Document:

ex10-35.htm

    
      

       

      EXHIBIT
10.35

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    

                                     

                                    THIRD
AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT

                                     

                                    THIS
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT is made as of
February 18, 2009 (the "Third Amendment
to Restated Credit Agreement," or this "Amendment"),
among VANGUARD NATURAL GAS,
LLC, a Kentucky limited liability company ("Borrower"),
each lender from time to time party hereto (collectively, the "Lenders"),
and CITIBANK, N.A., a
national banking association, in its capacity as Administrative Agent ("Administrative
Agent").

                                     

                                    R E C I T A L S

                                    

                                    A.           Borrower,
the Lenders, and the Administrative Agent are parties to that certain First
Amended and Restated Credit Agreement dated as of February 14, 2008, and as
amended by a First Amendment to First Amended and Restated Credit Agreement
dated as of May 15, 2008, and as amended by a Second Amendment to First
Amended and Restated Credit Agreement dated as of October 22, 2008
(collectively, the "Original Credit
Agreement").

                                     

                                    B.           Borrower
has requested certain amendments to the Original Credit Agreement as hereinafter
provided.

                                     

                                    NOW,
THEREFORE, in consideration of these premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

                                     

                                    1. Same
Terms.  All terms used herein which are defined in the Original
Credit Agreement shall have the same meanings when used herein, unless the
context hereof otherwise requires or provides.  In addition, all
references in the Loan Documents to the "Agreement" shall
mean the Original Credit Agreement, as amended by this Amendment, as the same
shall hereafter be amended from time to time.  In addition, the
following terms have the meanings set forth below:

                                     

                                    "Effective
Date" means February 18, 2009.

                                     

                                    "Modification
Papers" means this Amendment  and all of the other documents
and agreements executed in connection with the transactions contemplated by this
Amendment.

                                     

                                    2. Conditions
Precedent.  The transactions contemplated by this Amendment
shall be deemed to be effective as of the Effective Date, when the following
conditions have been complied with to the satisfaction of Administrative Agent,
unless waived in writing by Administrative Agent:

                                     

                                    A. Third
Amendment to Restated Credit Agreement.  This Third Amendment
to Restated Credit Agreement shall be in full force and effect.

                                     

                                    B. Guarantor
Confirmation Letters.  Each of Ariana Energy, LLC and Trust
Energy Company, LLC shall have executed a letter in favor of Administrative
Agent (each a "Guarantor
Confirmation Letter") confirming that its Guaranty remains in full force
and effect.

                                     

                                    C. Fees and
Expenses.  Administrative Agent shall have received payment of
all out-of-pocket fees and expenses (including reasonable attorneys' fees and
expenses) incurred by Administrative Agent in connection with the preparation,
negotiation and execution of the Modification Papers.

                                     

                                    D. Representations
and Warranties  All representations and warranties contained
herein or in the documents referred to herein or otherwise made in writing in
connection herewith or therewith shall be true and correct with the same force
and effect as though such representations and warranties have been made on and
as of this date.

                                     

                                    3. Amendments
to Original Credit Agreement.  On the Effective Date, the
Original Credit Agreement shall be deemed to be amended as follows:

                                     

                                    (a) The
Equity Interests of the Borrower are owned 100% by Vanguard Natural Resources,
LLC.  The parties have agreed to include the financial results of
Vanguard Natural Resources, LLC with the consolidated financial results of the
Borrower and its Subsidiaries for purposes of determining compliance with the
financial covenants set forth in Sections 9.01(a), (b) and (c) of the Original
Credit Agreement.  Accordingly, the definitions of "Consolidated
Leverage Ratio," "EBITDA," "Interest Expense" and "Total Debt" set forth in
Section 1.02 of the Original Credit Agreement shall be amended to read in their
entirety as follows:

                                     

                                    "'Consolidated
Leverage Ratio' means, as of any date of determination, for the Borrower,
the Consolidated Subsidiaries and Vanguard Natural Resources, LLC on a
consolidated basis, the ratio of (a) Total Debt as of such date to (b) EBITDA
for each four consecutive fiscal quarter period ending on and after
December 31, 2007.  For purposes of calculating the Consolidated
Leverage Ratio at any date, EBITDA shall be calculated on a pro forma basis (as
certified by the Borrower to the Administrative Agent and as approved by the
Administrative Agent) assuming that all acquisitions made, and all dispositions
completed, during the four consecutive fiscal quarters then most recently ended
have been made on the first day of such period (but without any adjustment for
projected cost savings or other synergies).

                                     

                                    'EBITDA'
means, for any twelve-month period (except as otherwise expressly provided)
ending on the last day of any fiscal quarter, consolidated net income, excluding
any non-cash revenue or expense associated with Swap Agreements resulting from FAS 133, plus without duplication
and to the extent deducted from revenues
in determining consolidated net income, the sum of (a) the aggregate amount of consolidated Interest Expense for such period, (b) the
aggregate amount of income tax expense for such period, (c) all amounts attributable to depletion,
depreciation and amortization for such period, and (d) all other non-cash charges, all determined on a
consolidated basis with respect to Borrower, the Consolidated Subsidiaries and
Vanguard Natural Resources, LLC in accordance with GAAP,
using the results of the twelve-month period ending with that reporting period
(except as otherwise herein provided).

                                     

                                    'Interest
Expense' means, for any period, the sum (determined without duplication)
of the aggregate gross interest expense of the Borrower, the Consolidated
Subsidiaries and Vanguard Natural Resources, LLC for such period, including to
the extent included in interest expense under GAAP:  (a) amortization
of debt discount, (b) capitalized interest and (c) the portion of any payments
or accruals under Capital Leases allocable to interest expense, minus (i) the
portion of any payments or accruals under Synthetic Leases allocable to interest
expense, and (ii) and any imputed interest pursuant to asset retirement
obligations whether or not the same constitutes interest expense under
GAAP.

                                     

                                    'Total
Debt' means, at any date, all Debt of the Borrower, the Consolidated
Subsidiaries and Vanguard Natural Resources, LLC on a consolidated basis,
excluding (i) non-cash obligations under FAS 133 and (ii) accounts payable and
other accrued liabilities (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business which
are not greater than sixty (60) days past the date of invoice or delinquent or
which are being contested in good faith by appropriate action and for which
adequate reserves are maintained in accordance with GAAP."

                                     

                                    (b) Section
9.01(a) of the Original Credit Agreement shall be amended to read in its
entirety as follows:

                                     

                                    "(a)           Interest Coverage
Ratio.  The Borrower will not, as of the last day of any fiscal
quarter beginning with the fiscal quarter ending December 31, 2007, permit its
ratio of EBITDA, less
the aggregate amount of cash used to purchase Equity Interests of Vanguard
Natural Resources, LLC for the twelve month period ending on the last day of
such fiscal quarter, to Interest Expense for such twelve month period, to be
less than 2.5 to 1.0."

                                    

                                    (c) Section
9.04(e) of the Original Credit Agreement shall be amended to read in its
entirety as follows:

                                     

                                    "(e)           the
Borrower may make Restricted Payments to its Equity Interest holders provided
that (i) no Default has occurred and is continuing or would result from the
making of such Restricted Payment, and (ii) after giving effect to such
Restricted Payment, the Revolving Credit Exposure is less than 90% of the
Borrowing Base as of such date, and (iii) in the case of a Restricted Payment
which will be used by Vanguard Natural Resources, LLC to purchase treasury
stock, the sum of the amounts of all such payments to date, plus the amount of
such proposed Restricted Payment, does not exceed $5,000,000."

                                    

                                    (d) Exhibit D
to the Original Credit Agreement shall be amended by replacing it in its
entirety with Exhibit
D attached hereto.

                                     

                                    4. Guarantor
Confirmation Letter – Nami Resources.  On or before April 30,
2009, Borrower shall have caused Nami Resources Company L.L.C. to deliver to
Administrative Agent a Guarantor Confirmation Letter which shall be satisfactory
in form and substance to Administrative Agent.  A breach of this
covenant shall constitute an Event of Default under the Original Credit
Agreement with no further grace period being applicable.

                                     

                                    5. Certain
Representations.  Borrower represents and warrants that, as of
the Effective Date:  (a) Vanguard Natural Resources, LLC owns
100% of the issued and outstanding Equity Interests of Borrower; (b) Borrower
has full power and authority to execute the Modification Papers, and the
Modification Papers executed by Borrower constitute the legal, valid and binding
obligation of Borrower enforceable in accordance with their terms, except as
enforceability may be limited by general principles of equity and applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally; and (c) no
authorization, approval, consent or other action by, notice to, or filing with,
any governmental authority or other person is required for the execution,
delivery and performance by Borrower thereof.  In addition, Borrower
represents that all representations and warranties contained in the Original
Credit Agreement are true and correct in all material respects on and as of the
Effective Date (except representations and warranties that relate to a specific
prior date are based upon the state of facts as they exist as of such
date).

                                     

                                    6. No
Further Amendments.  Except as previously amended in writing or
as amended hereby, the Original Credit Agreement shall remain unchanged and all
provisions shall remain fully effective among the parties.

                                     

                                    7. Limitation
on Agreements.  The modifications set forth herein are limited
precisely as written and shall not be deemed (a) to be a consent under or a
waiver of or an amendment to any other term or condition in the Original Credit
Agreement or any of the Loan Documents, or (b) to prejudice any right or
rights which Administrative Agent and/or the Lenders now have or may have in the
future under or in connection with the Original Credit Agreement and the Loan
Documents, each as amended hereby, or any of the other documents referred to
herein or therein. The Modification Papers shall constitute Loan Documents for
all purposes.

                                     

                                    8. Counterparts.  This
Amendment may be executed in any number of counterparts, each of which when
executed and delivered shall be deemed an original, but all of which constitute
one instrument.  In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.

                                     

                                    9. Incorporation
of Certain Provisions by Reference.  The provisions of Section
12.09 of the Original Credit Agreement captioned "Governing Law; Jurisdiction;
Consent to Service of Process; Waiver of Jury Trial" are incorporated herein by
reference for all purposes.

                                     

                                    10. Entirety,
Etc.  This instrument and all of the other Loan Documents
embody the entire agreement between the parties.  THIS AMENDMENT AND
ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

                                     

                                     

                                    
                                      
                                        
                                          

                                           

                                        

                                         

                                      

                                      
                                         

                                        
                                          

                                        

                                      

                                      
                                         

                                      

                                    

                                    IN
WITNESS WHEREOF, the parties hereto have executed this Amendment to be effective
as of the date and year first above written.

                                     

                                    

                                    
                                      
                                        	
                                                BORROWER:

                                              	
                                                VANGUARD
      NATURAL GAS, LLC

                                              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      Richard Robert

                                              	 
      
	 
      	 
      	
                                                Richard
      Robert

                                              	 
      
	 
      	 
      	
                                                Executive
      Vice President and Chief Financial Officer

                                              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                                                ADMINISTRATIVE
      AGENT:.

                                              	
                                                CITIBANK,
      N.A

                                              
	
                                                as
      Administrative Agent

                                              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      Ryan Watson

                                              	 
      
	 
      	 
      	
                                                Ryan
      Watson

                                              	 
      
	 
      	 
      	
                                                Vice
      President

                                              	 
      
	 
      	 
      	 
      	 
      
	
                                                LENDERS:

                                              	
                                                CITIBANK,
      N.A.

                                              
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      Ryan Watson

                                              	 
      
	 
      	 
      	
                                                Ryan
      Watson

                                              	 
      
	 
      	 
      	
                                                Vice
      President

                                              	 
      
	 
      	 
      	 
      	 
      
	
                                                LENDERS:

                                              	
                                                BNP
      PARIBAS

                                              
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      Betsy Jocher

                                              	 
      
	 
      	
                                                Name:

                                              	
                                                Betsy
      Jocher

                                              	 
      
	 
      	
                                                Title:

                                              	
                                                Director

                                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/ Edward Pak

                                              	 
      
	 
      	
                                                Name:

                                              	
                                                Edward Pak

                                              	 
      
	 
      	
                                                Title:

                                              	
                                                Vice
      President

                                              	 
      
	 
      	 
      	 
      	 
      
	
                                                LENDERS:

                                              	
                                                WACHOVIA
      BANK, NATIONAL ASSOCIATION

                                              
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      Shawn Young

                                              	 
      
	 
      	
                                                Name:

                                              	
                                                Shawn
      Young

                                              	 
      
	 
      	
                                                Title:

                                              	
                                                Director

                                              	 
      
	
                                                LENDERS:

                                              	
                                                THE
      BANK OF NOVA SCOTIA

                                              
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      David G. Mills

                                              	 
      
	 
      	
                                                Name:

                                              	
                                                David
      G. Mills

                                              	 
      
	 
      	
                                                Title:

                                              	
                                                Managing Director

                                              	 
      
	 
      	 
      	 
      	 
      
	
                                                LENDERS:

                                              	
                                                COMPASS
      BANK

                                              
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	
                                                /s/
      Kathleen J. Bowen

                                              	 
      
	 
      	
                                                Name:

                                              	
                                                Kathleen
      J. Bowen

                                              	 
      
	 
      	
                                                Title:

                                              	
                                                Senior
      Vice President

                                              	 
      

                                      

                                    

                                    

                                    

                                    
                                      
                                        
                                           

                                           

                                        

                                         

                                      

                                      
                                         

                                        
                                          

                                        

                                      

                                      
                                         

                                      

                                    

                                    EXHIBIT
D

                                     

                                    FORM
OF

                                     

                                    COMPLIANCE
CERTIFICATE

                                     

                                    The
undersigned hereby certifies that he/she is the _______________ of VANGUARD NATURAL GAS, LLC, a
Kentucky limited liability company (the "Borrower"),
and that as such he/she is authorized to execute this certificate on behalf of
the Borrower.  With reference to the First Amended and Restated Credit
Agreement dated as of February 14, 2008 (together with all amendments,
restatements, supplements or other modifications thereto being the "Agreement")
among the Borrower, CITIBANK,
N.A., as Administrative Agent, and the other agents and lenders (the
"Lenders")
which are or become a party thereto, and such Lenders, the undersigned
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Agreement unless otherwise
specified):

                                     

                                    (a)           The
representations and warranties of the Borrower contained in Article VII of the
Agreement and in the Loan Documents and otherwise made in writing by or on
behalf of the Borrower pursuant to the Agreement and the Loan Documents were
true and correct in all material respects when made, and are repeated at and as
of the time of delivery hereof and are true and correct in all material respects
at and as of the time of delivery hereof, except to the extent such
representations and warranties are expressly limited to an earlier date or the
Majority Lenders have expressly consented in writing to the
contrary.

                                     

                                    (b)           The
Borrower has performed and complied with all agreements and conditions contained
in the Agreement and in the Loan Documents required to be performed or complied
with by it prior to or at the time of delivery hereof [or specify default and
describe].

                                     

                                    (c)           Since
_________________, 200_, no change has occurred, either in any case or in the
aggregate, in the condition, financial or otherwise, of the Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect
[or specify event].

                                     

                                    (d)           There
exists no Default or Event of Default [or specify Default and
describe].

                                     

                                    (e)           The
aggregate amount of cash used to date by Vanguard Natural Resources, LLC to
repurchase treasury stock is $_________________.

                                     

                                    (f)           Attached
hereto are the detailed computations necessary to determine whether the Borrower
is in compliance with Section 9.01 and
Section 8.14 as
of the end of the [fiscal quarter][fiscal year] ending
[                              ].

                                     

                                    EXECUTED
AND DELIVERED this _________ day of __________, 20__.

                                     

                                    

                                    

                                    
                                      
                                        	 
      	
                                                VANGUARD
      NATURAL GAS, LLC

                                              
	 
      	 
      	 
      	 
      
	 
      	
                                                By:

                                              	 
      	 
      
	 
      	
                                                Name:

                                              	 
      	 
      
	 
      	
                                                Title:

                                              	 
      	 
      

                                      

                                    

                                    

                                    

                                    For the
Quarter/Year ended ___________________("Statement
Date")

                                     

                                    SCHEDULE
2

                                    to the
Compliance Certificate

                                    ($ in
000's)

                                     

                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	
                                                                I.
      Section 9.01(a) – Interest Coverage Ratio.

                                                              	 
      
	
                                                                A.
      EBITDA

                                                                 

                                                              	 
      
	
                                                                1.consolidated
      net income, less

                                                              	
                                                                $______________

                                                              
	
                                                                2.non-cash
      revenue or expense associated with Swap Agreements resulting from FAS 133,
      less

                                                              	
                                                                ($______________)

                                                                 

                                                              
	
                                                                3.income
      or plus loss from discontinued operations and extraordinary items, plus

                                                              	
                                                                ($______________)

                                                                 

                                                              
	
                                                                4.income
      taxes, plus

                                                              	
                                                                $______________

                                                              
	
                                                                5.interest
      expense, plus

                                                              	
                                                                $______________

                                                              
	
                                                                6.depreciation,
      plus

                                                              	
                                                                $______________

                                                              
	
                                                                7.depletion,
      plus

                                                              	
                                                                $______________

                                                              
	
                                                                8.amortization,
      plus

                                                              	
                                                                $______________

                                                              
	
                                                                9.non-cash
      and extraordinary items

                                                              	
                                                                $______________

                                                              
	
                                                                10.Total
      EBITDA

                                                              	
                                                                $______________

                                                              
	
                                                                11.
      less the aggregate amount of cash
      used to purchase Equity Interests of Vanguard Natural Resources, LLC
      during the twelve month period ending on the Statement
Date

                                                              	
                                                                 

                                                                $______________

                                                              
	
                                                                B.
      Interest Expense

                                                                 

                                                              	
                                                                $______________

                                                              
	
                                                                C.
      Ratio (Line I.A.11 ÷ Line I.B)

                                                                 

                                                              	
                                                                _________
      to 1.0

                                                              
	
                                                                Minimum
      Required:  2.5 to 1.0

                                                              	 
      

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                     

                                    
                                      
                                        
                                          	
                                                  II. Section 9.01(b) –
      Consolidated Leverage Ratio.

                                                	 
      
	
                                                  A.
      Total Debt

                                                	 
      
	
                                                  1.Debt, less

                                                	
                                                  $_______________

                                                
	
                                                  2.Non-cash obligations under FAS
      133, less

                                                	
                                                  ($______________)

                                                
	
                                                  3.Accounts
      payable and other accrued liabilities not greater than 60 days past due or
      which are being contested in good faith

                                                	
                                                  ($______________)

                                                
	
                                                  4.Total Debt

                                                	
                                                  $_______________

                                                
	
                                                  B.
      EBITDA (amount on Line I.A.10)

                                                	
                                                  $_______________

                                                
	
                                                  C.
      Ratio (Line II.A.4 ÷ Line II.B)

                                                	
                                                  __________
      to 1.0

                                                
	
                                                  Maximum Permitted:  4.0
      to 1.0

                                                   

                                                	 
      
	
                                                  III.
      Section 9.01(c) – Current Ratio.

                                                	 
      
	
                                                  A.
      Current Assets  (including
      Borrowing Base availability)

                                                	
                                                  $______________

                                                
	
                                                  B.
      Current Liabilities (excluding current
      maturities of Indebtedness owed to Lenders)

                                                	
                                                  $______________

                                                
	
                                                  C.
      Ratio (Line III.A ÷ Line III.B):

                                                	
                                                  _________
      to 1.0

                                                
	
                                                  Minimum
      Required:  1.0 to 1.0ex10-1.htm

     

    
      

      

    

    
      

      UNITED
STATES DISTRICT COURT

      SOUTHERN
DISTRICT OF FLORIDA

      

      CASE NO.
08-61517-CIV -GOLD/McALILEY

      

      SECURITIES
AND
EXCHANGE                                                        

       COMMISSION,                                                                                    

       

      Plaintiff,                                                                  

       

      v.                                                                                                             

       

      VIDEO
WITHOUT BOUNDARIES,
INC.,                                        

      d/b/a
CHINA LOGISTICS GROUP,
INC.,                                                                                                

      VERNON
JEFFREY HARRELL,
AND                                                                                                

      DAVID J.
AUBEL,                                                                                     

       

      Defendants.                                                                

      __________________________________________

      

      CONSENT
OF DEFENDANT VIDEO WITHOUT

      BOUNDARIES. INC . d/b/a
CHINA LOGISTICS GROUP. INC.

      

      1.           Defendant
Video Without Boundaries, Inc., d/b/a China Logistics Group, Inc. ("China
Logistics") acknowledges having been served with the complaint in this action,
enters a general appearance, and admits the Court's jurisdiction over it and
over the subject matter of this

      action.

      2.           Without
admitting or denying the allegations of the complaint (except as to personal and
subject matter jurisdiction, which China Logistics admits), China Logistics
consents to the entry of the Judgment of Permanent Injunction and Other Relief
in the attached form (the "Judgment") and incorporated by reference herein,
which, among other things:

      (a)           permanently
restrains and enjoins China Logistics from violation of Sections 5(a) and 5(c)
of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77e(a) and
77e(c);

      

      /s/ W.C.

      Initials

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)           permanently
restrains and enjoins China Logistics from violation of Section 1 0(b) of the
Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and Rule
l0b-5 promulgated thereunder, 17 C.F.R. §240.l0b-5;

      (c)           permanently
restrains and enjoins China Logistics from violation of

      Section
13(a) of the Exchange Act, 15 U.S.C. § 78m(a), and Rules 12b¬20, 13a-l, and
13a-13 thereunder, 17 C.F.R. §§ 240.12b-20, 240.13a-l, and 240. 13a-13;
and

      (d)           permanently
restrains and enjoins China Logistics from violation of Sections 13(b)(2)(A) and
13(b)(2)(B) of the Exchange Act, 15 U.S.C. §§ 78m(b )(2)(A) and 8m(b
)(2)(B).

      3.           China
Logistics agrees that, upon motion of the Commission, the Court shall determine
whether it is appropriate to order disgorgement of ill-gotten gains and, if so,
the amount of the disgorgement. China Logistics further understands that, if
disgorgement is ordered, China Logistics shall pay prejudgment interest thereon,
calculated from December 31, 2006, based on the rate of interest used by the
Internal Revenue Service for the underpayment of federal income tax as set forth
in 26 U.S.C. § 6621(a)(2). China Logistics further agrees that in connection
with the Commission's motion for disgorgement, and at any hearing held on such a
motion: (a) China Logistics will be precluded from arguing that it did not
violate the federal securities laws as alleged in the complaint; (b) China
Logistics may not challenge the validity of this Consent or the Judgment; (c)
solely for the purposes of such motion, the allegations of the complaint shall
be accepted as and deemed true by the Court; and (d) the Court may determine the
issues raised in the motion on the basis of affidavits, declarations, excerpts
of sworn

      

      

      

      /s/
W.C.                                                                2

      Initials

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      deposition
or investigative testimony, and documentary evidence, without regard to the
standards for summary judgment contained in Rule 56(c) of the Federal Rules of
Civil Procedure. In connection with the Commission's motion for disgorgement,
the parties may take discovery, including discovery from appropriate
non-parties.

      4.           China
Logistics waives the entry of findings of fact and conclusions of law pursuant
to Rule 52 of the Federal Rules of Civil Procedure.

      5.           China
Logistics waives the right, if any, to a jury trial and to appeal from the entry
of the Judgment.

      6.           China
Logistics enters into this Consent voluntarily and represents that no threats,
offers, promises, or inducements of any kind have been made by the Commission or
any member, officer, employee, agent, or representative of the Commission to
China Logistics or anyone acting on its behalf to induce China Logistics to
enter into this Consent.

      7.           China
Logistics agrees that this Consent shall be incorporated into the Judgment with
the same force and effect as if fully set forth therein.

      8.           China
Logistics will not oppose the enforcement of the Judgment on the ground, if any
exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil
Procedure, and hereby waives any objection based thereon.

      9.           China
Logistics waives service of the Judgment and agrees that entry of the Judgment
by the Court and filing with the Clerk of the Court will constitute notice to
China Logistics of its terms and conditions. China Logistics further agrees to
provide counsel for the Commission, within thirty days after the Judgment is
filed with the Clerk of the Court, with an affidavit or declaration stating it
has received and read a copy of the Judgment.

       

      /s/
W.C.                                                                3

      Initials

      
        
           

        

        
           

          
            

          

        

        
           

        

      

          10.           Consistent
with 17 C.F.R. §202.5(f), this Consent resolves only the claims asserted against
China Logistics in this civil proceeding. China Logistics acknowledges that no
promise or representation has been made by the Commission or any member,
officer, employee, agent, or representative of the Commission with regard to any
criminal liability that may have arisen or may arise from the facts underlying
this action or immunity from any such criminal liability. China Logistics waives
any claim of Double Jeopardy based upon the settlement of this proceeding,
including the imposition of any remedy or civil penalty herein. China Logistics
further acknowledges that the Court's entry of a permanent injunction may have
collateral consequences under federal or state law and the rules and regulations
of self-regulatory organizations, licensing boards, and other regulatory
organizations. Such collateral consequences include, but are not limited to, a
statutory disqualification with respect to membership or participation in, or
association with a member of, a self-regulatory organization. This statutory
disqualification has consequences that are separate from any sanction imposed in
an administrative proceeding. In addition, in any disciplinary proceeding before
the Commission based on the entry of the injunction in this action, China
Logistics understands that it shall not be permitted to contest the factual
allegations of the complaint in this action.

      11.           China
Logistics understands and agrees to comply with the Commission's policy "not to
permit a defendant or respondent to consent to a judgment or order that imposes
a sanction while denying the allegation in the complaint or order for
proceedings." 17 C.F.R. §202.5. In compliance with this policy, China Logistics
agrees: (i) not to take any action or to make or permit to be made any public
statement denying, directly or indirectly, any allegation in the complaint or
creating the impression that the complaint is without factual basis; and (ii)
that upon the filing of this Consent, China Logistics hereby withdraws any
papers filed in this action

       

      /s/
W.C.                                                                4

      Initials

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      to the
extent that they deny any allegation in the complaint. If China Logistics
breaches this agreement, the Commission may petition the Court to vacate the
Judgment and restore this action to its active docket. Nothing in this paragraph
affects China Logistics's: (i) testimonial obligations; or (ii) right to take
legal or factual positions in litigation or other legal proceedings in which the
Commission is not a party.

      12.           China
Logistics hereby waives any rights under the Equal Access to Justice Act, the
Small Business Regulatory Enforcement Fairness Act of 1996, or any other
provision of law to seek from the United States, or any agency, or any official
of the United States acting in his or her official capacity, directly or
indirectly, reimbursement of attorney's fees or other fees, expenses, or costs
expended by China Logistics to defend against this action. For these purposes,
China Logistics agrees it is not the prevailing party in this action since the
parties have reached a good faith settlement.

      13.           China
Logistics agrees the Commission may present the Judgment to the Court for
signature and entry without further notice.

      14.           China
Logistics agrees that this Court shall retain jurisdiction over this matter for
the purpose of enforcing the terms of the Judgment.

       

      
        	
                Dated:
      02 – 25, 2009

              	
                /s/
      Wei Chen

              
	 
      	
                Wei
      Chen, on behalf of Defendant Video Without Boundaries, Inc., d/b/a China
      Logistics Group, Inc.

                 

              

      

      

      

      

      

      

      

      

      

      /s/
W.C.                                                                5

      Initials

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	 
      	 
      	
                People’s
      Republic of China

              	
                )

              
	 
      	
                )

              	
                Municipality
      of Shanghai

              	
                )

              
	 
      	
                )   ss:

              	
                Consulate
      General of the

              	
                )

              
	
                COUNTY
      OF __________

              	
                )

              	
                United
      States of America

              	
                )

              

      

      

      On this 25th day of
Feb, 2009, Wei Chen, who __ is personally known to me or __ who produced a
passport G09091583 driver's license
(or other legal identification) bearing his name and photograph as
identification, personally appeared before me and acknowledged executing the
foregoing Consent.

      /s/ John L.
Junk

      John L.
Junk

      Consul of
the United States

      Of
America

      

      Notary
Public

      

      PRESIDENTIAL COMMISSIONS DO
NOT EXPIRE

      Commission
Expires:

      

      

      Approved
as to form:

      

      

      /s/ Adam Palmer
FOR

      Carl F.
Schoeppl, Esq.

      Schoeppl
& Burke, P.A.

      4651
North Federal Highway

      Boca
Raton, Florida 33431-5133

      Attorney
for China Logistics Group, Inc.

      

      

      

      

      

      

      

      

      

      

      /s/
W.C.                                                                6

      Initials

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