section) to the execution of the
Securities Purchase Agreement.
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Issuer:
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GC
China Turbine Corp., a Nevada corporation (the
“Company”).
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Securities
Offered:
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Up
to 6,400,000 shares of common stock, par value $0.001 per share of the
Company (the “Shares”), subject to adjustment by the Company (the
“Offering”). Moreover, the Company will issue warrants to each
investor in an amount equal to ten percent (10%) of the number of shares
of common stock that the Investor purchased, for a total of 640,000
warrants (the “Warrants”).
Each
Warrant will have an exercise price of $1.00 per share and may be
exercisable anytime within 3 years of the date of issuance.
The
Offering, subject to authorization from the Board of Directors of the
Company, will be completed on a best efforts basis and subject to
adjustment by the Company.
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Purchase
Price:
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$1.25
per share of common stock.
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Closing
Date:
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The
Company and the Investor shall execute a Securities Purchase Agreement in
substantially the form set forth herein. The closing of the
Offering shall occur as subscription and proceeds are received, and
certificates representing the Shares shall be issued to the Investor and
funds paid to the Company (the “Closing Date”). The Closing is
subject to approval by the Board of Directors of the
Company.
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Make
Good Shares:
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If
the After-Tax Net Income for the fiscal year ended December 31, 2010
reported in the Company's Annual Report on Form 10-K for the fiscal year
ending December 31, 2010 (the “2010 Actual ATNI”), as filed with the
Securities Exchange Commission (the “2010 Annual Report”) is less than
$12,500,000 (the “2010 Guaranteed ATNI”), Golden Wind Holdings Limited (on
behalf of Company management) will transfer to each Investor on a pro rata
basis (based upon such Investor's investment amount relative to the
aggregate investment amount of all Investors) for no additional
consideration, a number of shares of Common Stock equal to: [($12,500,000
- the actual After-Tax Net Income reported in the 2010 Annual
Report)/$2,500,000] * 640,000 shares (the “2010 Make Good Shares”),
provided, that the number of 2010 Make Good Shares shall in no event
exceed 640,000 shares.
At
the Closing, Company Management will deposit 640,000 shares on a prorata
basis to an escrow agent. If the Company's audited consolidated financial
statements for the fiscal year ended December 31, 2010 specify that the
2010 Guaranteed ATNI shall have been achieved, no transfer of the 640,000
shares shall be made to the Investors and all 640,000 shares deposited
with the escrow agent shall immediately be returned to Golden Wind
Holdings
Limited.
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Make
Good Warrant Adjustment:
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If
the 2010 Actual ATNI is less than the 2010 Guaranteed ATNI, the Company
will reduce the exercise price of each Warrant issued to each Investor by
an amount equal to: [($12,500,000 - the actual After-Tax Net Income
reported in the 2010 Annual Report)/$2,500,000] * $1.00 per share (the
“Adjusted Exercise Price”), provided, that if the Adjusted Exercise Price
is negative, the Adjusted Exercise Price will be deemed to equal $0.001
per share.
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Investor
Qualifications:
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The
Investor must be an “accredited investor” as defined in Regulation D of
the Securities Act of 1933, as amended (the “Securities Act”), and must
represent and warrant to the Company that it is acquiring the Shares for
investment with no present intention of distributing any of the
Shares. The Securities Purchase Agreement contains other
appropriate representations and warranties of the Investor to the
Company.
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Securities
Certificates:
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Certificates
evidencing the Shares which are delivered to the Investor within seven
days of the closing and will bear a restrictive legend stating that such
securities have been sold pursuant to the Securities Purchase Agreement
and that the shares may not be resold except as permitted under the
Securities Act pursuant to a Registration Statement that has been declared
effective or an exemption therefrom, and may be resold subject to certain
limitations and procedures agreed to in the Securities Purchase
Agreement.
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Indemnification:
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By
executing the Securities Purchase Agreement, the Investor will agree to
indemnify the Company against certain liabilities.
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Risk
Factors:
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The
securities offered hereby involve a high degree of risk. The
Investor must read the disclosure relating to the risks affecting the
Company as set forth in the attached Private Placement Memorandum, in
addition to, documents filed by the Company with the SEC under the
Securities Exchange Act of 1934, as amended.
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Use
of Proceeds:
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For
general corporate purposes, including working capital.
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OTC
Bulletin Board Symbol:
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GCHT
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Dividend
Policy:
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The
Company has never declared or paid any cash dividends on its shares of
common stock and does not intend to pay cash dividends on its shares of
common stock in the foreseeable future. The Company intends to retain
earnings for reinvestment in its business.
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Confidential
Information:
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The
recipient of this Confidential Summary of Terms and Conditions and the
materials attached hereto agrees with the Company to maintain in
confidence this disclosed information, together with any other non-public
information regarding the Company obtained from the Company, or its agents
during the course of the proposed Offering. The Company has
caused these materials to be delivered to you in reliance upon such
agreement and upon Rules promulgated by the SEC pursuant to Regulation
FD.
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Transfer
Agent:
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Holladay
Stock Transfer, Inc., 2939 North 67th Place, Scottsdale, Arizona, 85251,
tel. (480) 481-3940.
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Introduction
Fee:
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The
Company has engaged placement agents and others (collectively, as the
"Introducers") to provide advice and introduce or refer investors to the
Company. Subject to the approval of the Company's Board of
Directors, the Introducers will collectively receive from the Company the
aggregate of $700,000 in cash fees based on the gross proceeds from the
sale of the Shares and 560,000 common stock warrants (the "Introduction
Fee").
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INSTRUCTION
SHEET FOR INVESTOR
(to be
read in conjunction with the entire Securities Purchase Agreement)
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A.
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Complete
the following items in the Securities Purchase
Agreement:
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1. Provide
the information regarding the Investor requested on the Signature Page to the
Securities Purchase Agreement. Please submit a separate Securities
Purchase Agreement for each
individual fund/entity that will hold the Shares. The
Securities Purchase Agreement must be executed by an individual authorized to
bind the Investor.
2. Return
the signed Securities Purchase Agreement by fax and send the original signed
Securities Purchase Agreement by overnight mail to:
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Weintraub
Genshlea Chediak
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400
Capitol Mall, 11th
Floor
Sacramento,
CA 95814
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Attn: Mark
C Lee
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Phone: (916)
558-6000
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Fax: (916)
446-1611
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An
executed original Securities Purchase Agreement or a fax thereof must be
received by 2:00 p.m. Pacific Daylight Time on a date to be determined and
distributed to the Investor.
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B.
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Funds
for the purchase of Shares should be sent via wire transfer
to:
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Bank:
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Pacific
Coast Bankers Bank
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340
Pine Street, #401
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San
Francisco, CA 94104
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Contact:
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415-399-1900
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Account
Name:
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Five
Star Bank
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Account
Number:
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121143037
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ABA
No.:
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121042484
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For
further credit to:
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WGC
client trust account
#002203503
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SECURITIES
PURCHASE AGREEMENT
(Signature
Page)
GC China
Turbine Corp.
1694
Falmouth Road, Suite 147
Centerville,
Massachusetts 02632-2933
Ladies
& Gentlemen:
Each of
the undersigned investor (the “Investor”) and Golden Wind Holdings Limited
(“Make Good Pledgor”), hereby confirms its agreement with you as
follows:
1.
This Securities Purchase Agreement, including the Terms and
Conditions set forth in Annex I (the "Terms
and Conditions"), the Risk Factors set forth in the attached Private Placement
Memorandum, in addition to, documents filed by the Company with the SEC under
the Securities Exchange Act of 1934, as amended, which are incorporated herein
by reference as if fully set forth herein (the “Agreement”), is made as of the
date set forth below among GC China Turbine, Corp. a Nevada corporation (the
“Company”), Make Good Pledgor and the Investor.
2.
The Company has authorized the sale and issuance of 6,400,000 shares of common
stock of the Company, par value $0.001 per share (the "Common Stock") to certain
investors in a private placement (the “Offering”). Further, the
Company will issue warrants to each investor in an amount equal to ten percent
(10%) of the number of shares that the Investor purchased. Each
warrant has an exercise price of $1.00 per share and may be exercisable anytime
within three (3) years from the date of issuance.
3.
The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor [_________]
shares of Common Stock (the "Shares"), for a purchase price of $1.25 per share,
for an aggregate purchase price of $[__________], pursuant to the Terms and
Conditions. The Company will issue warrants to each investor in an
amount equal to ten percent (10%) of the number of shares that the Investor
purchased. Unless otherwise requested by the Investor, certificates representing
the Shares purchased by the Investor will be registered in the Investor’s name
and address as set forth below.
4.
Make Good Pledgor and the Investor agree to the terms of the Make Good
provisions in the Terms and Conditions.
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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Date:
___________, 2009
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Investor:
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By:
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Print
Name:
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Title:
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Address:
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Tax
ID No.:
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Contact name:
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Telephone:
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GOLDEN
WIND HOLDINGS LIMITED
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Xu
Hong Bing
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AGREED AND ACCEPTED:
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GC
CHINA TURBINE, CORP.
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By:
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Marcus
Laun,
Director
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1
ANNEX I
TERMS
AND CONDITIONS FOR PURCHASE OF SHARES
Investment
in the Company involves a high degree of risk. Each Investor should
carefully consider the risk factors set forth in the attached Private Placement
Memorandum and documents filed by the Company with the SEC under the Securities
Exchange Act of 1934, as amended, in addition to the other information set forth
in this Annex I
before purchasing shares of the Company's Common Stock.
1. Authorization and Sale of
the Shares. Subject to these Terms and Conditions, the Company
has authorized the sale of 6,400,000 shares of common stock of the Company, par
value $0.001 per share of the Company, at $1.25 per share of common stock,
including warrants to each investor in an amount equal to ten percent (10%) of
the number of shares that an investor purchased (the "Offering"). Each warrant
shall substantially be in the form attached hereto as Appendix A and have
an exercise price of $1.00 per share and may be exercisable anytime within three
(3) years from the date of issuance (the “Warrant”).
2. Agreement to Sell and
Purchase the Shares. At the Closing (as defined in Section 3
of this Annex
I), the Company will sell to the Investor, and the Investor will purchase
from the Company, upon the terms and conditions hereinafter set forth, the
number of Shares (the “Investment Amount”), set forth in Section 3 of the
Signature Page to the Securities Purchase Agreement at the purchase price set
forth thereon.
3. Delivery of the Shares at
Closing. The completion of the purchase and sale of the Shares
(the “Closing”) shall occur at the offices of the Company’s counsel upon receipt
of cleared funds and fully executed documents for the purchase of the Shares on
each date set by the Company. Within seven (7) days after the
Closing, the Company shall deliver to the Investor one or more stock
certificates representing the number of Shares as set forth in Section 3 of the
Signature Page to the Securities Purchase Agreement, each such certificate or
certificates to be registered in the name of the Investor.
The
Company’s obligation to issue the Shares to the Investor shall be subject to the
following conditions, any one or more of which may be waived by the Company: (a)
receipt by the Company of a certified or official bank check or wire transfer of
funds in the full amount of the purchase price for the Shares being purchased
hereunder as set forth in Section 3 of Signature Page to the Securities Purchase
Agreement; and (b) the accuracy of the representations and warranties made by
the Investors and the fulfillment of those undertakings of the Investors to be
fulfilled prior to the Closing.
The
Investor’s obligation to purchase the Shares shall be subject to the following
conditions, any one or more of which may be waived by the Investor: (1) the
representations and warranties of the Company set forth herein shall be true and
correct as of the Closing Date in all material respects and (2) the Investor
shall have received such documents as such Investor shall reasonably have
requested in connection with its due diligence.
4. Representations, Warranties
and Covenants of the Company. The Company hereby represents
and warrants to, and covenants with, the Investor, as follows:
4.1 Organization. The
Company is duly organized and validly existing in good standing under the laws
of the jurisdiction of its organization. The Company has full power
and authority to own, operate and occupy its properties and to conduct its
business as presently contemplated and is registered or qualified to do business
and in good standing in each jurisdiction in which the nature of the business
conducted by it or the location of the properties owned or leased by it requires
such qualification and where the failure to be so qualified would have a
material adverse effect upon the condition (financial or otherwise), earnings,
business or business prospects, properties or operations of the Company (a
“Material Adverse Effect”), and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
4.2 Due Authorization and Valid
Issuance. The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Agreement, and the
Agreement has been duly authorized and validly executed and delivered by the
Company and constitute legal, valid and binding agreement of the Company
enforceable against the Company in accordance with their terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale of the Shares. The Shares being purchased by the Investor
hereunder will, upon issuance and payment therefore pursuant to the terms
hereof, be duly authorized, validly issued, fully-paid and
nonassessable.
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4.3 Non-Contravention. The execution and delivery
of the Agreement, the issuance and sale of the Shares under the Agreement, the
fulfillment of the terms of the Agreement and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default under, (i) any material bond, debenture, note or other
evidence of indebtedness, lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which the
Company is a party or by which it or its properties are bound, (ii) the charter,
by-laws or other organizational documents of the Company, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or its
properties, except in the case of clauses (i) and (iii) for any such conflicts,
violations or defaults which are not reasonably likely to have a Material
Adverse Effect or (B) 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 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 is a party or by which any of them is bound or to which any of the
material property or assets of the Company is subject.
4.4 Capitalization. As
of the Closing Date and upon issuance of all of the shares of common stock of
the Company under the Offering, the Company has 100,000,000 shares of Common
Stock authorized, with 58,970,015 shares of Common Stock issued and
outstanding. Except as set forth herein or contemplated by documents
filed by the Company with the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934 (the "Exchange Act"), since the end of
its most recently completed fiscal year through the date hereof (the “Exchange
Act Documents”), there are no other 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 contract, commitment, agreement,
understanding or arrangement of any kind to which the Company is a party or of
which the Company has knowledge and relating to the issuance or sale of any
capital stock of the Company, any such convertible or exchangeable securities or
any such rights, warrants or options.
4.5 Legal
Proceedings. There is no material legal or governmental
proceeding pending or, to the best knowledge of the Company, threatened to which
the Company is or may be a party or of which the business or property of the
Company is subject that would have a Material Adverse Effect on the
Company.
4.6 No
Violations. The Company is not in violation of its charter,
bylaws, or other organizational document, 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, would be reasonably likely to have
a Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in any
material respect in the performance of any bond, debenture, note or any other
evidence of indebtedness in any indenture, mortgage, deed of trust or any other
material agreement or instrument to which the Company is a party or by which the
Company is bound or by which the properties of the Company are bound, which
would be reasonably likely to have a Material Adverse Effect.
4.7 Make Good
Shares. Make Good Pledgor is the sole record owner of the
Escrow Shares, and has the authority to enter into this Agreement and the Make
Good Escrow Agreement, and to transfer the 2010 Make Good Shares as set forth in
Section 6.2.
4.8 Introduction
Fee. In connection with this Offering and subject to the
approval of the Company's Board of Directors, the Company will be paying its
advisors, placement agents and others the aggregate of $700,000 in cash fees
based on the gross proceeds from the sale of the Shares and 560,000 common stock
warrants (the "Introduction Fee").
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5. Representations, Warranties
and Covenants of the Investor.
5.1 The
Investor represents and warrants to, and covenants with, the Company that: (i)
the Investor is an “accredited investor” as defined in Rule 501 of Regulation D
under the Securities Act and the Investor is also knowledgeable, sophisticated
and experienced in making, and is qualified to make decisions with respect to
investments in shares presenting an investment decision like that involved in
the purchase of the Shares, including investments in securities issued by the
Company and investments in comparable companies, and has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Shares; (ii) the Investor has carefully read and fully
understands the risks involved with an investment in the Company including,
without limitation, the risks identified in the attached Private Placement
Memorandum, in addition to, documents filed by the Company with the SEC under
the Securities Exchange Act of 1934, as amended, (iii) the Investor is acquiring
the number of Shares set forth in Section 3 of the Signature Page to the
Securities Purchase Agreement in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of such Shares or any arrangement or understanding with any other persons
regarding the distribution of such Shares; (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
Shares except in compliance with the Securities Act, applicable state securities
laws and the respective rules and regulations promulgated thereunder; (v) all of
the representations made by the Investor are true, correct and complete as of
the date hereof and will be true, correct and complete as of the Closing Date;
and (vi) the Investor has, in connection with its decision to purchase the
number of Shares set forth in Section 3 of the Signature Page to the Securities
Purchase Agreement, relied only upon the Exchange Act Documents and the
representations and warranties of the Company contained herein. The
Investor understands that its acquisition of the Shares 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 bona fide nature of the Investor’s investment
intent as expressed herein.
5.2 The
Investor acknowledges that it has had access to the Exchange Act Documents and
has carefully reviewed the same. The Investor further acknowledges
that the Company has made available to it the opportunity to ask questions of
and receive answers from the Company's officers and directors concerning the
terms and conditions of this Agreement and the business and financial condition
of the Company, and the Investor has received to its satisfaction, such
information about the business and financial condition of the Company and the
terms and conditions of the Agreement as it has requested. The
Investor has carefully considered the potential risks relating to the Company
and a purchase of the Shares, and fully understands that the Shares are
speculative investments, which involve a high degree of risk of loss of the
Investor’s entire investment. Among others, the undersigned has
carefully considered each of the risks identified under the caption “Risk
Factors” in the Exchange Act Documents and the risks identified in the attached
Private Placement Memorandum.
5.3 The
Investor acknowledges, represents and agrees that no action has been or will be
taken in any jurisdiction outside the United States by the Company that would
permit an offering of the Shares, or possession or distribution of offering
materials in connection with the issue of the Shares, in any jurisdiction
outside the United States where legal action by the Company for that purpose is
required. Each Investor outside the United States will comply with
all applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.
5.4 The
Investor hereby covenants with the Company not to make any sale of the Shares
without complying with the provisions of this Agreement, and the Investor
acknowledges that the certificates evidencing the Shares will be imprinted with
a legend that prohibits their transfer except in accordance
herewith. The overall commitment of the Investor to investments,
which are not readily marketable, is not excessive in view of the Investor’s net
worth and financial circumstances, and any purchase of the Shares will not cause
such commitment to become excessive. The Investor is able to bear the
economic risk of an investment in the Shares.
5.5 The
Investor further represents and warrants to, and covenants with, 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 as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Investor herein may be
legally unenforceable.
5.6 Investor
will not use any of the restricted Shares acquired pursuant to this Agreement to
cover any short position in the Common Stock of the Company if doing so would be
in violation of applicable securities laws.
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5.7 The
Investor understands that nothing in the Exchange Act Documents, this Agreement
or any other materials presented to the Investor in connection with the purchase
and sale of the Shares 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 Shares.
6. Make
Good
6.1 Background. The
Offering is made in connection with a voluntary share exchange between the
Company and Luckcharm Holdings Limited, a company organized under the laws of
Hong Kong (“Luckcharm”) pursuant to that certain Share Exchange Agreement among
the Company, Luckcharm, Wuhan Guoce Nordic New Energy Co. Ltd., a company
organized under the laws of the People’s Republic of China and wholly-owned
subsidiary of Luckcharm and Golden Wind Holdings Limited, a company organized
under the laws of the British Virgin Islands and sole stockholder of Luckcharm
(“Make Good Pledgor”) dated September 30, 2009 whereby Make Good Pledgor agrees
to sell all of the outstanding capital stock of Luckcharm to the Company in
exchange for the right to receive 32,383,808 shares of common stock of the
Company representing no less than fifty four percent (54%) ownership interest in
the Company.
6.2 Make Good
Shares.
(a) Make Good Pledgor
agrees that if the After-Tax Net Income for the fiscal year ended December 31,
2010 reported in the Company's Annual Report on Form 10-K for the fiscal year
ending December 31, 2010 (the “2010 Actual ATNI”), as filed with the SEC (the
“2010 Annual Report”) is less than $12,500,000 (the “2010 Guaranteed ATNI”),
Make Good Pledgor will transfer to Investor on a pro rata basis (based upon
Investor's Investment Amount relative to the aggregate investment amount of all
investors under the Offering) for no additional consideration, a number of
shares of common stock of the Company equal to: [($12,500,000 - the actual
After-Tax Net Income reported in the 2010 Annual Report)/$2,500,000] * Escrow
Shares (as defined below), with the result referred to herein as the “2010 Make
Good Shares,” provided, that the number of 2010 Make Good Shares shall in no
event exceed 640,000 shares. The “Escrow Shares” means the 640,000 shares of
common stock of the Company (as equitably adjusted for any stock splits, stock
combinations, stock dividends or similar transactions) required to be deposited
with the escrow agent pursuant to the escrow agreement in substantially the form
attached hereto as Appendix B (the “Make
Good Escrow Agreement”). If the Company's audited consolidated financial
statements for the fiscal year ended December 31, 2010 specify that the 2010
Guaranteed ATNI shall have been achieved, no transfer of the Escrow Shares shall
be made to the Investor and all Escrow Shares deposited with the escrow agent
shall immediately be returned to Make Good Pledgor.
(b) In
connection with the foregoing, Make Good Pledgor agrees that within three (3)
business days following the Closing, Make Good Pledgor will deposit the Escrow
Shares into escrow in accordance with the Make Good Escrow Agreement along with
stock powers executed in blank (or with such other instruments of transfer as in
accordance with the requirements of the Company’s transfer agent), and the
handling and disposition of the Escrow Shares shall be governed by this Section
6.2 and such Make Good Escrow Agreement. The Company shall notify the Investor
as soon as the Escrow Shares have been deposited with the escrow agent. The Make
Good Pledgor understands and agrees that the Investor’s right to receive 2010
Make Good Shares pursuant to this Section 6.2 and the Make Good Escrow Agreement
shall continue to run to the benefit of the Investor even if the Investor shall
have transferred or sold all or any portion of its Shares, and that the Investor
shall have the right to assign its rights to receive all or any such shares of
common stock to other persons in conjunction with negotiated sales or transfers
of any of its Shares
(c) For
purposes of this Section 6.2, the term After-Tax Net Income or ATNI shall mean
the after-tax net income of the Company and its consolidated subsidiaries
prepared in accordance with U.S. GAAP consistently applied; provided in the
event that the release of the 2010 Make Good Shares to the Investor or any
Escrow Shares to Make Good Pledgor is deemed to be an expense or deduction from
revenues/income of the Company for the applicable year, as required under U.S.
GAAP, then such expense or deduction shall be excluded for purposes of
determining whether or not the 2010 Guaranteed ATNI has been achieved by
the Company.
5
(d) The
Company covenants and agrees that upon any transfer of 2010 Make Good Shares to
the Investor in accordance with the Make Good Escrow Agreement, the Company
shall promptly instruct its Transfer Agent to reissue such 2010 Make Good Shares
in the Investor’s name and deliver the same as directed by the
Investor.
(e) If
any term or provision of this Section 6.2 contradicts or conflicts with any term
or provision of the Make Good Escrow Agreement, the terms of the Make Good
Escrow Agreement shall control.
6.3 Make Good Warrant
Adjustment.
(a) The
Company agrees that if the 2010 Actual ATNI is less than the 2010 Guaranteed
ATNI, the Company will reduce the exercise price of the Warrant issued to the
Investor by an amount equal to: [($12,500,000 - the actual After-Tax Net Income
reported in the 2010 Annual Report)/$2,500,000] * $1.00 per share (the “Adjusted
Exercise Price”), provided, that if the Adjusted Exercise Price is negative, the
Adjusted Exercise Price will be deemed to equal $0.001 per share.
(b) The
Company covenants and agrees to reissue a new Warrant to the Investor with the
Adjusted Exercise Price if the 2010 Actual ATNI is less than the 2010 Guaranteed
ATNI, within seven (7) days of receipt of the original Warrant issued to the
Investor.
7. Indemnification; Compliance
with the Securities Act.
7.1 Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Investor from and against any
losses, claims, damages or liabilities to which such Investor may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon any breach of the representations or warranties of the Company
contained herein or failure to comply with the covenants and agreements of the
Company contained herein, and the Company will reimburse such Investor for any
reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, or
preparing to defend any such action, proceeding or claim. The Company shall
reimburse each Investor for the amounts provided for herein on demand as such
expenses are incurred.
(b) The
Investor agrees to indemnify and hold harmless the Company (and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon any breach of
the representations or warranties of the Investor contained herein or failure to
comply with the covenants and agreements of the Investor contained herein, and
the Investor will reimburse the Company (or such officer, director or
controlling person), as the case may be, for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim. The Investor shall reimburse the Company
for the amounts provided for herein on demand as such expenses are
incurred.
(c) Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 7.1, such indemnified person shall
notify the indemnifying person in writing of such claim or of the commencement
of such action, but the omission to so notify the indemnifying person will not
relieve it from any liability which it may have to any indemnified person under
this Section 7.1 (except to the extent that such omission materially and
adversely affects the indemnifying person’s ability to defend such action) or
from any liability otherwise than under this Section 7.1. Subject to
the provisions hereinafter stated, in case any such action shall be brought
against an indemnified person, the indemnifying person shall be entitled to
participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified person promptly after receiving the aforesaid
notice from such indemnified person, shall be entitled to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified
person of its election to assume the defense thereof, such indemnifying person
shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof, provided, however, that if
there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any
indemnifying person be liable in respect of any amounts paid in settlement of
any action unless the indemnifying person shall have approved the terms of such
settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
6
(d) The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions of
this Section 7.1, and are fully informed regarding said
provisions. The parties are advised that federal or state public
policy as interpreted by the courts in certain jurisdictions may be contrary to
certain of the provisions of this Section 7.1, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public policy
as a defense to a claim under this Section 7.1 and further agree not to attempt
to assert any such defense.
7.2 Information
Available.
(a) A
copy of the Company Annual Report on Form 10-K, its Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and Information Statements are available on
the SEC's website at www.sec.gov (the "SEC
Filings"); and
(b) Upon
the request of the Investor, the Company will mail a copy of the SEC Filings and
all other information that is made available to stockholders of the Company to
the Investor.
8. Notices. All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (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 delivered from outside the
United States, by International Federal Express or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express, two business days after so mailed, (iv) if
delivered by facsimile, upon electronic confirmation of receipt and shall be
delivered as addressed as follows:
|
(a)
|
if
to the Company, to:
|
GC China
Turbine, Corp.
1694
Falmouth Road, Suite 147
Centerville,
MA 02632
Attn: Marcus
Laun, Director
|
(b)
|
with
a copy to:
|
Weintraub
Genshlea Chediak
400
Capitol Mall, 11th
Floor
Sacramento,
CA 95814
Attn: Mark
C Lee
Phone: (916)
558-6000
Fax: (916)
446-1611
|
|
(c)
|
if
to Make Good Pledgor, to:
|
|
|
Golden
Wind Holdings Limited
|
|
|
P.O.
Box 957
|
|
|
Offshore
Incorporations Centre
|
7
|
|
Road
Town, Tortola, British Virgin
Islands
|
|
|
Attn:
Xu Hong Bing
|
|
|
(d)
|
with
a copy to:
|
|
|
Global
Law Office
|
|
|
14th
Floor, Tower 1, China Central Place
|
|
|
No.
81 Jianguo Road, Beijing, China
100025
|
|
|
Attn:
Larry Liu
|
|
|
Phone: (8610)
6584-6688
|
|
|
Fax: (8610)
6584-6666
|
|
|
(e)
|
if
to the Investor, at its address on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in
writing.
|
9. Changes. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
10. 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.
11. Severability. In
case any provision contained in this Agreement should 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.
12. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Nevada, without giving effect
to the principles of conflicts of law.
13. 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.
14. Rule
144. The Company covenants that it will timely file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any Investor
holding Shares purchased hereunder made after the first anniversary of the
Closing Date, make publicly available such information as necessary to permit
sales pursuant to Rule 144 under the Securities Act), and it will take such
further action as any such Investor may reasonably request, all to the extent
required from time to time to enable such Investor to sell Shares purchased
hereunder without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of the Investor, the
Company will deliver to such holder a written statement as to whether it has
complied with such information and requirements.
15. Confidential
Information. The Investor represents to the Company that, at
all times during the Company’s offering of the Shares, the Investor has
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, and covenants that it
will continue to maintain in confidence such information and shall not use such
information for any purpose other than to evaluate the purchase of the Shares
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 use or disclosure in reliance on this subparagraph (b)
the Investor shall give the Company at least fifteen (15) days prior written
notice (or such shorter period as required by law) 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 best efforts to
obtain reliable assurance that confidential treatment will be accorded any
non-public information so furnished.
8
APPENDIX
A
FORM
OF WARRANT
9
APPENDIX
B
FORM
OF MAKE GOOD ESCROW AGREEMENT
10