NOTES PURCHASE
AGREEMENT
by and between
FUSHI COPPERWELD, INC.
and
CITADEL EQUITY FUND LTD.
Dated: August 13,
2009
This Notes Purchase Agreement (this “
Agreement ”) is dated as of August 13, 2009, by
and between Fushi Copperweld, Inc. (formerly known as Fushi
International, Inc.), a Nevada corporation (the “
Company ”), and Citadel Equity Fund Ltd.
(“ Citadel ”).
WHEREAS, the Company originally issued and sold
to Citadel 200 of the Company’s 3.0% Guaranteed
Senior Secured Convertible Notes due 2012 (the “
Notes ”) of US$100,000 principal amount each,
convertible into shares of common stock of the Company, issued
pursuant to the provisions of an indenture (the “
Indenture ”), dated as of January 25, 2007,
among the Company, Fushi Holdings, Inc., as guarantor, and The Bank
of New York, as trustee (the “ Trustee
”);
WHEREAS, Citadel is currently the sole
beneficial holder of the remaining 50 Notes with an aggregate
principal amount of US$5,000,000, which constitute all of the
outstanding Notes as of the date hereof;
WHEREAS, all capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in
the Indenture;
NOW, THEREFORE, in consideration of the mutual
covenants and promises contained herein and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Subject to the terms and conditions of this
Agreement, the Company will repurchase all of the outstanding 50
Notes at a purchase price determined as follows:
|
|
Notes
repurchased by the Company on or prior to October 9, 2009 (the
“ First Closing Date ”) shall be
repurchased at 200% of their face value, provided that no less than
20 Notes shall be repurchased by the Company on or prior to October
9, 2009, with the minimum amount payable to Citadel being
US$4,000,000 payable in Shares (as hereinafter defined) on the
First Closing Date (the aggregate purchase price payable
by the Company on the First Closing Date, as determined in
accordance with the foregoing, is hereinafter referred to as the
“ First Closing Purchase Amount ”); it
being acknowledged and agreed that the Company shall have the right
to repurchase up to the remainder of the Notes on the First Closing
Date, without any penalty; and
|
|
|
Any Notes
remaining outstanding after the First Closing Date (including,
without limitation, any Notes remaining outstanding as a result of
the Company’s failure to repurchase at least 20 Notes on the
First Closing Date) shall be repurchased by the Company on or prior
to November 9, 2009 (the “ Second Closing Date
” and together with the First Closing Date, each a “
Closing Date ”), at 202% of their face value
(the aggregate purchase price payable by the Company on the Second
Closing Date, as determined in accordance with the foregoing, is
hereinafter referred to as the “ Second Closing
Purchase Amount ”).
|
The sum of the
First Closing Purchase Amount and the Second Closing Purchase
Amount is hereinafter referred to as the “ Purchase
Amount ”.
2.
Payment of the Purchase Amount
|
|
The Purchase
Amount shall be payable by a combination of cash and 440,529 newly
issued shares (the “ Shares ”) of common
stock of the Company, par value US$0.0006 per share (the “
Common Stock ”).
|
|
|
The value of
the Shares to be issued and delivered as part of the Purchase
Amount is hereby agreed to be US$9.08 per share, for an aggregate
value of US$4,000,000. The balance of the Purchase
Amount shall be payable in cash.
|
|
|
The Company
shall cause the Shares to be registered for resale on the
Company’s Registration Statement on Form S-3 (Reg. No.
333-160449)(as amended or supplemented from time to time, the
“ Registration Statement ”) for an
offering to be made on a delayed or continuous basis pursuant to
Rule 415 of the Act from time to time by Citadel (and/or its
transferees), and cause such Registration Statement to be declared
effective under the U.S. Securities Act of 1933, as amended (the
“ Securities Act ”), within thirty (30)
calendar days after the First Closing Date (the “
Effective Date ”). All costs and
expenses of any registration and qualification of the Shares
pursuant to this Section 2A shall be borne and paid by the
Company.
|
|
|
The Company
shall use its best efforts to cause the Registration Statement to
remain effective under the Securities Act, including, without
limitation, by promptly filing post-effective amendments and
supplements, to permit Citadel (and/or its transferees from time to
time) to dispose of the Shares in such registration for a period
(the “ Effectiveness Period ”) commencing
as of the Effective Date and ending on the earliest to occur of (i)
the date on which all such Shares which have not been previously
sold to the public pursuant to the Registration Statement can be
sold to the public under Rule 144 under the Securities Act, and
(ii) the date on which all such Shares have been sold to the public
pursuant to the Registration Statement in accordance with the
intended method of distribution thereof.
|
|
|
If: (i) a
Registration Statement is not filed and declared effective by the
Commission on or prior to the Effective Date or if, by the business
day immediately following the Effective Date, the Company shall not
have filed a “final” prospectus for the Registration
Statement with the Commission under Rule 424(b) in accordance with
the terms hereof (whether or not such a prospectus is technically
required by such Rule), or (ii) after its Effective Date, without
regard for the reason thereunder or efforts therefor, such
Registration Statement ceases for any reason to be effective and
available to Citadel as to the Shares at any time prior to the
expiration of the Effectiveness Period for more than an aggregate
of 10 trading days (which need not be consecutive) (any such
failure or breach being referred to as an “
Event ”, and for purposes of clause (i) the
date on which such Event occurs, or for purposes of clause (ii) the
date which such 10 trading day-period is exceeded, being referred
to as the “ Event Date ”), then in
addition to any other rights Citadel may have hereunder or under
applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall
not have been cured by such date) until the applicable Event is
cured, the Company shall pay to Citadel an amount in cash, as
partial liquidated damages and not as a penalty, equal to 1.0% of
US$4,000,000. The parties agree that the maximum
aggregate liquidated damages payable to Citadel under this
Agreement shall be ten percent (10%) of US$4,000,000
. The partial liquidated damages pursuant to the terms
hereof shall apply on a daily pro-rata basis for any portion of a
month prior to the cure of the applicable Event and in such case
shall be due and payable no later than the third business day after
the date the Event is cured, (except in the case of the first Event
Date), and shall cease to accrue (unless earlier cured) upon the
expiration of the Effectiveness Period. If the Company
fails to pay any liquidated damages pursuant to this section in
full within seven business days after the date payable, the Company
will pay interest thereon at a rate of 15% per annum (or such
lesser maximum amount that is permitted to be paid by applicable
law) to Citadel, accruing daily from the date such liquidated
damages are due until the amounts, plus interest thereon, are paid
in full.
|
|
|
The Company
shall, notwithstanding any termination of this Agreement, indemnify
and hold harmless Citadel, the officers, directors, managers,
partners, members, stockholders, agents, brokers, investment
advisors and employees of each of them, each person who controls
Citadel (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents
and employees of each such controlling person (the
“Indemnified Party”), to the fullest extent permitted
by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs
of preparation and attorneys’ fees) and expenses
(collectively, “ Losses ”), as incurred, arising
out of or relating to any violation of securities laws or untrue or
alleged untrue statement of a material fact contained in the
Registration Statement, any prospectus or any form of prospectus or
in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not
misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information
regarding or provided by Citadel or such other Indemnified Party
furnished in writing to the Company for use therein. The
Company shall notify Citadel promptly of the institution, threat or
assertion of any proceeding of which the Company is aware in
connection with the Registration Statement, any prospectus or any
form of prospectus or in any amendment or supplement thereto or in
any preliminary prospectus.
|
|
|
Citadel shall
indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents and
employees of such controlling persons, to the fullest extent
permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in the Registration
Statement, any prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based
solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished
in writing by Citadel or other Indemnifying Party to the Company
specifically for inclusion in the Registration Statement or such
prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus.
|
|
|
Citadel agrees
for a period of sixty days from the earlier of (i) the Effective
Date of the Registration Statement, or (ii) October 20, 2009 (the
“ Lock-up Period ”), that it will not, without
the prior written consent of the Company (which consent may be
withheld in its sole discretion), directly or indirectly, sell,
offer, contract or grant any option to sell (including without
limitation any short sale), pledge, hypothecate, transfer, grant a
security interest in, establish an open “put equivalent
position” within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended or otherwise dispose
of, or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash
settlement or otherwise, directly or indirectly) (a
“Disposition”) of the Shares that are owned either of
record or beneficially (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) by Citadel, to any
person other than an affiliate of Citadel in a transaction not
involving a public resale of the Shares; provided, however that in
connection with any such Disposition to an affiliate, such
affiliate agrees in writing to be bound by the provisions of this
Section 2A(f), or publicly announce an intention to do any of the
foregoing, during the Lock-up Period.
|
3.
Repurchase, Delivery and Cancellation .
|
|
On each Closing
Date, upon the delivery of the applicable Purchase Amount as set
forth below, Citadel shall surrender to the Company the Notes to be
repurchased on such Closing Date, which Notes shall in turn be
surrende
|
|
