Document:

Unassociated Document

 

EXHIBIT 10.1

 

STANDBY
EQUITY DISTRIBUTION AGREEMENT

 

THIS
AGREEMENT dated as
of the 15th day of November, 2004 (the “Agreement”)
between CORNELL
CAPITAL PARTNERS, LP, a
Delaware limited partnership (the “Investor”), and
CHINA
WORLD TRADE CORPORATION, a
corporation organized and existing under the laws of the State of Nevada (the
“Company”).

 

WHEREAS, the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Investor, from time to time as
provided herein, and the Investor shall purchase from the Company up to Thirty
Million U.S. Dollars ($30,000,000) of the Company’s common stock, par value
$0.001 per share (the “Common
Stock”);
and

 

WHEREAS, such
investments will be made in reliance upon the provisions of Regulation D
(“Regulation
D”) of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the “Securities
Act”), and
or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.

 

WHEREAS, the
Company has engaged Duncan Capital Group (the “Placement
Agent”), to
act as the Company’s placement agent in connection with the sale of the
Company’s Common Stock to the Investor hereunder pursuant to the Placement Agent
Agreement dated the date hereof by and among the Company, the Placement Agent
and the Investor (the “Placement
Agent Agreement”).

 

NOW,
THEREFORE, the
parties hereto agree as follows:

 

ARTICLE
I.

Certain
Definitions

 

Section
1.1. “Advance” shall
mean the portion of the Commitment Amount requested by the Company in the
Advance Notice.

 

Section
1.2. “Advance
Date” shall
mean the date Butler Gonzalez LLP Escrow Account is in receipt of the funds from
the Investor and Butler Gonzalez LLP, as the Investor’s Counsel, is in
possession of free trading shares from the Company and therefore an Advance by
the Investor to the Company can be made and Butler Gonzalez LLP can release the
free trading shares to the Investor. The Advance Date shall be the first
(1st) Trading
Day after expiration of the applicable Pricing Period for each
Advance.

 

Section
1.3. “Advance
Notice” shall
mean a written notice to the Investor setting forth the Advance amount that the
Company requests from the Investor and the Advance Date.

 

Section
1.4. “Advance
Notice Date” shall
mean each date the Company delivers to the Investor an Advance Notice requiring
the Investor to advance funds to the Company, subject to the terms of this
Agreement. No Advance Notice Date shall be less than seven (7) Trading Days
after the prior Advance Notice Date.

 

1

 

Section
1.5. “Bid
Price” shall
mean, on any date, the closing bid price (as reported by Bloomberg L.P.) of the
Common Stock on the Principal Market or if the Common Stock is not traded on a
Principal Market, the highest reported bid price for the Common Stock, as
furnished by the National Association of Securities Dealers, Inc.

 

Section
1.6. “Closing” shall
mean one of the closings of a purchase and sale of Common Stock pursuant to
Section 2.3.

 

Section
1.7. “Commitment
Amount” shall
mean the aggregate amount of up to Thirty Million U.S. Dollars ($30,000,000)
which the Investor has agreed to provide to the Company in order to purchase the
Company’s Common Stock pursuant to the terms and conditions of this
Agreement.

 

Section
1.8. “Commitment
Period” shall
mean the period commencing on the earlier to occur of (i) the Effective Date, or
(ii) such earlier date as the Company and the Investor may mutually agree in
writing, and expiring on the earliest to occur of (x) the date on which the
Investor shall have made payment of Advances pursuant to this Agreement in the
aggregate amount of Thirty Million U.S. Dollars ($30,000,000), (y) the date this
Agreement is terminated pursuant to Section 2.5, or (z) the date occurring
twenty-four (24) months after the Effective Date.

 

Section
1.9. “Common
Stock” shall
mean the Company’s common stock, par value $0.001 per share.

 

Section
1.10. “Condition
Satisfaction Date” shall
have the meaning set forth in Section 7.2.

 

Section
1.11. “Damages” shall
mean any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorney’s fees and disbursements and costs and expenses
of expert witnesses and investigation).

 

Section
1.12. “Effective
Date” shall
mean the date on which the SEC first declares effective a Registration Statement
registering the resale of the Registrable Securities as set forth in Section
7.2(a). 

 

Section
1.13. “Escrow
Agreement” shall
mean the escrow agreement among the Company, the Investor, and David Gonzalez,
Esq., dated the date hereof.

 

Section
1.14. “Exchange
Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

Section
1.15. “Material
Adverse Effect” shall
mean any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.

 

2

 

Section
1.16. “Market
Price” shall
mean the lowest VWAP of the Common Stock during the Pricing Period.

 

Section
1.17. “Maximum
Advance Amount” shall
be up to Three Million U.S. Dollars (US$3,000,000) on the initial Advance
Notice hereunder , and up to One Million Five Hundred Thousand Dollars
($1,500,000) per Advance Notice there after. 

 

Section
1.18. “NASD” shall
mean the National Association of Securities Dealers, Inc.

 

Section
1.19. “Person” shall
mean an individual, a corporation, a partnership, an association, a trust or
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.

 

Section
1.20. “Placement
Agent” shall
mean Duncan Capital Group, a registered broker-dealer.

 

Section
1.21. “Pricing
Period” shall
mean the five (5) consecutive Trading Days after the Advance Notice
Date.

 

Section
1.22. “Principal
Market” shall
mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock
Exchange, the OTC Bulletin Board or the New York Stock Exchange, whichever is at
the time the principal trading exchange or market for the Common
Stock.

 

Section
1.23. “Purchase
Price” shall
be set at ninety nine percent (99%) of the Market Price during the Pricing
Period.

 

Section
1.24. “Registrable
Securities” shall
mean the shares of Common Stock to be issued hereunder (i) in
respect of which the Registration Statement has not been declared effective by
the SEC, (ii) which have not been sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act (“Rule
144”) or
(iii) which have not been otherwise transferred to a holder who may trade such
shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend.

 

Section
1.25. “Registration
Rights Agreement” shall
mean the Registration Rights Agreement dated the date hereof, regarding the
filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investor.

 

Section
1.26. “Registration
Statement” shall
mean a registration statement on Form S-1 or SB-2 (if use of such form is then
available to the Company pursuant to the rules of the SEC and, if not, on such
other form promulgated by the SEC for which the Company then qualifies and which
counsel for the Company shall deem appropriate, and which form shall be
available for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and the
Registration Rights Agreement, and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.

 

3

 

Section
1.27. “Regulation
D” shall
have the meaning set forth in the recitals of this Agreement.

 

Section
1.28. “SEC” shall
mean the Securities and Exchange Commission.

 

Section
1.29. “Securities
Act” shall
have the meaning set forth in the recitals of this Agreement.

 

Section
1.30. “SEC
Documents” shall
mean Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and Proxy Statements of the Company as supplemented to the
date hereof, filed by the Company for a period of at least twelve (12) months
immediately preceding the date hereof or the Advance Date, as the case may be,
until such time as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.

 

Section
1.31. “Trading
Day” shall
mean any day during which the New York Stock Exchange shall be open for
business.

 

Section
1.32. “VWAP” shall
mean the volume weighted average price of the Company’s Common Stock as quoted
by Bloomberg, LP.

 

 

ARTICLE
II.

Advances

 

Section
2.1. Investments.

 

(a) Advances. Upon
the terms and conditions set forth herein (including, without limitation, the
provisions of Article VII hereof), on any Advance Notice Date the Company may
request an Advance by the Investor by the delivery of an Advance Notice. The
number of shares of Common Stock that the Investor shall receive for each
Advance shall be determined by dividing the amount of the Advance by the
Purchase Price. No fractional shares shall be issued. Fractional shares shall be
rounded to the next higher whole number of shares. The aggregate maximum amount
of all Advances that the Investor shall be obligated to provide under this
Agreement shall not exceed the Commitment Amount.

 

Section
2.2. Mechanics.

 

(a) Advance
Notice. At any
time during the Commitment Period, the Company may deliver an Advance Notice to
the Investor, subject to the conditions set forth in Section 7.2; provided,
however, the amount for each Advance as designated by the Company in the
applicable Advance Notice, shall not be more than the Maximum Advance Amount.
The aggregate amount of the Advances pursuant to this Agreement shall not exceed
the Commitment Amount. The Company acknowledges that the Investor may sell
shares of the Company’s Common Stock corresponding with a particular Advance
Notice on the day the Advance Notice is received by the Investor. Without
limiting the foregoing, the Investor agrees not to engage in any naked short
transactions in excess of the amount of shares owned (or an offsetting long
position) during the Commitment Period. There
shall be a minimum of seven (7) Trading Days between each Advance Notice
Date.

 

4

 

(b) Date
of Delivery of Advance Notice. An
Advance Notice shall be deemed delivered on (i) the Trading Day it is received
by facsimile or otherwise by the Investor if such notice is received prior to
12:00 noon Eastern Time, or (ii) the immediately succeeding Trading Day if it is
received by facsimile or otherwise after 12:00 noon Eastern Time on a Trading
Day or at any time on a day which is not a Trading Day. No Advance Notice may be
deemed delivered on a day that is not a Trading Day.

 

(c) Pre-Closing
Share Credit. Within
two (2) business days after the Advance Notice Date, the Company shall credit
shares of the Company’s Common Stock to the Investor’s counsel’s balance account
with The Depository Trust Company through its Deposit Withdrawal At Custodian
system, in an amount equal to the amount of the requested Advance divided by the
closing Bid Price of the Company’s Common Stock as of the Advance Notice Date
multiplied by one point one (1.1). Any adjustments to the number of shares to be
delivered to the Investor at the Closing as a result of fluctuations in the
closing Bid Price of the Company’s Common Stock shall be made as of the date of
the Closing. Any excess shares shall be credited to the next Advance. In no
event shall the number of shares issuable to the Investor pursuant to an Advance
cause the Investor to own in excess of nine and 9/10 percent (9.9%) of the then
outstanding Common Stock of the Company.

 

(d) Hardship. In the
event the Investor sells the Company’s Common Stock pursuant to subsection (c)
above and the Company fails to perform its obligations as mandated in Section
2.5 and 2.2 (c), and specifically fails to provide the Investor with the shares
of Common Stock for the applicable Advance, the Company acknowledges that the
Investor shall suffer financial hardship and therefore shall be liable for any
and all losses, commissions, fees, or financial hardship caused to the Investor.

 

(e) Insufficient
Shares. In the
event the Company provides an Advance Notice to the Investor and it is mutually
determined by the Company and the Investor that there are insufficient shares of
the Company’s Common Stock registered pursuant to the Registration Rights
Agreement dated the date hereof the Company shall amend the Advance Notice to an
amount to correspond to the number shares of the Company’s Common Stock
registered pursuant to the Registration Rights Agreement.

 

Section
2.3. Closings. On each
Advance Date, which shall be the first (1st) Trading
Day after expiration of the applicable Pricing Period for each Advance, (i) the
Company shall deliver to the Investor’s Counsel, as defined pursuant to the
Escrow Agreement, shares of the Company’s Common Stock, representing the amount
of the Advance by the Investor pursuant to Section 2.1 herein, registered in the
name of the Investor which shall be delivered to the Investor, or otherwise in
accordance with the Escrow Agreement and (ii) the Investor shall deliver to
David Gonzalez, Esq. (the “Escrow
Agent”) the
amount of the Advance specified in the Advance Notice by wire transfer of
immediately available funds which shall be delivered to the Company, or
otherwise in accordance with the Escrow Agreement. In addition, on or prior to
the Advance Date, each of the Company and the Investor shall deliver to the
other through the David Gonzalez, Esq, all documents, instruments and writings
required to be delivered by either of them pursuant to this Agreement in order
to implement and effect the transactions contemplated herein. Payment of funds
to the Company and delivery of the Company’s Common Stock to the Investor shall
occur in accordance with the conditions set forth above and those contained in
the Escrow Agreement; provided,
however, that to
the extent the Company has not paid the fees, expenses, and disbursements of the
Investor in accordance with Section 12.4, the amount of such fees, expenses, and
disbursements may be deducted by the Investor (and shall be paid to the relevant
party) from the amount of the Advance with no reduction in the amount of shares
of the Company’s Common Stock to be delivered on such Advance Date.

 

5

 

Section
2.4. Termination
of Investment. The
obligation of the Investor to make an Advance to the Company pursuant to this
Agreement shall terminate permanently (including with respect to an Advance Date
that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for an
aggregate of fifty (50) Trading Days, other than due to the acts of the
Investor, during the Commitment Period, and (ii) the Company shall at any time
fail materially to comply with the requirements of Article VI and such failure
is not cured within thirty (30) days after receipt of written notice from the
Investor, provided,
however, that
this termination provision shall not apply to any period commencing upon the
filing of a post-effective amendment to such Registration Statement and ending
upon the date on which such post effective amendment is declared effective by
the SEC.

 

Section
2.5. Agreement
to Advance Funds.

 

(a) The
Investor agrees to advance the amount specified in the Advance Notice to the
Company after the completion of each of the following conditions and the other
conditions set forth in this Agreement:

 

(i) the
execution and delivery by the Company, and the Investor, of this Agreement and
the Exhibits hereto;

 

(ii) Investor’s
Counsel shall have received the shares of Common Stock applicable to the Advance
in accordance with Section 2.2(c) hereof;

 

(iii) the
Company’s Registration Statement with respect to the resale of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement
shall have been declared effective by or with no comment from the
SEC;

 

(iv) the
Company shall have obtained all material permits and qualifications required by
any applicable state for the offer and sale of the Registrable Securities, or
shall have the availability of exemptions therefrom. The sale and issuance of
the Registrable Securities shall be legally permitted by all laws and
regulations to which the Company is subject; 

 

(v) the
Company shall have filed with the Commission in a timely manner all reports,
notices and other documents required of a “reporting company” under the Exchange
Act and applicable Commission regulations;

 

(vi) the fees
as set forth in Section 12.4 below shall have been paid or can be withheld as
provided in Section 2.3; and

 

(vii) the
conditions set forth in Section 7.2 shall have been satisfied.

 

(viii) the
Company shall have provided to the Investor an acknowledgement, from Moorse
Rowland Mazars as to its ability to provide all consents required in order to
file a registration statement in connection with this transaction;

 

6

 

Section
2.6. Lock
Up Period.

 

During
the Commitment Period, the Company shall not issue or sell, without fifteen (15)
calendar days prior written notice to the Investor (i) any Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the Bid Price on the date of issuance or (ii) issue or sell any warrant,
option, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire Common Stock without consideration or for a
consideration per share less than the Bid Price on the date of
issuance.

 

 

ARTICLE
III.

Representations
and Warranties of Investor

 

Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and as of the date hereof and as of each Advance
Date:

 

Section
3.1. Organization
and Authorization. The
Investor is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite power
and authority to purchase and hold the securities issuable hereunder. The
decision to invest and the execution and delivery of this Agreement by such
Investor, the performance by such Investor of its obligations hereunder and the
consummation by such Investor of the transactions contemplated hereby have been
duly authorized and requires no other proceedings on the part of the Investor.
The undersigned has the right, power and authority to execute and deliver this
Agreement and all other instruments (including, without limitations, the
Registration Rights Agreement), on behalf of the Investor. This Agreement has
been duly executed and delivered by the Investor and, assuming the execution and
delivery hereof and acceptance thereof by the Company, will constitute the
legal, valid and binding obligations of the Investor, enforceable against the
Investor in accordance with its terms.

 

Section
3.2. Evaluation
of Risks. The
Investor has such knowledge and experience in financial tax and business matters
as to be capable of evaluating the merits and risks of, and bearing the economic
risks entailed by, an investment in the Company and of protecting its interests
in connection with this transaction. It recognizes that its investment in the
Company involves a high degree of risk.

 

Section
3.3. No
Legal Advice From the Company. The
Investor acknowledges that it had the opportunity to review this Agreement and
the transactions contemplated by this Agreement with his or its own legal
counsel and investment and tax advisors. The Investor is relying solely on such
counsel and advisors and not on any statements or representations of the Company
or any of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction.

 

7

 

Section
3.4. Investment
Purpose. The
securities are being purchased by the Investor for its own account, for
investment and without any view to the distribution, assignment or resale to
others or fractionalization in whole or in part. The Investor agrees not to
assign or in any way transfer the Investor’s rights to the securities or any
interest therein and acknowledges that the Company will not recognize any
purported assignment or transfer except in accordance with applicable Federal
and state securities laws. No other person has or will have a direct or indirect
beneficial interest in the securities. The Investor agrees not to sell,
hypothecate or otherwise transfer the Investor’s securities unless the
securities are registered under Federal and applicable state securities laws or
unless, in the opinion of counsel satisfactory to the Company, an exemption from
such laws is available.

 

Section
3.5. Accredited
Investor. The
Investor is an “Accredited
Investor” as that
term is defined in Rule 501(a)(3) of Regulation D of the Securities
Act.

 

Section
3.6. Information. The
Investor and its advisors (and its counsel), if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment decision.
The Investor and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and its management. Neither such inquiries nor any
other due diligence investigations conducted by such Investor or its advisors,
if any, or its representatives shall modify, amend or affect the Investor’s
right to rely on the Company’s representations and warranties contained in this
Agreement. The Investor understands that its investment involves a high degree
of risk. The Investor is in a position regarding the Company, which, based upon
employment, family relationship or economic bargaining power, enabled and
enables such Investor to obtain information from the Company in order to
evaluate the merits and risks of this investment. The Investor has sought such
accounting, legal and tax advice, as it has considered necessary to make an
informed investment decision with respect to this transaction.

 

Section
3.7. Receipt
of Documents. The
Investor and its counsel have received and read in their entirety: (i) this
Agreement and the Exhibits annexed hereto; (ii) all due diligence and other
information necessary to verify the accuracy and completeness of such
representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
the year ended September 30, 2004 and Form 10-QSB for the period ended June 30,
2004; and (iv) answers to all questions the Investor submitted to the
Company regarding an investment in the Company; and the Investor has relied on
the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus. 

 

Section
3.8. Registration
Rights Agreement and Escrow Agreement. The
parties have entered into the Registration Rights Agreement and the Escrow
Agreement, each dated the date hereof.

 

Section
3.9. No
General Solicitation. Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection with
the offer or sale of the shares of Common Stock offered hereby.

 

8

 

Section
3.10. Not an
Affiliate. The
Investor is not an officer, director or a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with the Company or any “Affiliate” of the
Company (as that term is defined in Rule 405 of the Securities Act). Neither the
Investor nor its Affiliates has an open short position in the Common Stock of
the Company, and the Investor agrees that it will not, and that it will cause
its Affiliates not to, engage in any short sales of or hedging transactions with
respect to the Common Stock, provided that the
Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor will sell the Shares to be issued to the Investor pursuant to the
Advance Notice, even if the Shares have not been delivered to the
Investor.

 

Section
3.11. Trading
Activities. The
Investor’s trading activities with respect to the Company’s Common Stock shall
be in compliance with all applicable federal and state securities laws, rules
and regulations and the rules and regulations of the Principal Market on which
the Company’s Common Stock is listed or traded. Neither the Investor nor its
affiliates has an open short position in the Common Stock of the Company in any
and all events and, except as set forth below, the Investor shall not and will
cause its affiliates not to engage in any short sale as defined in any
applicable SEC or National Association of Securities Dealers rules on any
hedging transactions with respect to the Common Stock. The Investor shall be
entitled to sell Common Stock during the applicable Pricing Period. 

 

Section
3.12 Sufficient
Funds. The
investor shall have sufficient money at any time and in any and all events to
provide any Advance the Company requests by submitting the Advance
Notice.

 

ARTICLE
IV.

Representations
and Warranties of the Company

 

Except as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents (as defined herein), the Company hereby represents and warrants to,
and covenants with, the Investor that the following are true and correct as of
the date hereof:

 

Section
4.1. Organization
and Qualification. The
Company is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite power
and authority corporate power to own its properties and to carry on its business
as now being conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.

 

Section
4.2. Authorization,
Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement, the Escrow Agreement,
the Placement Agent Agreement and any related agreements, in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Placement Agent
Agreement and any related agreements by the Company and the consummation by it
of the transactions contemplated hereby and thereby, have been duly authorized
by the Company’s Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders,
(iii) this Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Placement Agent Agreement and any related agreements have been
duly executed and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Placement Agent
Agreement and assuming the execution and delivery thereof and acceptance by the
Investor and any related agreements constitute the valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.

 

9

 

Section
4.3. Capitalization. As of
the date hereof, the authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $0.001 per share and 10,000,000
shares of Preferred Stock of which 25,463,366 shares of Common Stock and no
shares of Preferred Stock were issued and outstanding. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. Except as
disclosed in the SEC Documents, no shares of Common Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in the SEC Documents,
as of the date hereof, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities (iii) there
are no outstanding registration statements other than on Form S-8 and (iv) there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except pursuant to the Registration Rights Agreement). There
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by this Agreement or any related agreement or the
consummation of the transactions described herein or therein. The Company has
furnished to the Investor true and correct copies of the Company’s Certificate
of Incorporation, as amended and as in effect on the date hereof (the
“Certificate
of Incorporation”), and
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and
the terms of all securities convertible into or exercisable for Common Stock and
the material rights of the holders thereof in respect thereto.

 

Section
4.4. No
Conflict. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the Certificate of Incorporation, any certificate of
designations of any outstanding series of preferred stock of the Company or
By-laws or (ii) conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market on which the
Common Stock is quoted) applicable to the Company or any of its subsidiaries or
by which any material property or asset of the Company or any of its
subsidiaries is bound or affected and which would cause a Material Adverse
Effect. Except as disclosed in the SEC Documents, neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted in violation of any material
law, ordinance, regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under or contemplated by this Agreement or the Registration
Rights Agreement in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
fact or circumstance which might give rise to any of the foregoing.

 

10

 

Section
4.5. SEC
Documents; Financial Statements. Since
2003, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under of the Exchange Act. The
Company has delivered to the Investor or its representatives, or made available
through the SEC’s website at http://www.sec.gov, true and complete copies of the
SEC Documents. As of their respective dates, the financial statements of the
Company disclosed in the SEC Documents (the “Financial
Statements”)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

 

Section
4.6. 10b-5. The SEC
Documents do not include any untrue statements of material fact, nor do they
omit to state any material fact required to be stated therein necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading.

 

Section
4.7. No
Default. Except
as disclosed in the SEC Documents, the Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it is or its property
is bound and neither the execution, nor the delivery by the Company, nor the
performance by the Company of its obligations under this Agreement or any of the
exhibits or attachments hereto will conflict with or result in the breach or
violation of any of the terms or provisions of, or constitute a default or
result in the creation or imposition of any lien or charge on any assets or
properties of the Company under its Certificate of Incorporation, By-Laws, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound, or any statute, or any decree, judgment, order, rules or
regulation of any court or governmental agency or body having jurisdiction over
the Company or its properties, in each case which default, lien or charge is
likely to cause a Material Adverse Effect on the Company’s business or financial
condition.

 

11

 

Section
4.8. Absence
of Events of Default. Except
for matters described in the SEC Documents and/or this Agreement, no Event of
Default, as defined in the respective agreement to which the Company is a party,
and no event which, with the giving of notice or the passage of time or both,
would become an Event of Default (as so defined), has occurred and is
continuing, which would have a Material Adverse Effect on the Company’s
business, properties, prospects, financial condition or results of
operations.

 

Section
4.9. Intellectual
Property Rights. The
Company and its subsidiaries own or possess adequate rights or licenses to use
all material trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. The Company and its
subsidiaries do not have any knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service mark
registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company, there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
mark registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. 

 

Section
4.10. Employee
Relations. Neither
the Company nor any of its subsidiaries is involved in any labor dispute nor, to
the knowledge of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company’s or its subsidiaries’ employees is a member of
a union and the Company and its subsidiaries believe that their relations with
their employees are good.

 

Section
4.11. Environmental
Laws. The
Company and its subsidiaries are (i) in compliance with any and all applicable
material foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental
Laws”), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval.

 

12

 

Section
4.12. Title. Except
as set forth in the SEC Documents, the Company has good and marketable title to
its properties and material assets owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company. Any real property and
facilities held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.

 

Section
4.13. Insurance. The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the Company nor
any such subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.

 

Section
4.14. Regulatory
Permits. The
Company and its subsidiaries possess all material certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.

 

Section
4.15. Internal
Accounting Controls. The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

Section
4.16. No
Material Adverse Breaches, etc. Except
as set forth in the SEC Documents, neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Except as set forth
in the SEC Documents, neither the Company nor any of its subsidiaries is in
breach of any contract or agreement which breach, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect on the
business, properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.

 

13

 

Section
4.17. Absence
of Litigation. Except
as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a Material Adverse Effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a Material
Adverse Effect on the business, operations, properties, financial condition or
results of operation of the Company and its subsidiaries taken as a
whole.

 

Section
4.18. Subsidiaries. Except
as disclosed in the SEC Documents, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.

 

Section
4.19. Tax
Status. Except
as disclosed in the SEC Documents, the Company and each of its subsidiaries has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

 

Section
4.20. Certain
Transactions. Except
as set forth in the SEC Documents none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

 

Section
4.21. Fees
and Rights of First Refusal. The
Company is not obligated to offer the securities offered hereunder on a right of
first refusal basis or otherwise to any third parties including, but not limited
to, current or former shareholders of the Company, underwriters, brokers, agents
or other third parties and Duncan Capital Group.

 

Section
4.22. Use of
Proceeds. The
Company represents that the net proceeds from this offering will be used for
general corporate purposes. However, in no event shall the net proceeds from
this offering be used by the Company for the payment (or loaned to any such
person for the payment) of any judgment, or other liability, incurred by any
executive officer, officer, director or employee of the Company, except for any
liability owed to such person for services rendered, or if any judgment or other
liability is incurred by such person originating from services rendered to the
Company, or the Company has indemnified such person from liability.

 

14

 

Section
4.23. Further
Representation and Warranties of the Company. For so
long as any securities issuable hereunder held by the Investor remain
outstanding, the Company acknowledges, represents, warrants and agrees that it
will maintain the listing of its Common Stock on the Principal
Market.

 

Section
4.24. Opinion
of Counsel.
Investor shall receive an opinion letter from Harold H. Martin, P.A., counsel to
the Company, on the date hereof.

 

Section
4.25. Opinion
of Counsel. The
Company will obtain for the Investor, at the Company’s expense, any and all
opinions of counsel which may be reasonably required in order to sell the
securities issuable hereunder without restriction.

 

Section
4.26. Dilution. The
Company is aware and acknowledges that issuance of shares of the Company’s
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common Stock.

 

 

ARTICLE
V.

Indemnification

 

The
Investor and the Company represent to the other the following with respect to
itself:

 

Section
5.1. Indemnification.

 

(a) In
consideration of the Investor’s execution and delivery of this Agreement, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Investor, and all
of its officers, directors, partners, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Investor
Indemnitees”) from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Investor Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified
Liabilities”),
incurred by the Investor Indemnitees or any of them as a result of, or arising
out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnitees. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.

 

15

 

(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Investor’s other obligations under this Agreement, the
Investor shall defend, protect, indemnify and hold harmless the Company and all
of its officers, directors, shareholders, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company
Indemnitees”) from
and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b) any
breach of any covenant, agreement or obligation of the Investor(s) contained in
this Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor,
or (c) any cause of action, suit or claim brought or made against such Company
Indemnitee based on misrepresentations or due to a breach by the Investor and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees. To the extent that
the foregoing undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.

 

(c) The
obligations of the parties to indemnify or make contribution under this Section
5.1 shall survive termination.

 

 

ARTICLE
VI.

Covenants
of the Company

 

Section
6.1. Registration
Rights. The
Company shall cause the Registration Rights Agreement to remain in full force
and effect and the Company shall comply in all material respects with the terms
thereof.

 

Section
6.2. Listing
of Common Stock. The
Company shall maintain the Common Stock’s authorization for quotation on the
National Association of Securities Dealers Inc.’s Over the Counter Bulletin
Board or listing on any other Principal Market. 

 

Section
6.3. Exchange
Act Registration. The
Company will cause its Common Stock to continue to be registered under Section
12(g) of the Exchange Act, will file in a timely manner all reports and other
documents required of it as a reporting company under the Exchange Act and will
not take any action or file any document (whether or not permitted by Exchange
Act or the rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under said Exchange
Act.

 

Section
6.4. Transfer
Agent Instructions. Not
later than two (2) business days after each Advance Notice Date and prior
to each Closing and the effectiveness of the Registration Statement and resale
of the Common Stock by the Investor, the Company will deliver instructions to
its transfer agent to issue shares of Common Stock free of restrictive
legends.

 

16

 

Section
6.5. Corporate
Existence. The
Company will take all steps necessary to preserve and continue the corporate
existence of the Company.

 

Section
6.6. Notice
of Certain Events Affecting Registration; Suspension of Right to Make an
Advance. The
Company will immediately notify the Investor upon its becoming aware of the
occurrence of any of the following events in respect of a registration statement
or related prospectus relating to an offering of Registrable Securities: (i)
receipt of any request for additional information by the SEC or any other
Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the registration
statement or related prospectus; (ii) the issuance by the SEC or any other
Federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus of any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will 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, and
that in the case of the related prospectus, it will 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, in the light of the
circumstances under which they were made, not misleading; and (v) the Company’s
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events.

 

Section
6.7. Expectations
Regarding Advance Notices. Within
ten (10) days after the commencement of each calendar quarter occurring
subsequent to the commencement of the Commitment Period, the Company must notify
the Investor, in writing, as to its reasonable expectations as to the dollar
amount it intends to raise during such calendar quarter, if any, through the
issuance of Advance Notices. Such notification shall constitute only the
Company’s good faith estimate and shall in no way obligate the Company to raise
such amount, or any amount, or otherwise limit its ability to deliver Advance
Notices. The failure by the Company to comply with this provision can be cured
by the Company’s notifying the Investor, in writing, at any time as to its
reasonable expectations with respect to the current calendar
quarter.

 

Section
6.8. Restriction
on Sale of Capital Stock. During
the Commitment Period, the Company shall not issue or sell, with out fifteen
(15) calendar days prior written notice to the Investor, (i) any Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price of the Common Stock determined
immediately prior to its issuance, (ii) issue or sell any
Preferred Stock
warrant, option, right, contract, call, or other security or instrument granting
the holder thereof the right to acquire Common Stock without consideration or
for a consideration per share less than such Common Stock’s Bid Price determined
immediately prior to its issuance, or (iii) file any registration statement on
Form S-8 or form bona fide employee stock option plan.

 

17

 

Section
6.9. Consolidation;
Merger. The
Company shall not, at any time after the date hereof, effect any merger or
consolidation of the Company with or into, or a transfer of all or substantially
all the assets of the Company to another entity (a “Consolidation
Event”) unless
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligation to deliver to the Investor such shares of
stock and/or securities as the Investor is entitled to receive pursuant to this
Agreement.

 

Section
6.10. Issuance
of the Company’s Common Stock. The sale
of the shares of Common Stock shall be made in accordance with the provisions
and requirements of Regulation D and any applicable state securities
law.

 

 

ARTICLE
VII.

Conditions
for Advance and Conditions to Closing

 

Section
7.1. Conditions
Precedent to the Obligations of the Company. The
obligation hereunder of the Company to issue and sell the shares of Common Stock
to the Investor incident to each Closing is subject to the satisfaction, or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.

 

(a) Accuracy
of the Investor’s Representations and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects.

 

(b) Performance
by the Investor. The
Investor shall have performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.

 

Section
7.2. Conditions
Precedent to the Right of the Company to Deliver an Advance Notice and the
Obligation of the Investor to Purchase Shares of Common Stock. The
right of the Company to deliver an Advance Notice and the obligation of the
Investor hereunder to acquire and pay for shares of the Company’s Common Stock
incident to a Closing is subject to the fulfillment by the Company, on (i) the
date of delivery of such Advance Notice and (ii) the applicable Advance
Date (each a “Condition
Satisfaction Date”), of
each of the following conditions:

 

(a) Registration
of the Common Stock with the SEC. The
Company shall have filed with the SEC a Registration Statement with respect to
the resale of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement. As set forth in the Registration Rights
Agreement, the Registration Statement shall have previously become effective and
shall remain effective on each Condition Satisfaction Date and (i) neither the
Company nor the Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement or that
the SEC otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC’s concerns have been addressed and the
Investor is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist. The Registration Statement must have been declared
effective by the SEC prior to the first Advance Notice Date.

 

18

 

(b) Authority. The
Company shall have obtained all permits and qualifications required by any
applicable state in accordance with the Registration Rights Agreement for the
offer and sale of the shares of Common Stock, or shall have the availability of
exemptions therefrom. The sale and issuance of the shares of Common Stock shall
be legally permitted by all laws and regulations to which the Company is
subject.

 

(c) Fundamental
Changes. There
shall not exist any fundamental changes to the information set forth in the
Registration Statement which would require the Company to file a post-effective
amendment to the Registration Statement. 

 

(d) Performance
by the Company. The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement
(including, without limitation, the conditions specified in Section 2.5
hereof) and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction
Date.

 

(e) No
Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly and adversely
affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of prohibiting or
adversely affecting any of the transactions contemplated by this
Agreement.

 

(f) No
Suspension of Trading in or Delisting of Common Stock. The
trading of the Common Stock is not suspended by the SEC or the Principal Market
(if the Common Stock is traded on a Principal Market). The issuance of shares of
Common Stock with respect to the applicable Closing, if any, shall not violate
the shareholder approval requirements of the Principal Market (if the Common
Stock is traded on a Principal Market). The Company shall not have received any
notice threatening the continued listing of the Common Stock on the Principal
Market (if the Common Stock is traded on a Principal Market).

 

(g) Maximum
Advance Amount. The
amount of an Advance requested by the Company shall not exceed the Maximum
Advance Amount. In addition, in no event shall the number of shares issuable to
the Investor pursuant to an Advance cause the Investor to own in excess of nine
and 9/10 percent (9.9%) of the then outstanding Common Stock of the
Company.

 

(h) No
Knowledge. The
Company has no knowledge of any event which would be more likely than not to
have the effect of causing such Registration Statement to be suspended or
otherwise ineffective.

 

(i) Other. On each
Condition Satisfaction Date, the Investor shall have received the certificate
executed by an officer of the Company in the form of Exhibit
A attached
hereto.

 

19

 

ARTICLE
VIII.

Due
Diligence Review; Non-Disclosure of Non-Public Information

 

Section
8.1. Due
Diligence Review. Prior
to the filing of the Registration Statement the Company shall make available for
inspection and review by the Investor, its advisors and representatives, and any
underwriter participating in any disposition of the Registrable Securities on
behalf of the Investor pursuant to the Registration Statement, any such
registration statement or amendment or supplement thereto or any blue sky, NASD
or other filing, all financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and properties of the
Company as may be reasonably necessary for the purpose of such review, and cause
the Company’s officers, directors and employees to supply all such information
reasonably requested by the Investor or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investor and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.

 

Section
8.2. Non-Disclosure
of Non-Public Information.

 

(a) The
Company shall not disclose non-public information to the Investor, its advisors,
or its representatives, unless prior to disclosure of such information the
Company identifies such information as being non-public information and provides
the Investor, such advisors and representatives with the opportunity to accept
or refuse to accept such non-public information for review. The Company may, as
a condition to disclosing any non-public information hereunder, require the
Investor’s advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the
Investor.

 

(b) Nothing
herein shall require the Company to disclose non-public information to the
Investor or its advisors or representatives, and the Company represents that it
does not disseminate non-public information to any investors who purchase stock
in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

 

20

 

ARTICLE
IX.

Choice
of Law/Jurisdiction

 

Section
9.1. Governing
Law. This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Nevada without regard to the principles of conflict of laws. The
parties further agree that any action between them shall be heard in Hudson
County, New Jersey, and expressly consent to the jurisdiction and venue of the
Superior Court of New Jersey, sitting in Hudson County, New Jersey and the
United States District Court of New Jersey, sitting in Newark, New Jersey, for
the adjudication of any civil action asserted pursuant to this
paragraph.

 

 

ARTICLE
X.

Assignment;
Termination

 

Section
10.1. Assignment. Neither
this Agreement nor any rights of the Company hereunder may be assigned to any
other Person. 

 

Section
10.2. Termination. The
obligations of the Investor to make Advances under Article II hereof shall
terminate twenty-four (24) months after the Effective Date.

 

 

ARTICLE
XI.

Notices

 

Section
11.1. Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

 

21

 

	
      If
      to the Company, to:
	
      China
      World Trade Corporation

	 	
      Room
      1217, 12th
      Floor, The Metropolis Tower

	 	
      10
      Metropolis Drive

	 	
      Hunghom,
      Hong Kong China

	 	
      Attention:
      Bernard Chan, Chief Financial Officer

	 	
      Telephone:
      (852) 2330-6622

	 	
      Facsimile:
      (852) 2333-8844

	 	 
	
      With
      a copy to:
	
      Harold
      H. Martin, P.A.

	 	
      17111
      Kenton Drive - Suite 204B

	 	
      Conrelius,
      NC 28031

	 	
      Telephone:
      (704) 894-9760

	 	
      Facsimile:
      (704) 894-9759

	 	 
	
      If
      to the Investor(s):
	
      Cornell
      Capital Partners, LP

	 	
      101
      Hudson Street -Suite 3700

	 	
      Jersey
      City, NJ 07302

	 	
      Attention: Mark
      Angelo

	 	
                     Portfolio
      Manager

	 	
      Telephone: (201)
      985-8300 

	 	
      Facsimile: (201)
      985-8266 

	 	 
	
      With
      a Copy to:
	
      David
      Gonzalez, Esq. 

	 	
      101
      Hudson Street - Suite 3700

	 	
      Jersey
      City, NJ 07302

	 	
      Telephone: (201)
      985-8300 

	 	
      Facsimile: (201)
      985-8266

Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.

 

22

 

ARTICLE
XII.

Miscellaneous

 

Section
12.1. Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event any signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party within five (5)
days of the execution and delivery hereof, though failure to deliver such copies
shall not affect the validity of this Agreement.

 

Section
12.2. Entire
Agreement; Amendments. This
Agreement supersedes all other prior oral or written agreements between the
Investor, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with
enforcement.

 

Section
12.3. Reporting
Entity for the Common Stock. The
reporting entity relied upon for the determination of the trading price or
trading volume of the Common Stock on any given Trading Day for the purposes of
this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ any
other reporting entity.

 

Section
12.4. Fees
and Expenses. The
Company hereby agrees to pay the following fees:

 

(a) Structuring
Fees. Each of
the parties shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby, except
that upon the execution of this Agreement the Company will pay a structuring fee
of Fifteen Thousand Dollars ($15,000) to Yorkville Advisors Management,
LLC. Subsequently on each advance date, the Company will pay to Yorkville
Advisors Management, LLC a structuring fee of of Five Hundred
Dollars ($500) directly out the proceeds of any Advances
hereunder.

 

(b) Commitment
Fees.

 

(i) On each
Advance Date the Company shall pay to the Investor, directly from the gross
proceeds held in escrow, an amount equal to four percent (4%) of the amount of
each Advance. The Company hereby agrees that if such payment, as is described
above, is not made by the Company on the Advance Date, such payment will be made
at the direction of the Investor as outlined and mandated by Section 2.3 of this
Agreement. 

 

(ii) Upon the
execution of this Agreement the Company shall issue to the Investor Two Hundred
Twenty Thousand (225,000) shares of the Company’s Common Stock (the
“Investor’s
Shares”).

 

(iii) Fully
Earned. The
Investor’s Shares shall be deemed fully earned as of the date hereof.

 

(iv) Registration
Rights. The
Investor’s Shares will have “piggy-back” registration rights.

 

(v) Restrictions.
 For a
period of ninety (90) calendar days from the Effective Date, as this term is
identified in the Registration Rights Agreement dated the date hereof, , the
Investor shall not sell the Investor’s Shares if the volume weighted average
price of the Company’s Common Stock, as quoted by Bloomberg, LP, is less than
One Dollar and Fifty Cents ($1.50). Thereafter the Investor shall be entitled to
sell the Investor’s Shares free of any limitation other than as outlined herein.
Notwithstanding the foregoing if the Company does not obtain the effectiveness
of the Registration Statement the Investor shall be entitled to convert and sell
pursuant to Rule 144 and the restrictions contained below. In addition, for a
period of twelve (12) months following the declaration of effectiveness of the
Registration Statement by the United States Securities and Exchange Commission,
the Investor shall not sell more than twenty five percent (25%) of the
Investor’s shares every thirty (30) calendar days if the VWAP of the Company’s
Common Stock is less than Two Dollars and Fifty Cents ($2.50). If the VWAP of
the Company’s Common Stock is higher than Two Dollars and Fifty Cents ($2.50)
the Investor shall be entitled to sell the Investor’s Shares free of any
limitation. 

 

23

 

Section
12.5. Brokerage. Each of
the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker who will demand payment of any fee or
commission from the other party. The Company on the one hand, and the Investor,
on the other hand, agree to indemnify the other against and hold the other
harmless from any and all liabilities to any person claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.

 

Section
12.6. Confidentiality. If for
any reason the transactions contemplated by this Agreement are not consummated,
each of the parties hereto shall keep confidential any information obtained from
any other party (except information publicly available or in such party’s domain
prior to the date hereof, and except as required by court order) and shall
promptly return to the other parties all schedules, documents, instruments, work
papers or other written information without retaining copies thereof, previously
furnished by it as a result of this Agreement or in connection
herein.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

27

24

IN
WITNESS WHEREOF, the
parties hereto have caused this Standby Equity Distribution Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.

 

	 	
      COMPANY:

	 	
      CHINA
      WORLD TRADE CORPORATION

	 	 
	 	
      By:
      /s/ John Hui 

	 	
      Name: John
      Hui

	 	
      Title: CEO
      & Vice Chairman

	 	 
	 	 
	 	
      INVESTOR:

	 	
      CORNELL
      CAPITAL PARTNERS, LP

	 	 
	 	
      By: Yorkville
      Advisors, LLC

	 	
      Its: General
      Partner

	 	 
	 	
      By:
      /s/ Mark Angelo

	 	
      Name: Mark
      Angelo

	 	
      Title: Portfolio
      Manager

	 	 

25

 

EXHIBIT
A

 

ADVANCE
NOTICE/COMPLIANCE CERTIFICATE

 

CHINA
WORLD TRADE CORPORATION

 

The
undersigned, __________ hereby certifies, with respect to the sale of shares of
Common Stock of CHINA
WORLD TRADE CORPORATION (the
“Company”),
issuable in connection with this Advance Notice and Compliance Certificate dated
___________________ (the “Notice”),
delivered pursuant to the Standby Equity Distribution Agreement (the
“Agreement”), as
follows: 

 

1. The
undersigned is the duly elected ___________ of the Company.

 

2. There are
no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment to
the Registration Statement. 

 

3.
 The
Company has performed in all material respects all covenants and agreements to
be performed by the Company on or prior to the Advance Date related to the
Notice and has complied in all material respects with all obligations and
conditions contained in the Agreement.

 

4. The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC
Filings”)
required to be made by it pursuant to applicable securities laws (including,
without limitation, all filings required under the Securities Exchange Act of
1934, which include Forms 10-Q, 10-K, 8-K, etc. All SEC Filings and other public
disclosures made by the Company, including, without limitation, all press
releases, analysts meetings and calls, etc. (collectively, the “Public
Disclosures”), have
been reviewed and approved for release by the Company’s attorneys and, if
containing financial information, the Company’s independent certified public
accountants. None of the Company’s Public Disclosures 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, in the light of the
circumstances under which they were made, not misleading.

 

5. The
Advance requested is _____________________.

 

The
undersigned has executed this Certificate this ____ day of
_________________.

 

CHINA
WORLD TRADE CORPORATION

By:      

Name: 

Title: 

26Unassociated Document

EXHIBIT
10.2

 

REGISTRATION
RIGHTS AGREEMENT

 

REGISTRATION
RIGHTS AGREEMENT (this
“Agreement”), dated
as of November 15, 2004, by and between CHINA
WORLD TRADE CORPORATION, a Nevada
corporation, with its principal office located at Room 1217, 12th Floor,
The Metropolitan Tower 10 Metropolis Drive Hunghom, Hong Kong China (the
“Company”), and
CORNELL
CAPITAL PARTNERS, LP, a
Delaware limited partnership (the “Investor”).

 

WHEREAS:

 

A. In
connection with the Standby Equity Distribution Agreement by and between the
parties hereto of even date herewith (the “Standby
Equity Distribution Agreement”), the
Company has agreed, upon the terms and subject to the conditions of the Standby
Equity Distribution Agreement, to issue and sell to the Investor that number of
shares of the Company’s common stock, par value US$0.001 per share (the
“Common
Stock”), which
can be purchased pursuant to the terms of the Standby Equity Distribution
Agreement for an aggregate purchase price of up to Thirty Million U.S.
Dollars ($30,000,000). Capitalized terms not defined herein shall have the
meaning ascribed to them in the Standby Equity Distribution
Agreement.

 

B. To induce
the Investor to execute and deliver the Standby Equity Distribution Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the “1933
Act”), and
applicable state securities laws.

 

NOW,
THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as
follows:

 

1.  DEFINITIONS.

 

As used
in this Agreement, the following terms shall have the following
meanings:

 

a. “Person” means a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

 

a  “Register,”
“registered,” and
“registration” refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis (“Rule
415”), and
the declaration or ordering of effectiveness of such Registration Statement(s)
by the United States Securities and Exchange Commission (the “SEC”).

 

a  “Registrable
Securities” means
the Investor’s Shares, as defined in the Standby Equity Distribution Agreement
and shares of Common Stock issuable to Investors pursuant to the Standby Equity
Distribution Agreement.

 

b  “Registration
Statement” means a
registration statement under the 1933 Act which covers the Registrable
Securities.

 

1

 

2.  REGISTRATION.

 

a  Mandatory
Registration. The
Company shall prepare and file with the SEC a Registration Statement on Form
S-1, SB-2 or on such other form as is applicable. The Company shall cause such
Registration Statement to be declared effective by the SEC prior to the first
sale to the Investor of the Company’s Common Stock pursuant to the Standby
Equity Distribution Agreement.

 

b  Sufficient
Number of Shares Registered. In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities which the Investor has purchased pursuant to the Standby Equity
Distribution Agreement, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available therefore, if
applicable), or both, so as to cover all of such Registrable Securities which
the Investor has purchased pursuant to the Standby Equity Distribution Agreement
as soon as practicable, but in any event not later than fifteen (15) days after
the necessity therefore arises. The Company shall use it best efforts to cause
such amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of Registrable Securities issuable on an Advance Notice Date is
greater than the number of shares available for resale under such Registration
Statement.

 

3.  RELATED
OBLIGATIONS.

 

a  The
Company shall keep the Registration Statement effective pursuant to Rule 415 at
all times until the date on which the Investor shall have sold all the
Registrable Securities covered by such Registration Statement (the “Registration
Period”), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.

 

b  The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company’s filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “1934
Act”), the
Company shall have incorporated such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement the Registration
Statement.

 

2

 

c  The
Company shall furnish to the Investor, if such information is unavaiable on the
official website of the SEC, without charge, (i) at least one copy of such
Registration Statement as declared effective by the SEC and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) ten (10) copies of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request) and (iii) such other documents
as such Investor may reasonably request from time to time, and do not in any
event violate any rule under the 1933 Act, in order to facilitate the
disposition of the Registrable Securities owned by such Investor.

 

d  The
Company shall use its best efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
“blue sky” laws of such jurisdictions in the United States as the Investor
reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify the Investor of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

 

e  As
promptly as practicable after becoming aware of such event or development, the
Company shall notify the Investor in writing of the happening of any event as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Investor, if such
information is unavailable on the official website of the SEC. The Company shall
also promptly notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness), (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related prospectus
or related information, and (iii) of the Company’s reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate. 

 

3

 

f  The
Company shall use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

 

g  At the
reasonable request of the Investor, and not violating any rule under the 1933
Act and Reg M, the Company shall furnish to the Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as the Investor may reasonably request (i) a letter, dated such date,
from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, and (ii) an opinion, dated as
of such date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the Investor.

 

h  The
Company shall make available for inspection by at the sole costs of the
Investor, (i) the Investor and (ii) one firm of accountants or other agents
retained by the Investor (collectively, the “Inspectors”) all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree, and
the Investor hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Investor has knowledge. The Investor agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.

 

4

 

i  The
Company shall hold in confidence and not make any disclosure of information
concerning the Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to the Investor and allow the Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

 

j  The
Company shall use its best efforts either to cause all the Registrable
Securities covered by a Registration Statement (i) to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or to secure the
inclusion for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).

 

k  The
Company shall cooperate with the Investor, upon serving an Advance Notice to the
Investor, to the extent applicable, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investor may reasonably request and registered in such names as the
Investor may request.

 

l  The
Company shall use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.

 

m  The
Company shall make generally available to its security holders as soon as
practical, but not later than one hundred five (105) days after the close of the
period covered thereby, an earnings statement if such information is unavailable
on the official website of the SEC (in form complying with the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period beginning not later
than the first day of the Company’s fiscal quarter next following the effective
date of the Registration Statement.

 

n  The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

 

o  Within
two (2) business days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investor) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

 

p  The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant to a
Registration Statement.

 

5

 

4.  OBLIGATIONS
OF THE INVESTOR.

 

The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required. Notwithstanding anything to
the contrary and not violating any rule under the 1933 Act, the Company shall
cause its transfer agent to deliver unlegended certificates for shares of Common
Stock to a transferee of the Investor in accordance with the terms of the
Standby Equity Distribution Agreement in connection with any sale of Registrable
Securities with respect to which the Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Investor has not yet settled.

 

5 EXPENSES
OF REGISTRATION.

 

All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall be
paid by the Company. 

 

6. INDEMNIFICATION.

 

With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:

 

a  To the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend the Investor, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls the
Investor within the meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue
Sky Filing”), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). The
Company shall reimburse the Investor and each such controlling person promptly
as such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not be
available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(e); and (z) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person.

 

6

 

b  In
connection with a Registration Statement, the Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each an
“Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the extent, and only to the extent, that such Violation occurs in reliance upon
and in conformity with written information furnished to the Company by the
Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(d), the Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Investor, which consent
shall not be unreasonably withheld; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to the Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such new
prospectus was delivered to the Investor prior to the Investor’s use of the
prospectus to which the Claim relates.

 

c  Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior written
consent, provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

 

7

 

d  The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

 

e  The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

 

7. CONTRIBUTION.

 

To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

 

8. REPORTS
UNDER THE 1934 ACT.

 

With a
view to making available to the Investor the benefits of Rule 144 promulgated
under the 1933 Act or any similar rule or regulation of the SEC that may at any
time permit the Investors to sell securities of the Company to the public
without registration (“Rule
144”) the
Company agrees to:

 

a. make and
keep public information available, as those terms are understood and defined in
Rule 144;

 

b. file with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company’s obligations under Section 6.3 of the Standby Equity
Distribution Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and

 

c. furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company if such information is unavailable
on the official website of the SEC, and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to
Rule 144 without registration.

 

9. AMENDMENT
OF REGISTRATION RIGHTS.

 

Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a written agreement between the Company and the
Investor. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon the Investor and the Company. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.

 

8

 

10. MISCELLANEOUS.

 

a. A Person
is deemed to be a holder of Registrable Securities whenever such Person owns or
is deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.

 

b. Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one business day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:

 

	
      If
      to the Company, to:
	
      China
      World Trade Corporation

	 	
      Room
      1217, 12th
      Floor, The Metropolis Tower

	 	
      10
      Metropolis Drive

	 	
      Hunghom,
      Hong Kong China

	 	
      Attention:
      Bernard Chan, Chief Financial Officer

	 	
      Telephone:
      (852) 2330-6622

	 	
      Facsimile:
      (852) 2333-8844

	 	 
	
      With
      a copy to:
	
      Harold
      H. Martin, P.A.

	 	
      17111
      Kenton Drive - Suite 204B

	 	
      Conrelius,
      NC 28031

	 	
      Telephone:
      (704) 894-9760

	 	
      Facsimile:
      (704) 894-9759

	 	 
	
      If
      to the Investor, to:
	
      Cornell
      Capital Partners, LP

	 	
      101
      Hudson Street - Suite 3700

	 	
      Jersey
      City, New Jersey 07302

	 	
      Attention: Mark
      Angelo

	 	
                    
      Portfolio Manager

	 	
      Telephone: (201)
      985-8300

	 	
      Facsimile: (201)
      985-8266

	 	 
	
      With
      a copy to:
	
      David
      Gonzalez, Esq. 

	 	
      101
      Hudson Street - Suite 3700

	 	
      Jersey
      City, NJ 07302

	 	
      Telephone: (201)
      985-8300 

	 	
      Facsimile: (201)
      985-8266

	 	 

 

9

 

Any party
may change its address by providing written notice to the other parties hereto
at least five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

 

d. The
corporate laws of the State of Nevada shall govern all issues concerning the
relative rights of the Company and the Investor. All other questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New Jersey, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New Jersey or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New Jersey.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
Superior Courts of the State of New Jersey, sitting in Hudson County, New Jersey
and the Federal District Court for the District of New Jersey sitting in Newark,
New Jersey, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

10

 

e. This
Agreement, the Standby Equity Distribution Agreement, the Escrow Agreement, and
the Placement Agent Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the Standby Equity
Distribution Agreement, the Escrow Agreement, and the Placement Agent Agreement
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

 

f  This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

 

g  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

h  This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

 

i  Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

 

j  The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.

 

k  This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

11

 

IN
WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.

 

	 	
      COMPANY:

	 	
      CHINA
      WORLD TRADE CORPORATION

	 	 
	 	
      By:
      /s/ John Hui

	 	
      Name: John
      Hui

	 	
      Title: CEO
      & Vice Chairman

	 	 
	 	 
	 	
      INVESTOR:

	 	
      CORNELL
      CAPITAL PARTNERS, LP

	 	 
	 	
      By: Yorkville
      Advisors, LLC

	 	
      Its: General
      Partner

	 	 
	 	
      By:
      /s/ Mark Angelo 

	 	
      Name: Mark
      Angelo

	 	
      Title: Portfolio
      Manager

	 	 

 

12

 

EXHIBIT
A

FORM
OF NOTICE OF EFFECTIVENESS

 

OF
REGISTRATION STATEMENT

 

Attention: 

Re: CHINA
WORLD TRADE CORPORATION

Ladies
and Gentlemen:

We are
counsel to China World Trade Corporation, a Nevada corporation (the
“Company”), and
have represented the Company in connection with that certain Standby Equity
Distribution Agreement (the “Standby
Equity Distribution Agreement”)
entered into by and between the Company and Cornell Capital Partners, LP (the
“Investor”)
pursuant to which the Company issued to the Investor shares of its Common Stock,
par value US$0.001 per share (the “Common
Stock”).
Pursuant to the Standby Equity Distribution Agreement, the Company also has
entered into a Registration Rights Agreement with the Investor (the
“Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the “1933
Act”). In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration Statement on
Form ________ (File No. 333-_____________) (the “Registration
Statement”) with
the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names the Investor as a selling
stockholder thereunder.

 

In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS] on
[ENTER
DATE OF EFFECTIVENESS] and we
have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.

 

Very
truly yours,

By:      

cc: Cornell
Capital Partners, LP

 

 

13

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