Attached files
file | filename |
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8-K - CURRENT REPORT - China Carbon Graphite Group, Inc. | f8k122209_chinacarbon.htm |
EX-3.1 - CERTIFICATE OF DESIGNATION TO THE SERIES B CONVERTIBLE PREFERRED STOCK. - China Carbon Graphite Group, Inc. | f8k122209ex3_chinacarbon.htm |
EX-99.5 - FORM OF WARRANT ISSUED TO THE INVESTORS - China Carbon Graphite Group, Inc. | f8k122209ex99v_chinacarbon.htm |
EX-99.6 - WARRANT ISSUED TO MAXIM GROUP LLC - China Carbon Graphite Group, Inc. | f8k122209ex99vi_chinacarbon.htm |
EX-99.4 - ESCROW AGREEMENT - China Carbon Graphite Group, Inc. | f8k122209ex99iv_chinacarbon.htm |
EX-99.2 - REGISTRATION RIGHTS AGREEMENT - China Carbon Graphite Group, Inc. | f8k122209ex99ii_chinacarbon.htm |
EX-99.7 - PRESS RELEASE - China Carbon Graphite Group, Inc. | f8k122209ex99vii_chinacarbon.htm |
EX-99.3 - SECURITIES ESCROW AGREEMENT - China Carbon Graphite Group, Inc. | f8k122209ex99iii_chinacarbon.htm |
Exhibit
99.1
SUBSCRIPTION
BOOKLET
CHINA
CARBON GRAPHITE GROUP, INC.
___________________________
PRIVATE
OFFERING OF UNITS, WITH EACH UNIT CONSISTING OF:
(i) ONE (1) SHARE OF
SERIES A CONVERTIBLE PREFERRED STOCK, AND
(ii) A WARRANT TO
PURCHASE FOUR-TENTHS OF (1) SHARE OF COMMON STOCK
____________________________
PLACEMENT
AGENT
405
LEXINGTON AVENUE
NEW
YORK, NEW YORK 10174
(212)
895-3500
DECEMBER
22, 2009
CONTENTS
Instructions
for Subscription
Exhibit
A: Wiring
and Check Instructions
Exhibit
B: Subscription
Agreement
Exhibit
C: Confidential
Purchaser Questionnaire
CHINA CARBON GRAPHITE GROUP, INC.
SUBSCRIPTION
BOOKLET
INSTRUCTIONS
FOR SUBSCRIPTION FOR UNITS
Each subscriber for Units offered must
do the following:
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1.
|
Complete,
sign and deliver the Subscription Agreement included in this Subscription
Booklet.
|
|
2.
|
Complete,
sign and deliver the Confidential Purchaser Questionnaire included in this
Subscription Booklet.
|
|
3.
|
Deliver
payment in the amount of the Units subscribed for in accordance with the
wire transfer and check instructions attached hereto as Exhibit
A.
|
|
4.
|
Delivery
of the completed subscription documents described above and check (if
applicable) should be delivered directly to the Company at the following
address, which check shall be immediately forwarded to the escrow
account:
|
CHINA
CARBON GRAPHITE GROUP, INC.,
c/o
Maxim Group LLC
405
Lexington Avenue
New
York, New York 10174
Attention:
Shunda Cannon
Phone:
(212) 895-3500
Fax:
(212) 895-3555
THE
COMPANY AND MAXIM GROUP MAY ACCEPT OR REJECT SUBSCRIPTIONS IN ITS SOLE
DISCRETION. THE OFFERING IS AVAILABLE ONLY TO “ACCREDITED INVESTORS”
AS DEFINED UNDER REGULATION D OF THE SECURITIES OF 1933, AS
AMENDED. In the event that a subscription offer is not accepted by
the Company, the subscription funds shall be returned to the subscriber, without
interest or deduction thereon.
EXHIBIT
A
Wire Transfer and Check
Instructions
Wiring and Check
Instructions:
To
subscribe for Units in the private offering of CHINA CARBON GRAPHITE GROUP,
INC.
1.
|
Date and Fill in the
number of Units being purchased and Complete and Sign the
Signature Page to Subscription
Agreement
|
2.
|
Sign the Confidential
Purchaser Questionnaire page attached to this
letter.
|
3.
|
Fax all forms to Shunda
Cannon at (212) 895-3555 and then send all signed original documents with
a check (if a check is being used) to: Maxim Group LLC, 405 Lexington
Avenue, New York, New York 10174 Attention: Shunda
Cannon.
|
4.
|
Please
make your subscription payment payable to the order of “Continental Stock
Transfer & Trust Company AAF China Carbon Graphite Group,
Inc.”
|
For wiring funds directly to the escrow account,
see the following
instructions:
Name: JP
Morgan Chase Bank
ABA
Number: 021000021
Account
No.: 530-154498
Account Name:
Continental Stock Transfer & Trust Company AAF China Carbon Graphite
Group, Inc.
Checks:
Checks should be made out
to the order
of “Continental Stock Transfer & Trust Company AAF China Carbon
Graphite Group, Inc.”
EXHIBIT
B
SUBSCRIPTION
AGREEMENT
CHINA
CARBON GRAPHITE GROUP, INC.
Please
review, sign on page S-1, and return to the placement agent at the address
below:
c/o
Maxim Group LLC
405
Lexington Avenue
New
York, New York 10174
Attention:
Shunda Cannon
Phone:
(212) 895-3500
Fax:
(212) 895-3555
SUBSCRIPTION
AGREEMENT
CHINA
CARBON GRAPHITE GROUP, INC.
OTCBB:CHGI
Minimum
Offering Amount: 1,700,000 Units ($2,040,000)
Maximum
Offering Amount: 2,500,000 Units ($3,000,000)
Each
Unit Consisting of: (i) One (1) Share of Series B Convertible Preferred Stock,
and
(ii)
a Warrant to purchase Four-Tenths (0.40) of One (1) Share of Common
Stock
Purchase
Price: $1.20 per Unit
HOW
TO SUBSCRIBE
CHINA
CARBON GRAPHITE GROUP, INC., (the “Company”) will offer a
minimum of 1,000,000 units (“Units”) for aggregate
proceeds of $2,040,000 (the “Minimum Amount”) consisting
of (i) one share of Series B Convertible Preferred Stock (the “Series B Preferred”) and (ii)
a five year warrant to purchase four-tenths of one share of common stock, par
value $0.001 per share, of the Company (the “Common Stock”) underlying the
Series B Preferred at an exercise price of $1.30 per share (“Warrant”). The
Units are offered to investors at a price of $1.20 per Unit, on a “best efforts,
all-or-none” basis as to 1,700,000 Units and on a “best efforts” basis as to the
remaining Units. We are offering a maximum of 2,000,000 Units (“Maximum
Amount”).
The
minimum investment required is $60,000, representing 50,000 Units, although the
Company and Maxim Group LLC (the “Placement Agent”) may, in
their mutual discretion and without notice to investors, accept subscriptions
for a lesser amount. Any qualified subscriber who wishes to purchase
Units should deliver the following items to the Placement Agent:
(1)
|
one
dated and executed copy of the Subscription Agreement with all blanks
properly completed;
|
(2)
|
one
dated and executed copy of the Confidential Purchaser Questionnaire with
all blanks properly completed; and
|
(3)
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either:
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a.
|
a
check payable to the order of “Continental Stock Transfer & Trust
Company AAF China Carbon Graphite Group, Inc.” in the amount of $1.20 per
each Unit purchased; or
|
b.
|
wire
transfer to “Continental Stock Transfer & Trust Company” in accordance
with the wire transfer instructions attached hereto as Exhibit A. All
subscription proceeds received and accepted will be deposited directly
into the Escrow Account pending receipt of funds equal or greater than to
the Minimum Offering at which time the proceeds will be distributed to the
operating account of the Company in the first
closing. Additional closings may from time to time be conducted
with the final closing to occur within 10 days after the earlier of the
Termination Date or the sale of all Units
offered.
|
B-1
CHINA
CARBON GRAPHITE GROUP, INC.
SUBSCRIPTION
AGREEMENT
The
undersigned (hereinafter “Subscriber”) hereby confirms
his/her/its subscription for the purchase of __________________ investment units
(the “Units”), with each
Unit consisting of: (i) one (1) share of Series B Convertible Preferred
Stock (the “Series B Preferred”) and (ii)
a five-year warrant to purchase four-tenths (0.40) of one (1) share of common
stock, par value $0.001 per share, of the Company (the “Common Stock”) underlying the
Series B Preferred at an exercise price of $1.30 per share (the “Warrants”) of CHINA CARBON
GRAPHITE GROUP, INC., a Nevada corporation (the “Company”), on the terms
described below.
Capitalized
terms used and not otherwise defined herein shall have the respective meanings
set forth in the Company’s Private Placement Memorandum, dated December 16, 2009
(the “Memorandum”). The
Units, the shares of Series B Preferred and the Warrants are sometimes referred
to herein as the “Securities.”
In
connection with this subscription, Subscriber and the Company agree as
follows:
1.
Purchase
and Sale of the Units.
(a) The
Company hereby agrees to issue and to sell to Subscriber, and Subscriber hereby
agrees to purchase from the Company, Units for the aggregate subscription amount
set forth on the signature page hereto. The Subscriber understands
that this subscription is not binding upon the Company until the Company accepts
it. The Subscriber acknowledges and understands that acceptance of
this Subscription will be made only by a duly authorized representative of the
Company executing and mailing or otherwise delivering to the Subscriber at the
Subscriber’s address set forth herein, a counterpart copy of the signature page
to this Subscription Agreement indicating the Company’s acceptance of this
Subscription. The Company reserves the right, in its sole discretion
for any reason whatsoever, to accept or reject this subscription in whole or in
part. Following the acceptance of this Subscription Agreement by the
Company, the Company shall issue and deliver to Subscriber such number of Units
subscribed for hereunder against payment in U.S. Dollars of the Purchase Price
(as defined below). If this subscription is rejected, the Company and
the Subscriber shall thereafter have no further rights or obligations to each
other under or in connection with this Subscription Agreement. If
this subscription is not accepted by the Company on or before the last day of
the Offering Period, this subscription shall be deemed rejected.
(b) Subscriber
has hereby delivered and paid concurrently herewith the aggregate purchase price
for the Units set forth on the signature page hereof in an amount required to
purchase and pay for the Units subscribed for hereunder (the “Purchase Price”), which amount
has been paid in U.S. Dollars by wire transfer, subject to collection, to the
order of “CHINA CARBON GRAPHITE GROUP, INC.”
B-2
(c) Subscriber
understands and acknowledges that this subscription is part of a private
placement (“the “Offering”) by the Company of
up to a minimum of $2,040,000 (the “Minimum Amount”) and a maximum
of $3,000,000 of Units (the “Maximum Amount”) on a “best
efforts-all or none” basis with respect to the Minimum Amount and a “best
efforts” basis with respect to the Maximum Amount. Subscriber
understands that Company must sell the Minimum Amount before it receives, and
has the right to expend, the net proceeds from the sal of any Units. The
proceeds from the sale of the Units will be held in escrow until at least the
Minimum Amount is met, and the Company, upon accepting subscriptions, at its
discretion may immediately thereafter conduct a closing and expend the
subscription proceeds.
(d) At the
closing of the Offering, the Company shall deposit with an escrow agent
acceptable to the Company and the Placement Agent, as a pledge for the benefit
of the Subscriber and the other subscribers in the Offering, a number of shares
of Common Stock equal to 50% of the number of shares of Series B Preferred
issued in the Offering (the “Make-Good
Shares”). The Make-Good Shares shall be held in escrow in the
name of the escrow agent and be returned to the Company or delivered to the
Subscribers as hereinafter provided and further provided in a Securities Escrow
Agreement to be entered into by the Company and such escrow agent (the “Securities Escrow Agreement”)
in the event that the Company does not meet certain financial performance
targets for its fiscal years ending December 31, 2010 and December 31,
2011.
1.
|
The
performance target for the Company’s fiscal year ended December 31, 2010
is the achievement of net income (defined to include $120,000 of dividends
payable and a 25% corporate tax rate) of at least $5,100,000. The
performance target for the Company’s fiscal year ended December 31, 2011
is the achievement of net income (defined to include $120,000 of dividends
payable and a 25% corporate tax rate) of at least
$10,000,000. If the Company completes an underwritten equity
financing with gross proceeds in excess of $15,000,000 prior to August 31,
2010, the performance target for the Company’s fiscal year ended December
31, 2011 is the achievement of net income (defined to include $120,000 of
dividends payable and a 25% corporate tax rate) of at least
$20,000,000. In determining net income, to the extent that any
Excluded Items are deducted in computing net income, there shall be added
back the amount of such Excluded Items. “Excluded Items” shall
mean: (i) any income tax, enterprise tax or similar tax in excess of 25%
of income before income taxes; and (ii) any items of expense or deduction
arising directly or indirectly from the Offering and the transaction
contemplated by the Offering.
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2.
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The
total number of Make-Good Shares shall be allocated 50% to 2010 and 50% to
2011. If the Company meets the target number for any year, all
of the Make-Good Shares allocable to that year shall be returned to the
Company for cancellation. If the Company’s net income is less
than the target amount, the percentage shortfall shall be determined to
two decimal places. The Company shall allocate to the
Subscribers in the manner hereinafter provided, that percentage of the
Make-Good Shares for such year as equals the shortfall. For example, if
the shortfall for 2010 is 10% and if the total number of Make-Good Shares
for 2010 is 625,000, then 62,500 Make-Good Shares shall be issued to the
Subscribers.
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B-3
3.
|
For
purposes of paying the Make-Good Shares, a determination will be made
separately with respect to each Subscriber. The number of
Make-Good Shares payable to each Subscriber shall be equal to a fraction
of the total number of Make-Good shares potentially issuable pursuant to
the foregoing provisions (62,500 shares in the example above), the
numerator of which shall be the amount by which (a) the number of shares
of Common Stock issued or issuable upon Series B Preferred which was
initially issued to the Subscriber exceeds (b) the sum of (x) the number
of shares of Common Stock sold or otherwise transferred by the Subscriber
plus (y) the number of shares of Common Stock issued or issuable upon
conversion of the shares of Series B Preferred sold or otherwise
transferred by the Subscriber, and the denominator of which is the number
of shares of Common Stock issued or issuable upon conversion of all of the
Series B Preferred issued by the Company in the offering described in the
Memorandum. Any Make-Good Shares for either year which are not
transferred to the Subscribers pursuant to this paragraph shall be
returned to the Company for
cancellation.
|
2.
Representations and
Warranties of Subscriber.
Subscriber
represents and warrants to the Company and Maxim Group LLC (the “Placement Agent”) as
follows:
(a) Subscriber
is an “accredited investor” as defined by Rule 501 under the Securities Act of
1933, as amended (the “Act”), and Subscriber is
capable of evaluating the merits and risks of Subscriber’s investment in the
Units and has the ability and capacity to protect Subscriber’s
interests.
(b) Subscriber
understands that the Securities have not been registered, but Subscriber is
entitled to certain rights with respect to the registration of the Common Stock
underlying the Series B Preferred and the Warrants (see Section 5
below). Subscriber understands that the Securities will not be
registered under the Act on the ground that the issuance thereof is exempt under
Section 4(2) of the Act as a transaction by an issuer not involving any public
offering and Regulation D under the Act, and that, in the view of the United
States Securities and Exchange Commission (the “Commission”), the statutory
basis for the exception claimed would not be present if any of the
representations and warranties of Subscriber contained in this Subscription
Agreement or those of other purchasers of the Units are untrue or,
notwithstanding the Subscriber’s representations and warranties, the Subscriber
currently has in mind acquiring any of the Units for resale upon the occurrence
or non-occurrence of some predetermined event.
(c) Subscriber
is purchasing the Units subscribed for hereby for investment purposes and not
with a view to distribution or resale, nor with the intention of selling,
transferring or otherwise disposing of all or any part thereof for any
particular price, or at any particular time, or upon the happening of any
particular event or circumstance, except selling, transferring, or disposing the
Units in full compliance with all applicable provisions of the Act, the rules
and regulations promulgated by the Commission thereunder, and applicable state
securities laws. Subscriber understands that an investment in the Securities is
not a liquid investment.
B-4
(d) Subscriber
acknowledges that Subscriber has had the opportunity to ask questions of, and
receive answers from, the Company or any authorized person acting on its behalf
concerning the Company and its business and to obtain any additional
information, to the extent possessed by the Company (or to the extent it could
have been acquired by the Company without unreasonable effort or expense)
necessary to verify the accuracy of the information received by
Subscriber. In connection therewith, Subscriber acknowledges that
Subscriber has had the opportunity to discuss the Company’s business, management
and financial affairs with the Company’s management or any authorized person
acting on its behalf. Subscriber has received and reviewed the
Memorandum and all the information concerning the Company and the Securities,
both written and oral, that Subscriber desires. Without limiting the
generality of the foregoing, Subscriber has been furnished with or has had the
opportunity to acquire, and to review: (i) copies of the Memorandum, and (ii)
all information, both written and oral, that Subscriber desires with respect to
the Company’s business, management, financial affairs and
prospects. In determining whether to make this investment, Subscriber
has relied solely on (i) Subscriber’s own knowledge and understanding of the
Company and its business based upon Subscriber’s own due diligence
investigations and the information furnished pursuant to this paragraph, and
(ii) the information described in subparagraph 2(g) below. Subscriber
understands that no person has been authorized to give any information or to
make any representations which were not contained in the Memorandum and
Subscriber has not relied on any other representations or
information.
(e) Subscriber
has all requisite legal and other power and authority to execute and deliver
this Subscription Agreement and to carry out and perform Subscriber’s
obligations under the terms of this Subscription Agreement. This
Subscription Agreement constitutes a valid and legally binding obligation of
Subscriber, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other general
principles of equity, whether such enforcement is considered in a proceeding in
equity or law.
(f) Subscriber
has carefully considered and has discussed with the Subscriber’s legal, tax,
accounting and financial advisors, to the extent the Subscriber has deemed
necessary, the suitability of this investment and the transactions contemplated
by this Subscription Agreement for the Subscriber’s particular federal, state,
local and foreign tax and financial situation and has independently determined
that this investment and the transactions contemplated by this Subscription
Agreement are a suitable investment for the Subscriber. Subscriber
has relied solely on such advisors and not on any statements or representations
of the Company or any of its agents. Subscriber understands that
Subscriber (and not the Company) shall be responsible for Subscriber’s own tax
liability that may arise as a result of this investment or the transactions
contemplated by this Subscription Agreement.
(g) This
Subscription Agreement and the Confidential Purchaser Questionnaire accompanying
this Subscription Agreement do not contain any untrue statement of a material
fact or omit any material fact concerning Subscriber.
B-5
(h) There are
no actions, suits, proceedings or investigations pending against Subscriber or
Subscriber’s assets before any court or governmental agency (nor, to
Subscriber’s knowledge, is there any threat thereof) which would impair in any
way Subscriber’s ability to enter into and fully perform Subscriber’s
commitments and obligations under this Subscription Agreement or the
transactions contemplated hereby.
(i) The
execution, delivery and performance of and compliance with this Subscription
Agreement and the issuance of the Units will not result in any violation of, or
conflict with, or constitute a default under, any of Subscriber’s articles of
incorporation or by-laws, or equivalent limited liability company, trust or
partnership documents, if applicable, or any agreement to which Subscriber is a
party or by which it is bound, nor result in the creation of any mortgage,
pledge, lien, encumbrance or charge against any of the assets or properties of
Subscriber or the Units.
(j) Subscriber
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk and that Subscriber can bear the economic risk of the
purchase of the Units, including a total loss of his/her/its
investment.
(k) Subscriber
acknowledges that he/she/it has carefully reviewed and considered the risk
factors discussed in the “Risk Factors” section of the Memorandum.
(l) Subscriber
recognizes that no federal, state or foreign agency has recommended or endorsed
the purchase of the Securities.
(m) Subscriber
is aware that the Units and Series B Preferred are, and the Common Stock
issuable upon conversion of the Series B Preferred and upon exercise of the
Warrants will be, when issued, “restricted securities” as that term is defined
in Rule 144 of the general rules and regulations under the Act.
(n) Subscriber
understands that the Units, the Series B Preferred, and the Common Stock
issuable upon conversion of the Series B Preferred and upon exercise of the
Warrants shall bear the following legend or one substantially similar thereto,
which Subscriber has read and understands:
NEITHER
THIS SECURITY NOR ANY SECURITY INTO WHICH IT MAY BE CONVERTED HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY SECURITY INTO WHICH IT
MAY BE CONVERTED NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF AT ANY TIME IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.
B-6
(o) Because
of the legal restrictions imposed on resale, Subscriber understands that the
Company shall have the right to note stop-transfer instructions in its stock
transfer records, and Subscriber has been informed of the Company’s intention to
do so. Any sales, transfers, or other dispositions of the Units by
Subscriber, if any, will be made in compliance with the Act and all applicable
rules and regulations promulgated thereunder.
(p) Subscriber
acknowledges that Subscriber has such knowledge and experience in financial and
business matters that Subscriber is capable of evaluating the merits and risks
of an investment in the Securities and of making an informed investment decision
with respect thereto.
(q) Subscriber
represents that: (i) Subscriber is able to bear the economic risks of an
investment in the Securities and to afford a complete loss of the investment,
and (ii) (A) Subscriber could be reasonably assumed to have the ability and
capacity to protect his/her/its interests in connection with this subscription;
or (B) Subscriber has a pre-existing personal or business relationship with
either the Company or any affiliate thereof of such duration and nature as would
enable a reasonably prudent purchaser to be aware of the character, business
acumen and general business and financial circumstances of the Company or such
affiliate and is otherwise personally qualified to evaluate and assess the
risks, nature and other aspects of this subscription.
(r) Subscriber
further represents that the address of Subscriber set forth below is his/her
principal residence (or, if Subscriber is a company, partnership or other
entity, the address of its principal place of business); that Subscriber is
purchasing the Securities for Subscriber’s own account and not, in whole or in
part, for the account of any other person; Subscriber is purchasing the
Securities for investment and not with a view to the resale or distribution
thereof; and that Subscriber has not formed any entity, and is not an entity
formed, for the purpose of purchasing the Securities.
(s) Subscriber
understands that the Company shall have the unconditional right to accept or
reject this subscription, in whole or in part, for any reason or without a
specific reason, in the sole and absolute discretion of the Company (even after
receipt and clearance of Subscriber’s funds). This Subscription
Agreement is not binding upon the Company until accepted in writing by an
authorized officer of the Company. In the event that this
subscription is rejected, then Subscriber’s subscription funds (to the extent of
such rejection) will be promptly returned in full without interest thereon or
deduction therefrom.
(t) Subscriber
has not been furnished with any oral representation or oral information in
connection with the offering of the Securities that is not contained in, or is
in any way contrary to or inconsistent with, statements made in the Memorandum
and this Subscription Agreement.
(u) Subscriber
represents that Subscriber is not subscribing for the Securities as a result of
or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over the
Internet, television or radio or presented at any seminar or meeting or any
public announcement or filing of or by the Company.
B-7
(v) Subscriber
has carefully read and understood this Subscription Agreement and the
Memorandum, and Subscriber has accurately completed the Confidential Purchaser
Questionnaire which accompanies this Subscription Agreement.
(w) No
representations or warranties have been made to Subscriber by the Company, or
any officer, employee, agent, affiliate or subsidiary of the Company, other than
the representations of the Company contained herein, and in subscribing for the
Securities the Subscriber is not relying upon any representations other than
those contained in the Memorandum or in this Subscription
Agreement.
(x) Subscriber
represents and warrants, to the best of Subscriber’s knowledge, that no finder,
broker, agent, financial advisor or other intermediary, nor any purchaser
representative or any broker-dealer acting as a broker other than Maxim Group
LLC, is entitled to any compensation in connection with the transactions
contemplated by this Subscription Agreement.
(y) Subscriber
represents and warrants that Subscriber has: (i) not distributed or reproduced
the Memorandum, in whole or in part, at any time, without the prior written
consent of the Company and (ii) kept confidential the existence of the
Memorandum and the information contained therein or made available in connection
with any further investigation of the Company.
(z) If the
Subscriber is a corporation, partnership, limited liability company, trust, or
other entity, the person executing this Subscription Agreement hereby represents
and warrants that the above representations and warranties shall be deemed to
have been made on behalf of such entity and the Subscriber has made the same
after due inquiry to determine the truthfulness of such representations and
warranties.
(aa) If the
Subscriber is a corporation, partnership, limited liability company, trust, or
other entity, it represents that: (i) it is duly organized, validly existing and
in good standing in its jurisdiction of incorporation or organization and has
all requisite power and authority to execute and deliver this Subscription
Agreement and purchase the Securities as provided herein; (ii) its purchase of
the Securities will not result in any violation of, or conflict with, any term
or provision of the charter, By-Laws or other organizational documents of
Subscriber or any other instrument or agreement to which the Subscriber is a
party or is subject; (iii) the execution and delivery of this Subscription
Agreement and Subscriber’s purchase of the Securities has been duly authorized
by all necessary action on behalf of the Subscriber; and (iv) all of the
documents relating to the Subscriber’s subscription to the Securities have been
duly executed and delivered on behalf of the Subscriber and constitute a legal,
valid and binding agreement of the Subscriber.
(bb) The
Subscriber understands and agrees that the securities are anticipated to be sold
by the Company through the Placement Agent, a licensed broker-dealer, on an “all
or none” basis with respect to the Minimum Amount and a “best efforts” with
respect to the rest of the offering and that the Company has engaged the
Placement Agent to sell the securities on its behalf, and will pay the Placement
Agent the fees, expenses including (i) a fee of 9% of the gross proceeds, a
portion of which the placement agent may pay to other licensed broker-dealers;
(ii) a corporate finance fee of 1% of the gross proceeds; and (iii) warrants to
purchase the number of shares of Common Stock equal to 5% of the number of
shares included as part of the Units sold in this offering at a price equal to
$1.32 per share of Common Stock.
B-8
(cc) The
Subscriber should check the Office of Foreign Assets Control (“OFAC”) website at
http://www.treas.gov/ofac before making the following representations. The
Subscriber represents that the amounts invested by it in the Company in the
Offering were not and are not directly or indirectly derived from activities
that contravene federal, state or international laws and regulations, including
anti-money laundering laws and regulations. Federal regulations and Executive
Orders administered by OFAC prohibit, among other things, the engagement in
transactions with, and the provision of services to, certain foreign countries,
territories, entities and individuals. The lists of OFAC prohibited
countries, territories, persons and entities can be found on the OFAC website at
http://www.treas.gov/ofac. In addition, the programs administered by
OFAC (the “OFAC
Programs”) prohibit dealing with individuals or entities in certain
countries regardless of whether such individuals or entities appear on the OFAC
lists.
(dd) To the
best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person
controlling or controlled by the Subscriber; (3) if the Subscriber is a
privately-held entity, any person having a beneficial interest in the
Subscriber; or (4) any person for whom the Subscriber is acting as agent or
nominee in connection with this investment is a country, territory, individual
or entity named on an OFAC list, or a person or entity prohibited under the OFAC
Programs. Please be advised that the Company may not accept any
amounts from a prospective investor if such prospective investor cannot make the
representation set forth in this and the preceding paragraph. The
Subscriber agrees to promptly notify the Company and the Placement Agent should
the Subscriber become aware of any change in the information set forth in these
representations. The Subscriber understands and acknowledges that, by
law, the Company may be obligated to “freeze the account” of the Subscriber,
either by prohibiting additional subscriptions from the Subscriber, declining
any redemption requests and/or segregating the assets in the account in
compliance with governmental regulations, and Placement Agent may also be
required to report such action and to disclose the Subscriber’s identity to
OFAC. The Subscriber further acknowledges that the Company may, by written
notice to the Subscriber, suspend the redemption rights, if any, of the
Subscriber if the Company reasonably deems it necessary to do so to comply with
anti-money laundering regulations applicable to the Company and Placement Agent
or any of the Company’s other service providers. These individuals
include specially designated nationals, specially designated narcotics
traffickers and other parties subject to OFAC sanctions and embargo
programs.
(ee) To the
best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person
controlling or controlled by the Subscriber; (3) if the Subscriber is a
privately-held entity, any person having a beneficial interest in the
Subscriber; or (4) any person for whom the Subscriber is acting as agent or
nominee in connection with this investment is a senior foreign political figure,
or any immediate family member or close associate of a senior foreign political
figure.
B-9
(ff) If the
Subscriber is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the
Subscriber receives deposits from, makes payments on behalf of, or handles other
financial transactions related to a Foreign Bank, the Subscriber represents and
warrants to the Company that: (1) the Foreign Bank has a fixed address, other
than solely an electronic address, in a country in which the Foreign Bank is
authorized to conduct banking activities; (2) the Foreign Bank maintains
operating records related to its banking activities; (3) the Foreign Bank is
subject to inspection by the banking authority that licensed the Foreign Bank to
conduct banking activities; and (4) the Foreign Bank does not provide banking
services to any other Foreign Bank that does not have a physical presence in any
country and that is not a regulated affiliate.
3. Representations and
Warranties of the Company. The Company, for itself and on
behalf of its wholly-owned subsidiaries Talent International Investment Limited
and Xinghe Yongle Carbon Co., Ltd. and Xinghe Xingyong Carbon Co., Ltd., a
variable interest entity controlled by the Company (collectively, the “Subsidiaries”), represents and
warrants to Subscriber as follows:
(a) Due
Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Nevada and has the requisite
power and authority to own its properties and to carry on its business as
presently conducted. The Company and its Subsidiaries are qualified
to transact business as a domestic or foreign corporation and are in good
standing (to the extent the concept of good standing is recognized in such
jurisdictions) under the laws of each jurisdiction where the location of its
properties or the conduct of its business makes such qualification necessary,
except where the failure to be so qualified and in good standing would not have
a material and adverse effect on the business, condition (financial or
otherwise), operations, prospects or property of the Company or its
Subsidiaries, taken as a whole (“Material Adverse
Effect”).
(b) Due
Authorization; Enforceability. Each document necessary to effect the
Offering, including, without limitation, this Subscription Agreement, the
Certificate of Designations of the Series B Preferred, the Warrants, the
Registration Rights Agreement (as defined below) and the Securities Escrow
Agreement (collectively, the “Transaction Documents”) has
been duly authorized, executed and delivered by the Company and is a valid and
binding agreement enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The Company and its
Subsidiaries have full corporate power and authority necessary to conduct its
business as presently conducted and to enter into and deliver the Transaction
Documents and to perform its obligations thereunder.
(c) Non
Contravention. None of the execution and delivery of, or performance
by the Company or its Subsidiaries, as applicable, under any of the Transaction
Documents or the consummation of the transactions herein or therein contemplated
conflicts with, violates, or will result in the creation or imposition of any
lien, charge or other encumbrance upon any of the assets of the Company or its
Subsidiaries, under any agreement or other instrument to which the Company or
its Subsidiaries is a party or by which the Company or its Subsidiaries or its
assets may be bound, any term of the certificate of incorporation or by-laws of
the Company or its Subsidiaries, or any license, permit, judgment, decree,
order, statute, rule or regulation including SAFE (as defined in the Memorandum)
applicable to the Company or its Subsidiaries or any of its assets, except where
such conflict, violation or creation would not have a Material Adverse
Effect. Without limiting the generality of the foregoing, the terms
of the Transaction Documents do not conflict rights of, and with respect to the
Certificate of Designations of the Series B Preferred, have been duly and
lawfully approved by, the holders of the Company’s outstanding shares of Series
A Convertible Preferred Stock.
B-10
(d) Information
Provided. The Memorandum and/or information provided by the Company
to the undersigned hereof, including, without limitation, all filings of the
Company filed with the Securities and Exchange Commission under the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”), included
therewith or filed prior to the completion of the Offering (collectively, “SEC Reports”), taken together,
do not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. Except as may have been corrected or supplemented in a
subsequent SEC Report, as of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder. Except as set forth in
the SEC Reports, 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 material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company’s most recently filed periodic report under the
Exchange Act, as the case may be, is being prepared. The Company’s
certifying officers have evaluated the effectiveness of the Company’s controls
and procedures as set forth in the most recently filed periodic report under the
Exchange Act.
(e) Internal
Controls. The Company maintains a system of internal accounting and
other 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 reliable financial statements in conformity with United States
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accounting for assets
is compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any material differences.
(f) Securities
Exemptions. Neither the Company nor any of its directors, officers, employees,
agents or representatives (“Company Representatives”) have
taken or will take any action which has caused or may cause the Offering not to
qualify for exemption from the registration requirements of the Securities Act
or of other federal, state or other securities or other laws, it being
understood that the Company Representatives do not include the Placement Agent
or its managers, members, consultants or employees. In connection with the
Offering, neither the Company nor the Company Representatives shall offer or
cause to be offered the Units by any form of general solicitation or general
advertising as defined in Rule 502(c) of Regulation D. The Company
and the Company Representatives have not taken and shall not take any action
that would cause the Offering to be integrated with other transactions under
Rule 502(a) of Regulation D. Neither the Company nor, to the
Company’s knowledge, any of its affiliates or Company Representatives has, prior
to the date hereof, made any offer or sale of any securities which could be
“integrated” for purposes of the Securities Act or the Rules and Regulations
with the offer and sale of the Units pursuant to this Offering.
B-11
(g) No
commissions. The Company has taken no action that would give rise to
any claim by any person for brokerage commissions, finder’s fees or similar
payments relating to the Offering and the transactions contemplated hereby,
other than to the Placement Agent.
(h) Anti-Dilution.
The transaction contemplated hereby will not result in the application of any
anti-dilution or price protection provisions attributable to any of the
Company’s existing and outstanding securities, whether equity, debt or a hybrid
thereof.
(i) Conduct
of Business. The conduct of business by the Company and its
Subsidiaries as presently conducted is not subject to continuing oversight,
supervision, regulation or examination by any governmental official or body of
the United States or any other jurisdiction wherein the Company or its
Subsidiaries conducts or proposes to conduct such business, except as such
regulation as is applicable to commercial enterprises generally. To
the Company’s knowledge, the Company and its Subsidiaries have obtained all
requisite licenses, permits and other governmental authorization necessary to
conduct its business as presently conducted, except where the failure to obtain
such license, permit or other governmental authorization would not result in a
Material Adverse Effect.
(j) No
Defaults. Except as disclosed in the Memorandum, to the knowledge of
the Company, no default by the Company or its Subsidiaries exists in the due
performance under any material agreement to which the Company or its
Subsidiaries is a party or to which any of its assets is subject (collectively,
the “Company
Agreements”), except where such defaults do not, individually or in the
aggregate, have a Material Adverse Effect. The Company Agreements are
in full force and effect in accordance with their respective terms.
(k) Intellectual
Property. The Company or its Subsidiaries own all right, title and
interest in, or possesses adequate and enforceable rights to use, without
further payment, all patents, patent applications, trademarks, trade names,
service marks, copyrights, franchises, trade secrets, confidential information,
processes, formulations, software and source and object codes employed in the
conduct of their business (collectively, the “Intangibles”). To
the knowledge of the Company, it has not infringed upon the rights of others
with respect to the Intangibles and neither the Company nor its Subsidiaries
have received notice that they have or may have infringed or are infringing upon
the rights of others with respect to the Intangibles, or any notice of conflict
with the asserted rights of others with respect to the Intangibles that could,
individually or in the aggregate, have a Material Adverse Effect.
(l) Anti-Terrorism. Neither
the sale of the Units by the Company nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto. Without limiting the foregoing, neither the Company nor its
Subsidiaries is (a) a person whose property or interests in property are blocked
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) a person who
engages in any dealings or transactions, or be otherwise associated, with any
such person. To the Company’s knowledge, the Company and its
Subsidiaries are in compliance, in all material respects, with the USA Patriot
Act of 2001 (signed into law October 26, 2001).
B-12
(m) Capitalization;
Additional Issuances. The issued and outstanding securities of the
Company as of December 15, 2009 are as set forth in the
Memorandum. Except for XingGuang’s right of first refusal to
participate in future financings or as otherwise set forth in the Memorandum,
there are no outstanding agreements or preemptive or similar rights affecting
the Common Stock and no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any Common Stock of the
Company as of the date of the Memorandum.
(n) Tax
Returns. The Company and its Subsidiaries have properly prepared and
timely filed all federal, state, foreign and other tax returns that are required
to be filed by each of them and have paid or made provision for the payment of,
except such as may be contested in good faith, all taxes, assessments,
governmental or other similar charges, including without limitation, all sales
and use taxes and all taxes which the Company and its Subsidiaries are obligated
to withhold from amounts owing to employees, creditors and third parties, with
respect to the periods covered by such tax returns (whether or not such amounts
are shown as due on any tax return). No deficiency assessment with
respect to a proposed adjustment of the Company’s or its Subsidiary’s federal,
state, local or foreign taxes is pending or, to the Company’s knowledge,
threatened which, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect. The accruals and reserves on
the books and records of the Company in respect of tax liabilities for any
taxable period not finally determined are adequate in all material respects to
meet any assessments and related liabilities for any such period and, since the
date of the Company’s most recent audited financial statements, the Company has
not incurred any liability for taxes other than in the ordinary course of its
business. There is no tax lien, whether imposed by any federal,
state, foreign or other taxing authority, outstanding against the assets,
properties or business of the Company or its Subsidiaries.
(o) Political
Contributions. Neither the Company, nor the Company Representatives,
have at any time during the last five (5) years: (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments that are not prohibited by
the laws of the United States or any jurisdiction thereof or any foreign
jurisdiction.
(p) Labor
disputes. No labor disturbance by the employees of the Company or its
Subsidiaries currently exists or, to the Company’s knowledge, is likely to
occur.
(q) Consents. No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, its Subsidiaries, or
any of its affiliates, is required for the execution by the company of the
Transaction Documents and compliance and performance by the Company or its
Subsidiaries of its obligations under the Transaction Documents, including,
without limitation, the issuance and sale of the Securities, other than such
consents, approvals and authorizations as shall have been received by the
Company or its Subsidiaries as of the closing date, except for any notices of
sale required to be filed with the Securities and Exchange Commission under
Regulation D of the Act, or such post-closing filings as may be required
under applicable state securities laws.
B-13
(r) The
Securities. The Securities upon issuance:
1.
|
will
be free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the Act and any
applicable state securities laws;
|
2.
|
will
be duly authorized and validly issued, fully paid and
non-assessable;
|
3.
|
will
not have been issued or sold in violation of any preemptive or other
similar rights of the holders of any securities of the
Company;
|
4.
|
will
have been issued in reliance upon an exemption from the registration
requirements of and, assuming the representations and warranties of the
Subscriber herein is true and accurate, will have been issued in
compliance with Regulation D under the 1933
Act.
|
(s) Litigation. Except
as disclosed in the Memorandum, there are no material legal proceedings, other
than routine litigation incidental to the business, pending or, to the knowledge
of the Company, threatened against or involving the Company, its Subsidiaries or
any of its respective property or assets. There are no outstanding
orders, judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving the Company or its
Subsidiaries.
(t) Disclosure. All
of the disclosure furnished by or on behalf of the Company to the Subscribers
regarding the Company, its business and the transactions contemplated hereby,
including, without limitation, any disclosure contained in the Memorandum, the
SEC Reports or included in presentations to potential investors, taken together,
is true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, taken together, in light of the
circumstances under which they were made, not misleading.
4.
Indemnification. Subscriber
agrees to indemnify and hold harmless the Company, the Placement Agent, and
their respective officers, directors, employees, shareholders, agents,
attorneys, representatives and affiliates, and any person acting for or on
behalf of the Company or the Placement Agent, from and against any and all
damage, loss, liability, cost and expense (including reasonable attorneys’ fees
and disbursements) which any of them may incur by reason of the failure by
Subscriber to fulfill any of the terms and conditions of this Subscription
Agreement, or by reason of any breach of the representations and warranties made
by Subscriber herein, or in any other document provided by Subscriber to the
Company in connection with this investment. All representations,
warranties and covenants of each of Subscriber and the Company contained herein
shall survive the acceptance of this subscription and the closings.
B-14
5.
Registration
Rights.
(a) In
consideration of the investment in the Units described in this Subscription
Agreement and the Memorandum, the Company hereby grants to the Subscriber, and
Subscriber hereby agrees to and accepts from the Company, the registration
rights set forth in the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit I (the “Registration Rights
Agreement”).
(b) In
connection with the exercise by Subscriber of the registration rights set forth
in the Registration Rights Agreement, and with respect to the Securities held by
such Subscriber, Subscriber hereby covenants that, prior to filing a
Registration Statement or Prospectus (each as defined in Registration Rights
Agreement) or any amendments or supplements thereto, Subscriber shall promptly
and truthfully complete and execute a selling security-holder questionnaire
provided by the Company, and provide any and all such other material information
as the Company may require in order to prepare and file such Registration
Statement, Prospectus or any amendment or supplement thereto.
6. Miscellaneous.
(a) Subscriber
agrees not to transfer or assign this Subscription Agreement or any of
Subscriber’s interests herein without the prior written approval of the Company
and further agrees that the transfer or assignment of the Securities acquired
pursuant hereto shall be made only in accordance with all applicable
laws.
(b) Subscriber
agrees that Subscriber cannot cancel, terminate, or revoke this Subscription
Agreement or any agreement of Subscriber made hereunder, and this Subscription
Agreement shall survive the death or legal disability of Subscriber and shall be
binding upon Subscriber’s heirs, executors, administrators, successors, and
permitted assigns.
(c) Subscriber
has read, understood and accurately completed this entire Subscription
Agreement.
(d) This
Subscription Agreement and the Confidential Purchase Questionnaire constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and may be amended or waived only by a written instrument signed
by all parties.
(e) Subscriber
acknowledges that it has been advised and has had the opportunity to consult
with Subscriber’s own attorney regarding this subscription and Subscriber has
done so to the extent that Subscriber deems appropriate.
(f) Any
notice or other document required or permitted to be given or delivered to the
parties hereto shall be in writing and sent: (i) by fax if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid) or (c) by a recognized overnight
delivery service (with charges prepaid).
B-15
If to the
Company, to:
CHINA
CARBON GRAPHITE GROUP, INC.
c/o
Xinghe Yongle Carbon Co., Ltd.
787
Xicheng Wai, Chengguantown,
Xinghe
County, Inner Mongolia, China
Phone:
(86) 474-7209723
Attention:
Donghai Yu, Chief Executive Officer
With a
copy to:
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32nd Floor
New York,
New York 10006
Phone:
(212) 981-6767
Fax:
(212) 930-9725
Attn: Asher S. Levitsky
P.C.
If to the
Placement Agent, to:
Maxim
Group LLC
405
Lexington Avenue
New York,
New York 10174
Phone:
(212) 895-3500
Fax:
(212) 895-3555
Attention: Clifford
A. Teller
With a
copy to:
Ellenoff
Grossman & Schole LLP
150 East
42nd
Street, 11th
Floor
New York,
NY 10017
Phone:
(212) 370-1300
Fax:
(212) 370-7889
Attn:
Barry I. Grossman, Esq.
If to the
Subscriber, at Subscriber’s address set forth on the signature page to this
Subscription Agreement, or such other address as Subscriber shall have specified
to the Company in writing.
(g) It is
expressly agreed that that Placement Agent shall be deemed a third party
beneficiary of, and shall be entitled to rely on and enforce as if a party
hereto, each of the Company’s representations and warranties made to Subscriber
herein.
(h) Failure
of the Company to exercise any right or remedy under this Subscription Agreement
or any other agreement between the Company and the Subscriber, or otherwise, or
any delay by the Company in exercising such right or remedy, will not operate as
a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed by the Company.
B-16
(i) This
Subscription Agreement shall be enforced, governed and construed in all respects
in accordance with the laws of the State of New York, as such laws are applied
by the New York courts except with respect to the conflicts of law provisions
thereof, and shall be binding upon the Subscriber and the Subscriber’s heirs,
estate, legal representatives, successors and permitted assigns and shall inure
to the benefit of the Company, and its successors and assigns.
(j) Any legal
suit, action or proceeding arising out of or relating to this Subscription
Agreement or the transactions contemplated hereby shall be instituted
exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York. The
parties hereto hereby: (i) waive any objection which they may now have or
hereafter have to the venue of any such suit, action or proceeding, and (ii)
irrevocably consent to the jurisdiction of the New York Supreme Court, County of
New York, and the United States District Court for the Southern District of New
York in any such suit, action or proceeding. The parties further
agree to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York and agree that service of process upon a party which is
mailed by certified mail to such party’s address shall be deemed in every
respect effective service of process upon such party in any such suit, action or
proceeding.
(k) If any
provision of this Subscription Agreement is held to be invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
modified to conform with such statute or rule of law. Any provision
hereof that may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provisions hereof.
(l) The
parties understand and agree that money damages would not be a sufficient remedy
for any breach of this Subscription Agreement by the Company or the Subscriber
and that the party against which such breach is committed shall be entitled to
equitable relief, including an injunction and specific performance, as a remedy
for any such breach, without the necessity of establishing irreparable harm or
posting a bond therefor. Such remedies shall not be deemed to be the
exclusive remedies for a breach by either party of this Subscription Agreement
but shall be in addition to all other remedies available at law or equity to the
party against which such breach is committed.
(m) All
pronouns and any variations thereof used herein shall be deemed to refer to the
masculine, feminine, singular or plural, as identity of the person or persons
may require.
(n) This
Subscription Agreement may be executed in counterparts and by facsimile, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
[Signature
Page Follows]
B-17
Signature
Page for Individuals:
IN WITNESS WHEREOF, Subscriber has
caused this Subscription Agreement to be executed as of the date indicated
below.
$
|
/
|
|
Aggregate
Amount of Investment
|
Number
of Series B Preferred Shares/
Warrant
Shares
|
|
|
|
|
Print
or Type Name
|
Print
or Type Name (Joint-owner)
|
|
|
|
|
Signature
|
Signature
(Joint-owner)
|
|
|
|
|
Date
|
Date
(Joint-owner)
|
|
|
|
|
Social
Security Number
|
Social
Security Number (Joint-owner)
|
|
|
|
|
Address
|
Address
(Joint-owner)
|
|
_______ Joint Tenancy | ______ Tenants in Common |
S-1
Signature
Page for Partnerships, Corporations or Other Entities:
IN WITNESS WHEREOF, Subscriber has
caused this Subscription Agreement to be executed as of the date indicated
below.
$ | ||
Aggregate Amount of Investment | ||
Number of Series B Preferred Shares | ||
Number of Warrant Shares | ||
Print or Type Name of Entity | ||
Address | ||
Taxpayer I.D. No. (if applicable) | Date | |
Signature | Print or Type Name and Indicate Title or Position with Entity | |
Signature (other authorized signatory) | Print or Type Name and Indicate Title or Position with Entity |
S-2
Acceptance:
IN WITNESS WHEREOF, the Company has
caused this Subscription Agreement to be executed, and the foregoing
subscription accepted, as of the date indicated below, as to Units (an
aggregate investment of $_______).
CHINA
CARBON GRAPHITE GROUP, INC.
By: __________________________________
Name:
Title:
Date:
__________________________, 2009
S-3
EXHIBIT
I
Registration
Rights Agreement
[attached
hereto]
EXHIBIT
C
CONFIDENTIAL
PURCHASER QUESTIONNAIRE
Please
fill in the information and sign on page S-1, and return to the placement
agent
at
the address below:
Maxim
Group LLC
405
Lexington Avenue
New
York, New York 10174
Attention: Shunda
Cannon
Phone:
(212) 895-3500
Fax:
(212) 895-3555
CONFIDENTIAL
PURCHASER QUESTIONNAIRE
CHINA
CARBON GRAPHITE GROUP, INC.
THIS
QUESTIONNAIRE MUST BE ANSWERED FULLY AND RETURNED ALONG WITH YOUR COMPLETED
SUBSCRIPTION AGREEMENT IN CONNECTION WITH YOUR PROSPECTIVE PURCHASE OF
SECURITIES FROM CHINA CARBON GRAPHITE GROUP, INC. (THE “COMPANY”).
THE
INFORMATION SUPPLIED IN THIS QUESTIONNAIRE WILL BE HELD IN STRICT
CONFIDENCE. NO INFORMATION WILL BE DISCLOSED EXCEPT TO THE EXTENT
THAT SUCH DISCLOSURE IS REQUIRED BY LAW OR REGULATION, OTHERWISE DEMANDED BY
PROPER LEGAL PROCESS OR IN LITIGATION INVOLVING THE COMPANY.
Capitalized
terms used herein without definition shall have the respective meanings given
such terms as set forth in the Subscription Agreement between CHINA CARBON
GRAPHITE GROUP, INC. and the subscriber signatory thereto (the “Subscription
Agreement”).
(1) The
undersigned represents and warrants that he, she or it comes within at least one
category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
undersigned comes within that category. The undersigned agrees to
furnish any additional information which the Company deems necessary in
order to verify the answers set forth below.
Category
A
|
The
undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000.
|
Explanation. In
calculating net worth you may include equity in personal property and real
estate, including your principal residence, cash, short-term investments, stock
and securities. Equity in personal property and real estate should be
based on the fair market value of such property less debt secured by such
property.
Category
B
|
The
undersigned is an individual (not a partnership, corporation, etc.) who
had an income in excess of $200,000 in each of the two most recent years,
or joint income with his or her spouse in excess of $300,000 in each of
those years (in each case including foreign income, tax exempt income and
full amount of capital gains and losses but excluding any income of other
family members and any unrealized capital appreciation) and has a
reasonable expectation of reaching the same income level in the current
year.
|
Category
C
|
The
undersigned is a director or executive officer of the Company which is
issuing and selling the Securities.
|
C-1
Category
D
|
The
undersigned is a bank, as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended (the “Act”); a savings and loan
association or other institution as defined in
Section 3(a)(5)(A) of the Act, whether acting in its individual or
fiduciary capacity; any insurance company as defined in Section 2(13)
of the Act; any 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; any 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;
any 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; any 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 advisor, or if
the employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons
that are accredited investors (describe
entity).
|
Category
E
|
The
undersigned is a private business development company as defined in
section 202(a) (22) of the Investment Advisors Act of 1940 (describe
entity).
|
Category
F
|
The
undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of
Section 501(c)(3) of the Internal Revenue Code, in each case not
formed for the specific purpose of acquiring the Securities and with total
assets in excess of $5,000,000 (describe
entity).
|
Category
G
|
The
undersigned is a trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Securities, where the
purchase is directed by a “sophisticated investor” as defined in
Regulation 506(b)(2)(ii) under the
Act.
|
C-2
Category
H
|
The
undersigned is an entity (other than a trust) in which all of the equity
owners are “accredited investors” within one or more of the above
categories. If relying upon this Category alone, each equity
owner must complete a separate copy of this Purchaser Questionnaire
(describe entity).
|
The
undersigned agrees that the undersigned will notify the Company at any time on
or prior to the applicable Closing (as defined in the Memorandum) in the event
that the representations and warranties in this Purchaser Questionnaire shall
cease to be true, accurate and complete.
(2)
Suitability (please answer each question)
|
(a)
|
For
individuals, do you expect your current level of income to significantly
decrease in the foreseeable future?
|
YES
|
NO
|
|
(b)
|
For
trust, corporate, partnership and other institutional subscribers, do you
expect your total assets to significantly decrease in the foreseeable
future?
|
YES
|
NO
|
|
(c)
|
For
all subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden
cash requirements in excess of cash readily available to
you?
|
YES
|
NO
|
|
(d)
|
For
all subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the Securities for which you seek to
purchase?
|
YES
|
NO
|
|
(e)
|
For
all subscribers, do you understand that there is no guarantee of financial
return on this investment and that you run the risk of losing your entire
investment?
|
YES
|
NO
|
C-3
(3) Manner
in which title is to be held: (circle one)
(a) Individual
Ownership
(b) Community
Property
(c) Joint
Tenant with Right of Survivorship (both parties must sign)
(d) Partnership
(e) Tenants
in Common
(f) Company
(g) Trust
(h) Other
(4) FINRA
Affiliation.
Are you
affiliated or associated with an FINRA member firm (please check
one):
YES
|
NO
|
If Yes,
please describe how you are affiliated/associated:
_________________________________________________________
_________________________________________________________
_________________________________________________________
*If
subscriber is a Registered Representative with a FINRA member firm, have the
following acknowledgment signed by the appropriate party:
The
undersigned FINRA member firm acknowledges receipt of the notice required by the
FINRA Conduct Rules.
_________________________________
Name of
FINRA Member Firm
By:
______________________________
Authorized Officer
Date:
____________________________
(5) For
Trust Subscribers
C-4
A.
Certain trusts generally may not qualify as accredited investors except under
special circumstances. Therefore, if you intend to purchase the
shares of the Company’s stock in whole or in part through a trust, please answer
each of the following questions.
Is the trustee of the trust a national
or state bank that is acting in its fiduciary capacity in making the investment
on behalf of the trust?
Yes o No
o
Does this investment in the Company
exceed 10% of the trust assets?
Yes o No
o
B. If the
trust is a revocable
trust, please complete Question 1 below. If the trust is an irrevocable trust, please
complete Question 2 below.
1. REVOCABLE
TRUSTS
Can the trust be amended or revoked at
any time by its grantors:
Yes o No
o
If yes,
please answer the following questions relating to each
grantor (please add sheets if necessary):
Grantor
Name:
Net worth of grantor (including spouse,
if applicable), including home, home furnishings and automobiles exceeds
$1,000,000?
Yes o No
o
OR
Income
(exclusive of any income attributable to spouse) was in excess of $200,000 for
2007 and 2008 and is reasonably expected to be in excess of $200,000 for
2009?
Yes o No
o
OR
Income
(including income attributable to spouse) was in excess of $300,000 for 2007 and
2008 and is reasonably expected to be in excess of $300,000 for
2009?
Yes o No
o
C-5
2. IRREVOCABLE
TRUSTS
If the
trust is an irrevocable trust, please answer the following
questions:
Please
provide the name of each
trustee:
Trustee
Name:
Trustee
Name:
Does the trust have assets greater than
$5 million?
Yes o No
o
Do you
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Company?
Yes o No
o
Indicate
how often you invest in:
Marketable
Securities
Often
o Occasionally
o Seldom
o Never
o
Restricted
Securities
Often
o Occasionally
o Seldom
o Never
o
Venture
Capital Companies
Often
o Occasionally
o Seldom
o Never
o
[Signature
Page follows]
C-6
The
undersigned has been informed of the significance to the Company of the
foregoing representations and answers contained in this Confidential Purchaser
Questionnaire and such representations and answers have been provided with the
understanding that the Company and the Placement Agent will rely on
them.
Individual
|
||
Date:
|
||
Name
of Individual
|
||
(Please
type or print)
|
||
Signature
of Individual
|
||
Name
of Joint Owner
|
||
(Please
type or print)
|
||
Signature
(Joint Owner)
|
||
Date:
|
Partnership,
Corporation or Other Entity
|
|
Print
entity name
|
||
By:
|
||
(Signature)
|
||
Name:
|
||
(Print
signer’s name)
|
||
Title:
|
||
Signature
(other authorized signatory)
|
||
S-1