Exhibit
4.3
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT (this “ Agreement ”)
is made and entered into as of April 24, 2007, by and among (i) (a)
China Security & Surveillance Technology, Inc., a Delaware
corporation (the “ Company ”),
(b) China Safetech Holdings Limited, a wholly-owned subsidiary of
the Company, incorporated under the laws of British Virgin Islands
(“ Safetech ”), China Security
& Surveillance Technology (HK) Ltd., a wholly-owned subsidiary
of Safetech, incorporated under the laws of Hong Kong (“
CSST HK ”) and and Chain Star
Investments Ltd., a wholly-owned subsidiary of Safetech,
incorporated under the laws of Hong Kong (“ Chain
Star ”), (c) Golden Group Corporation (Shenzhen)
Limited, a limited liability company organized and existing under
the laws of the People’s Republic of China (the “
PRC ”) and a wholly-owned subsidiary
of Safetech (“ Golden ”),
Shanghai Cheng Feng Digital Technology Co., Ltd., a limited
liability company organized and existing under the laws of the PRC
and a wholly-owned subsidiary of CSST HK (“ Cheng
Feng ”), China Security & Surveillance
Technology (PRC), Inc., a limited liability company organized and
existing under the laws of the PRC and a wholly-owned subsidiary of
the Company (“ CSST PRC ”, and
collectively with the Company, Safetech, CSST HK, Golden, and Cheng
Feng, the “ Prior Group Companies
”), Shanghai Cheng Feng Public Safety Prevention Technology
Co., Ltd., a limited liability company organized and existing under
the laws of the PRC and a seventy percent (70%) owned subsidiary of
Cheng Feng (“ Cheng Feng Public
Safety ”), Shanghai Cheng Feng Digital Equipment
Ltd., a limited liability company organized and existing under the
laws of the PRC and a ninety percent (90%) owned subsidiary of
Cheng Feng (“ Cheng Feng Equipment
”), Shenzhen Hongtianzhi Electronics Co., Ltd., a limited
liability company organized and existing under the laws of the PRC
and a wholly-owned subsidiary of Chain Star (“
Hongtianzhi ”), Shenzhen Tongxing
Shixun Technology Co., Ltd., a limited liability company organized
and existing under the laws of the PRC and a seventy percent (70%)
owned subsidiary of Hongtianzhi (“
Tongxing ”), Guangzhou Shixing
Digital Technology Co., Ltd., a limited liability company organized
and existing under the laws of the PRC and a seventy percent (70%)
owned subsidiary of Hongtianzhi (“
Shixing ,”and collectively with the
Prior Group Companies, Cheng Feng Equipment, Cheng Feng Public
Safety, Chain Star, Hongtianzhi and Tongxing, the “
Group Companies ”), (d) Mr. Tu Guo
Shen (“ Mr. Tu ”), a resident
of the City of Hangzhou in the PRC, Ms. Li Zhi Qun (“
Ms. Li ”), a resident of the City of
Shenzhen in the PRC and Whitehorse Technology Limited, a British
Virgin Islands company wholly owned by Mr. Tu and the registered
owner of Mr. Tu’s equity interest in the Company (“
Whitehorse ”, and collectively with
Mr. Tu and Ms. Li, the “ Controlling
Shareholders ”) and (ii) Citadel Equity Fund
Ltd. (“ Citadel ”).
Capitalized terms used herein but not otherwise defined herein
shall have the respective meanings set forth in the New Notes
Purchase Agreement (as defined below).
WITNESSETH:
WHEREAS, the Prior Group Companies, the
Controlling Shareholders and Citadel have entered into that certain
investor rights agreement, dated as of February 16, 2007, as
amended by that certain amendment to the investor rights agreement
by and among the same parties, dated as of March 29, 2007 (the
“ Prior Investor Rights Agreement
”), in relation to the purchase from the Company by Citadel
of US$60,000,000 1% Guaranteed Senior Unsecured Convertible Notes
due 2012 (the “ Prior Notes ”),
which are convertible into the Company’s common stock, par
value $.0001 (the “ Common Stock
”), purchased and issued pursuant to that that certain notes
purchase agreement, dated as of February 16, 2007, by and among the
Prior Group Companies and Citadel (the “ Prior
Notes Purchase Agreement ”), and that certain
indenture ,dated as of February 16, 2007, by and among the Company,
the other Prior Group Companies and The Bank of New York, as
trustee (the “ Prior Indenture
”);
WHEREAS, the Group Companies and Citadel have
entered into that certain notes purchase agreement dated as of
April 24, 2007 (the “ New Notes Purchase
Agreement ”), pursuant to which the Company has
agreed to issue to Citadel, and Citadel has agreed to purchase from
the Company, US$50,000,000 1% Guaranteed Senior Unsecured
Convertible Notes due 2012 (the “ New
Notes ”, and together with the Prior Notes, the
“ Notes ”), which are
convertible into the Common Stock, which are being issued pursuant
to that certain Indenture dated as of the date hereof by and among
the Company, the other Group Companies and The Bank of New York, as
trustee (the “ New Indenture ”,
and together with the Prior Indenture, the “
Indentures ”);
WHEREAS, in connection with the consummation of
the transactions contemplated by the New Notes Purchase Agreement,
the parties hereto desire to enter into this Agreement to amend and
restate in its entirety the Prior Investor Rights Agreement;
and
WHEREAS, it is a condition to the Closing under
the New Notes Purchase Agreement that the parties hereto shall have
executed this Agreement.
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound by this agreement, agree as
follows:
1.
Representations and Warranties of
the Group Companies .
Each of the Group Companies, jointly and severally, represents and
warrants that:
1.1 Each of the Group Companies has full power and
authority to make, enter into and carry out the terms of this
Agreement. This Agreement has been duly executed and delivered by
each Group Company and constitutes the legal, valid and binding
obligations of such Group Company enforceable against such Group
Company in accordance with its terms.
1.2 The execution and delivery of this Agreement by
each Group Company do not, and the performance of this Agreement by
such Group Company will not: (i) conflict with or violate any law,
rule, regulation, order, decree or judgment applicable to any Group
Company or by which any Group Company or any of the properties of
any Group Company is or may be bound or affected, or the Charter
Documents of any Group Company; (ii) result in or constitute (with
or without notice or lapse of time) any breach of or default under
any contract to which any Group Company is a party or by which any
Group Company or any of the affiliates or properties of any Group
Company is or may be bound or affected, or (iii) result in the
creation of any encumbrance or restriction on any of the shares of
Common Stock or equity interests in any other Group Company or
properties of any Group Company. The execution and delivery of this
Agreement by each Group Company do not, and the performance of this
Agreement by each Group Company will not, require any consent or
approval of any Person.
2.
Representations and Warranties of
the Controlling Shareholders . Each of the Controlling Shareholders, jointly
and severally, represents and warrants that:
2.1 (i) Whitehorse is the direct owner of record,
free and clear of all Liens, of 11,000,000 shares of Common Stock,
which constitutes 31.48% of the outstanding voting power of the
Company’s capital stock, (ii) Ms. Li is the direct owner of
record, free and clear of all Liens (except for the Lien already
provided to a third party by Ms. Li on 2,044,126 shares of Common
Stock (the “ Encumbered Securities
”)), of 2,627,500 shares of Common Stock, which constitutes
7.52% of the outstanding voting power of the Company’s
capital stock, and (iii) Mr. Tu is the beneficial owner, free and
clear of all Liens (except for the Lien on the Encumbered
Securities), of 13,627,500 shares of Common Stock (through the
ownership by Whitehorse and Mr. Li), which constitutes 39.00% of
the outstanding voting power of the Company’s capital stock.
Each of the Controlling Shareholders has full power and authority
to make, enter into and carry out the terms of this Agreement. This
Agreement has been duly executed and delivered by each Controlling
Shareholder and constitutes the legal, valid and binding
obligations of such Controlling Shareholder enforceable against
such Controlling Shareholder in accordance with its
terms.
2.2 The execution and delivery of this Agreement by
each Controlling Shareholder do not, and the performance of this
Agreement by such Controlling Shareholder will not: (i) conflict
with or violate any law, rule, regulation, order, decree or
judgment applicable to any Controlling Shareholder or by which any
Controlling Shareholder or any of the properties of any Controlling
Shareholder is or may be bound or affected, or the Charter
Documents of Whitehorse; (ii) result in or constitute (with or
without notice or lapse of time) any breach of or default under any
contract to which any Controlling Shareholder is a party or by
which any Controlling Shareholder or any of the affiliates or
properties of any Controlling Shareholder is or may be bound or
affected, or (iii) result in the creation of any encumbrance or
restriction on any of the shares of Common Stock or equity
interests in Whitehorse or properties of any Controlling
Shareholder. The execution and delivery of this Agreement by each
Controlling Shareholder do not, and the performance of this
Agreement by each Controlling Shareholder will not, require any
consent or approval of any Person.
3.
Covenants and
Agreements .
Unless the context requires otherwise, each
Group Company hereby, jointly and severally, covenants and agrees,
and Mr. Tu (with respect to Sections 3.2 , 3.4 and
3.5 only) covenants and agrees to cause each Group Company
to do, as follows:
3.1
Inspection
. As long as Citadel is the
beneficial owner (as such term is defined in the Exchange Act and
the rules and regulations promulgated thereunder (the “
Beneficial Owner ”)) of the Notes
then outstanding (including the principal amount of the Notes
converted into shares of Common Stock as if such conversion had not
taken place and to the extent such shares of Common Stock are held
by Citadel at the time of calculating such percentage), the
principal amount of which is at least 25% of the principal amount
of the Notes then outstanding (including the principal amount of
the Notes converted into shares of Common Stock as if such
conversion had not taken place and to the extent such shares of
Common Stock are beneficially owned by Citadel at the time of
calculating such percentage) (the “ Minimum
Holdings ”), each Group Company shall permit
Citadel and any authorized representative thereof, to visit and
inspect the properties of such Group Company, including its
corporate and financial records, to examine its records and make
copies thereof and to discuss its affairs, finances and accounts
with its officers, at all such reasonable times and as often as may
be reasonably requested upon reasonable notice, provided
that such visits and inspections shall not unduly interrupt the
daily operation of such Group Company. Each reference in this
Agreement to ‘holds the Minimum Holdings’ shall be
construed as ‘is the Beneficial Owner of the Minimum
Holdings’. Citadel and its participating agents and
representatives, in exercising its rights of inspection hereunder,
agrees to maintain the confidentiality of all financial and other
confidential information of such Group Company acquired by them. If
requested by such Group Company, Citadel, in exercising its rights
under this Section 3.1 shall execute a confidentiality
agreement with such Group Company in such reasonable form and
substance as agreed between Citadel and such Group
Company.
3.2
FCPA . Each of the Group Companies and Mr. Tu (during
the term while he serves as the Company’s director, Chief
Executive Officer or President) shall, and shall cause each Group
Company, any of the Company’s Subsidiaries and their
respective management to, (i) comply with the U.S. Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “ FCPA ”),
including, without limitation, not making use of the mails or any
means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization
of the payment of any money, or other property, gift, promise to
give, or authorization of the giving of value to any “foreign
official” (as the term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA, (ii) conduct each
such company’s respective business in compliance with the
FCPA, and (iii) institute and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.
3.3
PFIC . No Group Company shall become a “passive
foreign investment company” within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986.
3.4
OFAC . Neither any Group Company nor, to the
knowledge of any Group Company, any director, officer, agent,
employee, Affiliate or Person acting on behalf of any Group Company
is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department
(“ OFAC ”); and no Group
Company shall, and Mr. Tu (during the term while he serves as the
Company’s director, Chief Executive Officer or President)
shall cause each Group Company not to, directly or indirectly use
the proceeds of the sale of the Notes, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint
venture partner or other Person or entity, towards any sales or
operations in Cuba, Iran, Syria, Sudan, Myanmar or any
other country sanctioned by OFAC or for the purpose of financing
the activities of any Person currently subject to any U.S.
sanctions administered by OFAC.
3.5
Money Laundering Laws
. Each of the Group Companies shall,
and Mr. Tu (during the term while he serves as the Company’s
director, Chief Executive Officer or President) shall cause each
Group Company to, conduct its operations at all times in compliance
with the money laundering statutes of applicable jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
applicable governmental agency.
3.6
New Issuances or Sales to Third
Parties . The Company
shall not issue or sell any Common Stock or securities or options
exercisable, exchangeable or convertible into Common Stock to a
purchaser that is not an Affiliate of Citadel or the Company, if
the issuance or sale price of such securities (as appropriately
adjusted taking into account applicable exercise or conversion
prices) is not greater than (i) 90% of the closing price of the
Common Stock on the Trading Market as of the date of closing of
such issuance or sale or (ii) the simple arithmetic average of the
closing prices of the Common Stock on the Trading Market for the
twenty Trading Days preceding the date of closing of such issuance
or sale. Notwit
