Exhibit 10.1
12% SECURED NOTE PURCHASE
AGREEMENT
THIS 12%
SECURED NOTE PURCHASE AGREEMENT, dated as of October 5, 2005 (this "
Agreement "), is entered into by and among CHINA GRANITE
CORPORATION, a Nevada corporation (the " Company ") and
____________________________,(the "Purchaser").
RECITALS:
WHEREAS , the Company and
the Purchaser are executing and delivering this Agreement in
reliance upon the exemptions from registration provided by
Regulation D (" Regulation D ") promulgated by the
Securities and Exchange Commission (the " SEC ") under the
Securities Act of 1933, as amended (the " Securities Act ")
and/or Section 4(2) of the Securities Act;
WHEREAS , the Purchaser
wish to purchase, and the Company wishes to sell and issue to the
Purchaser, upon the terms and subject to the conditions stated in
this Agreement, an aggregate of $_____________ in principal amount
of the Company's 12% Secured Notes due October 4, 2006 in the form
attached hereto as Exhibit A (the " Notes
")
WHEREAS, the
Notes are secured by a security agreement dated as of October 5,
2005 and attached hereto as Exhibit B (the "Security
Agreement"):
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 parties agree as
follows:
AGREEMENTS:
-
AGREEMENT TO PURCHASE;
CLOSING
(a)
Purchase of Notes . Subject to the terms and conditions set
forth herein, the Company hereby agrees to issue and sell to the
Purchaser, and the Purchaser hereby agrees to purchase the Notes
from the Company for the aggregate purchase price of $37,500.00
(the " Purchase Price ").
(b)
Closing . The closing (the " Closing ") of the
purchase and sale of the Notes will take place at the offices of
the Purchaser on October 5, 2005, or at such other place and time
as may be mutually agreed by the Purchaser and the Company. The
date of the Closing is referred to herein as the " Closing
Date ." At the Closing, the Company will deliver to the
Purchaser the Notes in exchange the Purchase Price.
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2.
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION
Each of the
Purchaser hereby represents and warrants to the Company as to
itself only that:
(a)
Accredited Investors . Such Purchaser is:
(i) experienced in making investments of the kind contemplated
by this Agreement; (ii) able, by reason of business and
financial experience, to protect its own interests in connection
with the transactions contemplated by this Agreement;
(iii) able to afford the entire loss of its investment in the
Notes; (iv) an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D; and (v) not a broker-dealer or an
affiliate of a broker-dealer as such terms are defined in the
Securities Exchange Act of 1934, as amended (the " Exchange
Act ").
(b) No
Public Distribution . Such Purchaser is acquiring the Notes for
its own account, for investment purposes only, and not with a
present view towards the public sale or distribution thereof,
except pursuant to a sale or sales that are registered under the
Securities Act or exempt from such registration. Such Purchaser has
not been organized for the purpose of investing in securities of
the Company, although such investment is consistent with its
purposes.
(c)
Subsequent Offers and Sales . All subsequent offers and
sales of the Notes by such Purchaser shall be made pursuant to an
effective registration statement under the Securities Act or
pursuant to an applicable exemption from such registration; with
any offers and sales which are being made pursuant to an applicable
exemption from registration being accompanied by a legal opinion
obtained by such Purchaser, which legal opinion shall be reasonably
satisfactory to the Company and the Company's legal
counsel.
(d)
Accuracy of Purchaser's Representations and Warranties .
Such Purchaser understands that the Notes are being offered and
sold to it in reliance upon exemptions from the registration
requirements of the United States federal securities laws, and that
the Company is relying upon the truth and accuracy of such
Purchaser's representations and warranties contained in this
Agreement, the Notes and the Security Agreement (the "Transaction
Documents") and any ancillary documents thereto, as applicable, and
such Purchaser's compliance with the Transaction Documents and any
ancillary documents thereto, in order to determine the availability
of such exemptions and the eligibility of such Purchaser to acquire
the Notes in accordance with the terms and provisions of the
Transaction Documents.
(e)
Financial Information . Such Purchaser: (i) has been
provided with and has reviewed all requested information concerning
the business of the Company, including, without limitation, the
Company's audited financial statements for the fiscal year ended
December 31, 2004 and the Company's subsidiaries' audited financial
statements for the fiscal year ended December 31, 2004 (the "
China Subsidiaries' Financials ") and (ii) has had all
requested access to the management of the Company and has had the
opportunity to ask questions of the management of the
Company.
(f)
Capacity and Authority . Such Purchaser has the requisite
capacity and authority to execute, deliver and perform each of the
Transaction Documents and any and all ancillary documents thereto
and to consummate the transactions contemplated thereby.
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(g) Due
Execution . This Agreement and the other Transaction Documents,
and any ancillary documents thereto and the transactions
contemplated hereby and thereby that have been executed and
delivered by such Purchaser, have been duly and validly authorized
by such Purchaser and such agreements, when executed and delivered
by each of the other parties thereto will each be a valid and
binding agreement of such Purchaser, enforceable against such
Purchaser in accordance with their respective terms, except to the
extent that enforcement of such agreements may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and to general principles
of equity.
(h)
Brokers . Such Purchaser has not employed, engaged or
retained, or otherwise incurred any liability to, any person as a
broker, finder, agent or other intermediary in connection with the
transactions contemplated herein.
(i) No
General Solicitation . Such Purchaser has not learned of the
investment in the Notes as a result of any public advertising or
general solicitation.
3.
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company
hereby represents and warrants to such Purchaser that:
(a)
Organization . The Company is a corporation duly organized
and validly existing under the laws of the State of Nevada. Each of
the Company's subsidiaries is a corporation duly organized and
validly existing under the laws of its respective jurisdiction of
incorporation. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation in all jurisdictions in which
the failure to so qualify would have a Material Adverse Effect (as
hereinafter defined) on the Company. All of the outstanding capital
stock of the Company's subsidiaries is owned either directly or
indirectly by the Company. The Company and its subsidiaries have
all requisite corporate power and authority, and hold all licenses,
permits and other required authorizations from governmental
authorities, necessary to conduct their business as it is now being
conducted or proposed to be conducted and to own or lease their
properties and assets as they are now owned or held under
lease.
(b)
Capitalization . On the date hereof, the authorized capital
of the Company consists of 25,000,000 shares of Common Stock and
5,000,000 shares of preferred stock, $.001 par value per share ("
Preferred Stock ").
(c) Legality.
The Company has the requisite corporate power and authority to
enter into each of the Transaction Documents and to issue and
deliver the Notes.
(d) Due
Execution . The Transaction Documents, and the transactions
contemplated thereby, have been duly and validly authorized by the
Company. The Transaction Documents have been duly executed and
delivered by the Company and are each the legal, valid and binding
agreement and obligation of the Company, enforceable in accordance
with their respective terms, except to the extent that enforcement
of such agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights
generally and to general principles of equity.
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(e)
Non-contravention . The execution and delivery of the
Transaction Documents, and the consummation by the Company of the
transactions contemplated thereby, does not (i) result in a
violation of either the Certificate of Incorporation or By-laws of
the Company, or (ii) constitute a default under (or an event which
with notice or lapse of time or both could become a default) or
give to others any rights of termination, amendment or cancellation
of, any material agreement, indenture or instrument to which the
Company is a party unless the same shall have been waived or
consented to by the other party, or result in a violation of any
law, rule, regulation, order, judgment or decree (foreign or
domestic and including federal and state securities laws and
regulations) applicable to the Company or by which any material
property or asset of the Company is bound or affected other than
any of the foregoing which would not have a Material Adverse Effect
(as hereinafter defined).
(f) Approvals
. No authorization, approval or consent of any court, governmental
body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company are required
to be obtained by the Company for the entry into or the performance
of the Transaction Documents.
(g) SEC Filings;
Financial Statements . The Company has received an SEC comment
letter dated September 8, 2005 and except for those deficiencies
contained in such comment letter or any subsequent comment letter
and all such comments have been cleared by the Company to the
satisfaction of the SEC, the Company represents and warrants as
follows with respect to their SEC filings and financial
statements:
(1) The Company has filed, and as
of the Closing will have filed, all required reports, schedules,
forms, statements and other documents (including exhibits and all
other information incorporated by reference) required to be filed
by it with the SEC since 2002. The Company has made available to
the Purchaser all such reports, schedules, forms, statements and
other documents in the form filed with the SEC. All such required
reports, schedules, forms, statements and other documents
(including those that the Company may file subsequent to the date
of this Agreement), as amended, are referred to herein as the "
SEC Reports ." As of their respective dates, the SEC Reports
(i) were prepared in accordance and complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of
the SEC there under applicable to such SEC Reports, and (ii) did
not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
except to the extent corrected prior to the date of this Agreement
by a subsequently filed SEC Report. None of the Company's
subsidiaries is required to file any forms, reports or other
documents with the SEC.
(2) Each of the consolidated
financial statements (including, in each case, any related note
thereto) contained in the SEC Reports (the " Financials "),
including each SEC Report filed after the date of this Agreement
until the Closing: (i) complied as to form in all material respects
with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with U.S. generally
accepted accounting principles (" GAAP "), consistently
applied and (iii) fairly presented in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as at the respective dates thereof and the
consolidated results of the Company's operations and cash flows for
the periods indicated.
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The balance sheet of the Company
contained in the SEC Reports as of June 30, 2004 is hereinafter
referred to as the " Balance Sheet ." Except as disclosed in
the Financials, since the date of the Balance Sheet and through the
date of this Agreement, neither the Company nor any of its
subsidiaries has any liabilities required under GAAP which,
individually or in the aggregate, would be reasonably expected to
have a Material Adverse Effect on the Company, except for
liabilities incurred since the date of the Balance Sheet in the
ordinary course of business consistent with past practices and
liabilities incurred pursuant to this Agreement.
(h) Undisclosed
Liabilities . The Company has no material obligation or
liability (whether accrued, absolute, contingent, unliquidated, or
otherwise, whether due or to become due) arising out of
transactions entered into at or prior to the Closing of this
Agreement, or any action or inaction at or prior to the Closing of
this Agreement, or any state of facts existing at or prior to the
Closing of this Agreement, except liabilities incurred in the
ordinary course of business.
(i) Absence of
Certain Changes . There has been no material adverse change in
the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole
(each, a " Material Adverse Effect ").
(j) Insurance
. The Company and its subsidiaries maintain property and casualty,
general liability, personal injury and other similar types of
insurance that are reasonably adequate and consistent with industry
standards and historical claims experience. The Company and its
subsidiaries have not received notice from, and have no knowledge
of any threat by, any insurer (that has issued any insurance policy
to the Company or its subsidiaries) that such insurer intends to
deny coverage under or cancel, discontinue or not renew any
insurance policy covering the Company or any of its subsidiaries
presently in force.
(k) Compliance
with Law . To the knowledge of the Company, the Company and its
subsidiaries have complied in all material respects with all
applicable statutes and regulations of the United States and of all
states, municipalities and applicable agencies and foreign
jurisdictions or bodies in respect of the conduct of its business
and operations, and the failure, if any, by the Company or its
subsidiaries to have fully complied with any such statute or
regulation has not resulted in a Material Adverse
Effect.
(l) Absence of
Litigation . To the knowledge of the Company, there is no
action, suit, formal inquiry or investigation, or proceeding before
or by any court, public board or body pending or, to the knowledge
of the Company or any of its subsidiaries, threatened, against or
affecting the Company or any of its subsidiaries, in which an
unfavorable decision, ruling or finding would have a Material
Adverse Effect or adversely affect the transactions contemplated by
the Transaction Documents or the validity or enforceability of, or
the authority or ability of the Company to perform its obligations
under the Transaction Documents.
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(m)
Investment Company Act . The Company and its subsidiaries
are not conducting, and will not conduct, their business in a
manner which would cause any of them to become an "investment
company," as defined in Section 3(a) of the Investment Company
Act of 1940, as amended.
(n) Private
Offering; Trust Indenture Act . Subject to the accuracy of the
Purchaser' representations and warranties set forth in
Section 2 hereof, the offer, sale and issuance of the Notes,
as contemplated by this Agreement, are exempt from the registration
requirements of the Securities Act and the Company is not required
to qualify an indenture relating to the Notes under the Trust
Indenture Act of 1939, as
