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INVESTOR
RIGHTS AGREEMENT
THIS
INVESTOR RIGHTS AGREEMENT (the “Agreement”) made this 4th day
of January 2010 by and among Man Shing Agricultural Holdings, Inc., a Nevada
corporation with headquarters located at Unit 1005, 10/F, Tower B, Hunghom
Commercial Centre, 37 Ma Tau Wai Road, Hunghom, Kowloon, Hong Kong (the “Company ”) and China Angel
Assets Management Limited, a British Virgin Isles company (the “Investor”).
BACKGROUND:
A.
In connection with the Securities Purchase Agreement by and
among the parties hereto of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Investor secured units (the “Unit(s)”) where each unit
shall consist of (i) one three (3) year eight percent (8%) annual interest
$100,000 convertible redeemable debenture to be convertible into that number of
shares of the Company’s common stock, par value US$0.001 per share, (ii) 80,000
shares of the Company’s common stock, par value US $0.001 (collectively referred
to as the “Common
Stock”), and (iii) one Right to acquire an additional Unit within three
years, pursuant to the terms of the Securities Purchase Agreement for an
aggregate purchase price of up to One Million U.S.
Dollars ($1,000,000)..
B.
The parties hereto desire to set forth certain rights and
restrictions of the Investor as shareholders of the Company, as further set
forth herein.
NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as
follows:
AGREEMENT:
1. Investor
Rights Provisions. As long as the Investor, together with their
Affiliates, own at least fifteen percent (15%) of the Company’s outstanding
Common Stock (the “Investor
Shares”), the Company shall not, without first obtaining the written
consent of a majority of the Investor Shares:
amend, alter or repeal any provision of the Articles of
Incorporation of the Company if such action would adversely alter the rights,
preferences, privileges or powers of, or restrictions provided for the benefit
of the Company’s Common Stock;
amend, alter or repeal any provision of the Articles of
Incorporation or Bylaws of the Company if such action would increase the
authorized maximum number of directors on the Board of Directors;
authorize or create any new class or series of shares having
rights, preferences or privileges with respect to dividends, redemption or
payments upon liquidation senior to or on a parity with the Company’s Common
Stock or having greater or equivalent voting rights than or to those granted to
the Company’s Common Stock generally;
reclassify any new class
or series of shares having rights, preferences or privileges with respect to
dividends, redemption or payments upon liquidation senior to or on a parity with
the Company’s common stock or having greater or equivalent voting rights than or
to those granted to the Company’s Common Stock generally;
enter into any Reorganization
Transaction;
redeem or repurchase any shares of the Company,
other than (i) repurchases of Common Stock issued to or held by employees,
officers, directors or consultants of the Company or its subsidiaries upon
termination of their employment or services pursuant to agreements providing for
the right of said repurchase, (ii) repurchases of Common Stock issued to or held
by employees, officers, directors or consultants of the Company or its
subsidiaries pursuant to rights of first refusal contained in agreements
providing for such right, or (iii) repurchase of capital stock of the Company in
connection with the settlement of disputes with any shareholder.
voluntarily liquidate or dissolve;
appoint or terminate executive officers of the Company,
except as required of the Board of Directors in the exercise of their fiduciary
duties to the Company;
approve any Related Party Transaction; or
2. Board
Composition.
(a) All
Shareholders shall vote at regular or special meetings of shareholders, and to
give written consent with respect to, the shares of Common Stock that they own
(or as to which they have voting power) to ensure that the size of the Board of
Directors shall be set and remain at five (5) directors.
3. Registration
Rights. See Registration Rights Agreement.
4. Definitions. For
purposes of this Agreement, the following definitions shall apply:
(a) “Additional
Shares of the Company’s Common Stock” means all shares of Common Stock issued or
deemed to be issued after the date of this Agreement, other than the following:
(i) shares of Common Stock issued or issuable to officers, directors and
employees of, or consultants to, the Company pursuant to stock grants, option
plans, purchase plans or other employee stock incentive programs or arrangements
approved by the Board of Directors, or upon exercise of options or warrants
granted to such parties pursuant to any such plan or arrangement; (ii) shares of
Common Stock issued upon the exercise or conversion of options or convertible
securities outstanding as of the date of this Agreement; (iii) shares of Common
Stock issued or issuable pursuant to the acquisition of another business entity
by the Company by merger, purchase of substantially all of the assets or other
reorganization or to a joint venture agreement, provided, that such issuances
are approved by the Board of Directors; (iv) shares of Common Stock issued or
issuable to banks, equipment lessors or other financial institutions pursuant to
a debt financing or commercial leasing transaction approved by the Board of
Directors; (v) shares of Common Stock issued or issuable in connection with any
settlement of any action, suit, proceeding or litigation approved by the Board
of Directors; (vi) shares of Common Stock issued or issuable in connection with
sponsored research, collaboration, technology license, development, marketing or
other similar agreements or strategic partnerships approved by the Board of
Directors; (vii) shares of Common Stock issued or issuable to suppliers or third
party service providers in connection with the provision of goods or services
pursuant to transactions approved by the Board of Directors; and (viii) shares
of Common Stock to be issued to new investors issued after the date of this
Agreement.
(b) “Affiliate”
of any particular person or entity means any other person or entity controlling,
controlled by or under common control with such particular person or entity
(including, without limitation, with respect to China Angel Assets Management
Limited and each of their Affiliates, each of their constituent partners,
retired partners, members or investment or venture capital fund Affiliates),
where “control” means the possession, directly or indirectly, of the power to
direct the management and policies of a person or entity whether through the
ownership of voting securities, contract or otherwise.
(c) “Board
of Directors” means the Board of Directors of the Company.
(d) “Related
Party Transaction” means any transaction between the Company and an Affiliate of
the Company in excess of $100,000 individually or in excess of $500,000 in the
aggregate during any fiscal year, except for the following when approved by a
majority of disinterested members of the Board of Directors: (i) the
compensation of officers, directors and employees of, or consultants to the
Company or (ii) transactions where the terms and conditions of the transaction,
on an overall basis, are fair and reasonable to the Company and are at least as
favorable to the Company as those generally available between parties operating
at arm’s length.
(e) “Reorganization
Transaction” means (i) the acquisition of the Company by another entity by means
of any transaction or series of related transactions to which the Company is
party (including, without limitation, any stock acquisition, reorganization,
merger or consolidation but excluding any sale of stock for capital raising
purposes) other than a transaction or series of transactions in which the
holders of the voting securities of the Company outstanding immediately prior to
such transaction continue to retain (either by such voting securities remaining
outstanding or by such voting securities being converted into voting securities
of the surviving entity), as a result of shares in the Company held by such
holders prior to such transaction, at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such transaction or series of
transactions; or (ii) a sale, lease or other conveyance of all or substantially
all of the assets of the Company.
(f) “Shareholders”
means China Angel Assets Management Limited.
1. 5. Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been validly served, given or delivered five (5) days after
deposit in the United States mails, by certified mail with return receipt
requested and postage prepaid, when delivered personally, one (1) day delivered
to any overnight courier, or when transmitted by facsimile transmission and upon
confirmation of receipt and addressed to the party to be notified as
follows:
If to
Investor,
to: China
Angel Assets Management Limited
P.O. Box
957
Offshore
Incorporations Centre
Road
Town
Tortola
British
Virgin Islands
If to the
Company,
to: Man
Shing Agricultural Holdings, Inc.
Unit 1005,
10/F, Tower
Hunghom
Commercial Centre
37 Ma Tau
Wai Road, Hunghom
Kowloon,
Hong Kong
Attention: Mr.
Eddie Cheung, CEO
Telephone (86)
536-4644888
Facsimile: (86)
536-4643777
With a
copy
to: Jared
P. Febbroriello, Esq. LL.M.
JPF
Securities Law, LLC
19720
Jetton Road
3rd
Floor
Cornelius,
NC 28031
Telephone: (704) 897-8334
Facsimile: (704)
897-8349
Mr.
Patrick Mak
Tai, Mak
and Partners
Room 905
- 907, 9/F.
Nan Fung
Tower
173 Des
Voeux Road Central
Hong
Kong
Telephone: (852)
2850 6336
Facsimile: (852)
2850 6086
Or to
such other address as each party may designate for itself by like
notice.
6. Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without limitation”.
7. Entire
Agreement; No Third-Party Beneficiaries. This Agreement and the other
agreements referred to herein constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person other than the parties any rights or
remedies.
8. Governing
Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Nevada, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws
thereof.
9. Assignment.
(a) Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other
parties, except that the rights of the Investors and their Affiliates under
Sections 1, 2, and 3 are fully assignable in connection with a transfer of
securities of the Company by any Investor or its Affiliates; provided, however,
that no party may be assigned any of the foregoing rights unless the Company is
given written notice at least seven (7) business days prior to any
assignment by such Investor or its Affiliates stating the name and address
of the assignee and identifying the securities of the Company as to which the
rights in question are being assigned; and provided further, that any such
assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement.
(b) Any
attempt by a Shareholder to sell or transfer any Company’s securities shall be
void and the Company hereby agrees that it will not effect such a transfer nor
will it treat any alleged transferee as the holder of such securities unless (i)
the transferee in such transfer agrees in writing to be subject to the terms
hereof by executing and delivering a Deed of Adherence substantially in the form
attached hereto as Exhibit A (a “Deed of Adherence”), (ii) such transfer
complies in all respects with the applicable provisions of the Bylaws and other
agreements among the Shareholders, and (iii) the transferee in such transfer
complies in all respects with the applicable securities laws. Upon
the execution and delivery of a Deed of Adherence by such transferee, it shall
be deemed to be a party hereto as a Shareholder as if such transferee’s
signature appeared on the signature page of this Agreement.
(c) Subject
to the preceding subsections (a) and (b), this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
10. Enforcement. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Nevada, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) agrees
that it will not attempt to deny or defeat such personal jurisdiction or venue
by motion or other request for leave from any such court, and (b) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any state court other than such
court.
11. Severability. Whenever
possible, each provision or portion of any provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law but
if any provision or portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or portion of any provision in such jurisdiction,
and this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
12. Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
Agreement. This Agreement, to the extent delivered by means of a
facsimile machine or electronic mail (any such delivery, an "Electronic
Delivery"), shall be treated in all manner and respects as an original agreement
or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in
person. At the request of any party hereto, each other party hereto
shall re-execute original forms hereof and deliver them in person to all other
parties. No party hereto shall raise the use of Electronic Delivery
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of Electronic Delivery as a
defense to the formation of a contract, and each such party forever waives any
such defense, except to the extent such defense related to lack of
authenticity.
13. Covenants
of the Company. Subject to compliance with applicable laws, the
Company agrees to use its best efforts to ensure that the rights granted
hereunder are effective and that the parties hereto enjoy the benefits
thereof. Such actions may include, without limitation, the use of the
Company’s best efforts to cause the nomination and election of the directors as
provided above, by causing a meeting of shareholders to be held or by causing a
written consent of shareholders to be circulated. The Company will
not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all of the
provisions of this Agreement and in the taking of all such actions as may be
necessary, appropriate or reasonably requested by the holders of a majority of
the outstanding voting securities held by the parties hereto assuming conversion
of all outstanding securities in order to protect the rights of the parties
hereunder against impairment.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the undersigned have caused their duly authorized officers to
execute this Agreement as of the date first above written.
MAN SHING
AGRICULTURAL HOLDINGS, INC.
By: /s/ Eddie
Cheung
Name:
Eddie Cheung
Title:
Chief Executive Officer
CHINA
ANGEL ASSETS MANAGEMENT LIMITED
By: /s/ Jiang Qi
Hang
Name:
Jiang Qi Hang
Title:
Chief Executive Officer
EXHIBIT
A
FORM OF
DEED OF ADHERENCE
THIS DEED
OF ADHERENCE is made this __________ day of ____________by and between Man Shing
Agricultural Holdings, Inc., a Nevada corporation (“Company”),
and________________________________ (the “New Shareholder”).
The
Company and the New Shareholder shall be referred to collectively as the
Parties.
WHEREAS:
(A) As
of [____], 2009, certain shareholders of the Company and the Company entered
into an Investor Rights Agreement (the "Investor Rights Agreement"), a copy of
which is attached hereto as Exhibit 1.
(B) The
New Shareholder wishes to acquire an aggregate of _____________ _______________
[INSERT NUMBER and TYPE/CLASS OF SECURITIES] in the capital of the Company from
China Angel Assets Management Limited (the “Transferor”) and in accordance with
the Investor Rights Agreement has agreed to enter into this Deed of Adherence
(the "Deed").
(C) The
Company is entering into this Deed on behalf of itself and as agent for all the
existing Shareholders of the Company.
NOW,
THEREFORE, the Parties hereby agree as follows:
1. Interpretation.
In this Deed, except as the context may otherwise require, all words and
expressions defined in the Investor Rights Agreement shall have the same
meanings when used herein.
2. Covenant. The
New Shareholder hereby covenants to the Company as trustee for all other persons
who are at present or who may hereafter become bound by the Investor Rights
Agreement, and to the Company itself, to adhere to and be bound by all the
duties, burdens and obligations of the Transferor imposed pursuant to the
provisions of the Investor Rights Agreement and all documents expressed in
writing to be supplemental or ancillary thereto as if the New Shareholder had
been an original party to the Investor Rights Agreement since the date
thereof.
3. Enforceability. Each
existing Shareholder and the Company shall be entitled to enforce the Investor
Rights Agreement against the New Shareholder, and the New Shareholder shall be
entitled to all rights and benefits of the Transferor under the Investor Rights
Agreement in each case as if such New Shareholder had been an original party to
the Investor Rights Agreement since the date hereof.
4. Governing
Law. This Deed shall be governed by, and construed in accordance
with, the laws of the State of Nevada, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws
thereof.
5. Counterparts. This
Deed may be signed in any number of counterparts which together shall form one
and the same agreement.
6. Further
Assurance. Each party agrees to take all such further action as may
be reasonably necessary to give full effect to this Deed on its terms and
conditions.
7. Headings. The
headings used in this Deed are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
[REMINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS whereof the parties have executed and delivered this Deed as a deed on
the day and year first hereinbefore mentioned.
COMPANY:
Signed as
a deed on behalf of
MAN SHING
AGRICULTURAL HOLDINGS, INC.
By: Eddie
Cheung
Name: Eddie
Cheung
Title: Chief
Executive Officer
NEW
SHAREHOLDER:
signed as
a deed on behalf of
By:
Name:
Title:
[SIGNATURE
PAGE TO DEED OF ADHERENCE]
EXHIBIT 1
TO DEED OF ADHERENCE
COPY OF
INVESTOR RIGHTS AGREEMENT