CO-PLACEMENT AGENT AGREEMENT
Exhibit
10.2
October
21, 2009
Tang ▇▇▇
▇▇▇▇, President
China
Baicaotang Medicine Limited
▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
Dear ▇▇.
▇▇▇▇:
This Co-Placement Agent Agreement (the
“Agreement”)
is entered into by and among Ingenious Paragon Global Limited, a company
organized under the laws of the British Virgin Islands (“Ingenious”),
Forever Well Asia Pacific Limited, a Hong Kong company and the wholly owned
subsidiary of Ingenious (“Forever
Well”), Guangxi Liuzhou Baicaotang Medicine Limited, a company organized
under the laws of the PRC (“BCT”),
Hefeng Pharmaceutical Company Ltd. (“Hefeng”),
and Guangxi Liuzhou Baicaotang Medicine Retail Limited (“Retail”)(each
of Ingenious, Forever Well, BCT, Hefeng and Retail shall be referred to
individually as a “BCT
Company” and, as the “Company”),
Purden Lake Resource Corp., a Delaware corporation (“Pubco”),
May ▇▇▇▇▇ Partners, LLC (“May
▇▇▇▇▇”) and American Capital Partners LLC (“ACP”). May
▇▇▇▇▇ and ACP shall be referred to herein individually as a “Co-Placement
Agent” and collectively herein as the “Co-Placement
Agents”.
RECITALS
A. The
Company will enter into an agreement with Pubco, a shell corporation that files
reports with the Securities and Exchange Commission, pursuant to which Ingenious
shall become a wholly owned subsidiary of Pubco and immediately after the
Merger, the business of Pubco shall be the business of the Company.
B. As
a condition to the closing of the Merger, Pubco shall close on a private
offering of its securities through the Co-Placement Agents as more fully
described in this Agreement.
1. The
Offering and the Reverse Transaction.
(a) The
Company will offer (the “Offering”)
for sale through the Co-Placement Agents, as exclusive agents for the Company, a
minimum (the “Minimum
Amount”) of $5,820,000 of units (each, a “Unit”
and, collectively, the “Units”)
and a maximum (the “Maximum
Amount”) of $11,470,000 of Units on a reasonable efforts
basis. Additionally, the Offering may be increased an additional 500
Units (or $5,000,000) above the Maximum Amount, at the sole discretion of the
Company (the “Over-Allotment”). Each
Unit shall be offered and sold at a purchase price of $10,000 per Unit (the
“Unit
Price”) and shall consist of:
(i) 3,937
shares of Pubco common stock, par value $0.001 per share (the “Common
Stock”), and
(ii) a warrant
(each, a “Warrant”
and collectively, the “Warrants”)
to purchase 514 shares of Common Stock (the “Warrant
Shares”).
(b) The
Warrants shall be exercisable at any time and from time to time after the date
of issuance, at a per share exercise price equal to one hundred fifty (150%)
percent of the price per share of Common Stock underlying the Units (or $3.81)
and shall be exercisable for a period of five (5) years after the date of
issuance for cash only. The Warrants shall also provide for full
ratchet anti-dilution protection.
(c) The
terms, rights and privileges of the Units, Common Stock, the Warrants and the
Warrant Shares (sometimes collectively referred to herein as the “Securities”),
shall be set forth in the Company’s Confidential Private Placement Memorandum
(together, with any and all amendments, supplements, exhibits and/or appendices
thereto, and the information incorporated by reference therein collectively, the
“Memorandum”).
(d) During
the one year period following the final Closing, the Company shall grant to
subscribers that purchase Units in the Offering a right of first refusal to
participate in Company financings.
(e) Placement
of the Units by the Co-Placement Agents will be made on a “reasonable efforts,
all-or-none” basis with respect to the Minimum Amount. The minimum
subscription for Units shall be one (1) Unit for $10,000 provided, however, that the
Company and the Co-Placement Agents may, in their mutual discretion, offer
fractional Units. The Units will be offered during the period (the
“Offering
Period”) commencing on the date of the Memorandum and for the Minimum
Amount ending on November 20, 2009 (the “Expiration
Date”) unless
such date is extended as mutually agreed to by the Placement Agent and the
Company; for the Maximum Amount ending on December 21, 2009. Whether
or not extended beyond the Expiration Date, the date on which the Offering
Period shall terminate is hereinafter referred to as the “Termination
Date.”
(f) The
Placement Agent shall not tender to the Company and the Company shall not accept
subscriptions for, or sell Units to, any persons or entities who do not qualify
as “accredited
investors,” as such term is defined in Rule 501 of Regulation D
promulgated under Section 4(2) of the Securities Act of 1933, as amended (the
“Securities
Act”).
(g) The
offering of the Units will be made by the Company solely pursuant to the
Memorandum and the Subscription Documents (as hereinafter defined), which at all
times will be in form and substance acceptable to the Co-Placement Agents and
their counsel and contain such legends and other information as the Co-Placement
Agents and their counsel may, from time to time, deem necessary and desirable to
be set forth therein.
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(h) The
Co-Placement Agents will keep confidential and not disclose to any third party
any confidential information of the Company made available to the Co-Placement
Agents by the Company or its agents, and will use the confidential information
only in connection with the services they provide to the Company
under this Agreement; provided, however, such
confidential information shall not include: (i) any information
already lawfully available to or in the possession of the Co-Placement Agents
prior to the date of its disclosure to the Co-Placement Agents by the Company;
(ii) any information in the Memorandum, (iii) any information generally
available to the public; or (iv) any information that becomes available to the
Co-Placement Agents on a non-confidential basis from a third party that to the
knowledge of the Co-Placement Agents is not bound by a confidentiality
obligation to the Company; and that such confidential information may be
disclosed (i) to the Co-Placement Agents’ partners, employees, agents,
advisors, attorneys and representatives in connection with the services they
provide to the Company under this Agreement, who shall be informed of the
confidential nature of the information and that such information is subject to a
confidentiality agreement; (ii) to any person with the written consent of the
Company, including to any prospective investors; or (iii) if either of the
Co-Placement Agents is compelled to disclose such information by the order of
any Court of competent jurisdiction or any regulatory authority or stock
exchange, in which event the applicable Co-Placement Agent shall: (A)
notify the Company promptly in writing of the existence and terms of, and
circumstances surrounding, such a request; and (B) if, upon the advice of its
outside legal counsel, disclosure of any confidential information is required,
disclose only such portion of the confidential information as is required to be
disclosed.
(i) At or
prior to the date of the Memorandum, the Company and Pubco shall enter into an
agreement (the “Reverse
Transaction Agreement”) pursuant to which Pubco and the Company effect a
reverse transaction (the “Reverse
Transaction”), subject to the receipt in the Escrow Account of gross
proceeds of the Offering of not less than the Minimum Amount pursuant to
which:
(i) Ingenious
shall become a wholly owned subsidiary of Pubco;
(ii) Pubco’s
sole business shall be the business of the Company;
(iii) The
officers and directors of Pubco immediately prior to the Reverse Transaction
shall resign and new officers and directors shall be appointed by the
Company.
2. Subscription
and Closing Procedures.
(a) Each
prospective purchaser will be required to complete and execute an investor
eligibility questionnaire, a subscription agreement and a Registration Rights
Agreement (as hereinafter defined) in the forms annexed to the Memorandum
(collectively, the “Subscription Documents”),
which will be forwarded or delivered to the applicable Co-Placement Agent at
such Co-Placement Agent’s offices at the address set forth in Section
12
hereof, together with the subscriber’s check or good funds (including wire of
funds) in the full amount of the subscription price for the number of Units
desired to be purchased.
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(b) The
Subscription Documents shall direct prospective purchasers to tender funds for
subscriptions for the Offering to a non-interest bearing escrow account (the
“Escrow
Account”) established for such purpose with Signature Bank (the “Escrow
Agent”). All funds for subscriptions received from the
Offering by the Co-Placement Agents or the Company will be promptly forwarded by
such Co-Placement Agent or the Company, as the case may be, to, and deposited
into, the Escrow Account. All such funds for subscriptions will be
held in the Escrow Account pursuant to the terms of an escrow agreement among
the Company, the Co-Placement Agents and the Escrow Agent. The
Company will pay all fees related to the establishment and maintenance of the
Escrow Account. The Company will either accept or reject, for any or
no reason, the Subscription Documents in a timely fashion and at each Closing
will countersign the Subscription Documents and provide duplicate copies of such
documents to the Co-Placement Agents for distribution to the
subscribers. The Company will give notice to the Co-Placement Agents
of its acceptance of each subscription. The Company, or the
Co-Placement Agents on the Company’s behalf, will promptly return to subscribers
incomplete, improperly completed, improperly executed and rejected subscriptions
and give written notice thereof to the Co-Placement Agents upon such
return.
(c) If
subscriptions for at least the Minimum Amount have been accepted prior to the
Expiration Date, or the Termination Date if the Co-Placement Agents and the
Company have agreed to extend the Offering Period as contemplated in Section
1(e),
the funds therefor have been collected by the Escrow Agent and all of the
conditions set forth elsewhere in this Agreement are fulfilled, a closing shall
be held with respect to those Units (the “Closing”). Delivery
of payment for the accepted subscriptions for Units from the funds held in the
Escrow Account against delivery of the Units by the Company, will be made at the
Closing at the offices of May ▇▇▇▇▇ at the address set forth in Section
12
hereof (or at such other place as may be mutually agreed upon between the
Company and the Co-Placement Agents), net of amounts due to the Co-Placement
Agents and their blue sky counsel as of such Closing. Executed
instruments/certificates for the Common Stock and Warrants constituting the
Units and the Agent’s Warrants (as hereinafter defined) will be in such
authorized denominations and registered in such names as the Co-Placement Agents
may request on or before the date of Closing (the “Closing
Date”), and will be made available to the Co-Placement Agents for
checking and packaging at their respective offices at the Closing.
(d) If, on or
before the Termination Date (as defined below),
(i) Subscription
Documents and the funds therefor equal to at least the Minimum Amount have not
been received and accepted by the Company, and
(ii) all of
the conditions set forth in this Agreement or elsewhere to the closing of the
sale of at least the Minimum Amount have not been received and accepted by the
Company,
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the
Offering will be terminated, no Units will be sold, and the Escrow Agent will,
upon written instructions of the Co-Placement Agents and the Company, cause all
monies received from subscribers for the Units to be promptly returned to such
subscribers without interest, penalty, expense or deduction.
3. Representations,
Warranties and Covenants of the Co-Placement Agents. The
Co-Placement Agents hereby represent, warrant and covenant, jointly, but not
severally, to the Company that:
(a) Each of
the Co-Placement Agents is registered as a broker-dealer, pursuant to the
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder (the “Exchange
Act”) and a member of the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
(b) The Units
will be offered and sold pursuant to the registration exemption provided by
Section 4(2) of the Securities Act and the safe harbor provided by Rule 506 of
Regulation D (“Regulation
D”) as
promulgated by the Securities and Exchange Commission (the “SEC”),
in a private placement not involving a public offering and pursuant to the
requirements, if any, of any state of the United States in which the Units are
offered or sold.
(c) Each of
the Co-Placement Agents will offer Units for sale in such circumstances as is in
compliance with the securities or “blue sky” laws of the states in which the
potential investors are located based upon an examination of the statutes and
regulations, if any, of such jurisdictions as reported in standard compilations
and upon interpretive advice obtained from representatives of certain securities
commissions.
4. Representations,
Warranties and Covenants of the Company. Each of the BCT
Companies, jointly and severally, represent, warrant and covenant to each
Co-Placement Agent that:
(a) The
Memorandum has been prepared solely by the Company and conforms to the
requirements, if any, imposed by the SEC on the Company in respect of offers and
sales to accredited investors only pursuant to Rule 506 of Regulation D, and all
other applicable rules and regulations of any regulatory authority (the “Regulations”).
(b) With
respect to actions taken by the Company, the Units will be offered and sold
pursuant to the registration exemption provided by Section 4(2) of the
Securities Act and the safe harbor provided by Rule 506 of Regulation D, in a
private placement not involving a public offering and pursuant to the
requirements, if any, of any state of the United States in which the Units are
offered or sold.
(c) The
Memorandum describes and discloses in detail all material aspects of, among
other items, the Company, the Securities, the attendant risks of an investment
in the Company and the Securities, the business of the Company and insider
transactions and relationships, and the Company’s capitalization. The
Company has not taken nor will it take any action which conflicts with the
conditions and requirements of, or which
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would
make unavailable with respect to the Offering, the exemption from registration
available pursuant to Section 4(2) of the Securities Act and the safe harbor
provided by Rule 506 of Regulation D, and knows of no reason why any such
exemption would be otherwise unavailable to it.
(d) The
Memorandum does not and shall not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the statements,
documents, certificates or other items prepared or supplied by the Company with
respect to the transactions contemplated hereby contains an untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made.
(e) Except
for the compensation set forth in this Agreement, the Company is not obligated
to pay, and has not obligated either of the Co-Placement Agents to pay, a
finder’s or origination fee in connection with the Offering, and hereby agrees
to indemnify each of the Co-Placement Agents from any such claim made by any
other person as more fully set forth in herein. Except for
negotiations with the Co-Placement Agents, the Company has not offered for sale
or solicited offers to purchase Units or any other securities. Other than the
Co-Placement Agents, no other person has any right to participate (including,
but not limited to, pre-emptive right, rights of first refusal and/or any other
rights) in any offer, sale or distribution of the Company’s and/or Pubco’s
securities.
(f) All
corporate action on the part of the Company, its officers, directors, and
shareholders necessary for the (a) authorization, execution, and delivery of (i)
this Agreement, (ii) the Memorandum, (iii) the Subscription Documents, (iv) the
Reverse Transaction Agreement(v) and all other relevant documents, exhibits and
schedules (all of the foregoing documents being collectively referred to as the
“Transaction
Documents”), and (b) the performance of all obligations of the Company
hereunder and thereunder, has been taken and the Transaction Documents
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms.
(g) The
Company will furnish each of the Co-Placement Agents, from time to time, such
number of copies of the Memorandum, any exhibits thereto and agreements and
documents referred to therein, as either of the Co-Placement Agents may
reasonably request.
(h) If any
event shall occur or condition exist as a result of which it is necessary or
advisable, in the opinion of the Company or either of the Co-Placement Agents,
to amend or supplement the Memorandum in order that the Memorandum will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to prospective purchasers,
the Company will forthwith prepare and furnish to each of the Co-Placement
Agents such number of
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copies as
the Co-Placement Agents may reasonably request of an amendment or supplement to
the Memorandum (in form and substance satisfactory to the Co-Placement Agents
and their counsel) that will ensure that the Memorandum does not contain any
misstatements or omissions and is not in any respect misleading and provide the
same to offerees.
(i) The
Company will advise the Co-Placement Agents promptly of (i) the occurrence
of any event or the existence of any condition known to the Company referred to
in (l) above hereof; (ii) the receipt by the Company of any communication
from the SEC, any state securities commissioner or any other domestic or foreign
securities or financial regulatory authority or self-regulatory organization
concerning the offering of the Securities; and (C) the commencement of any
lawsuit or proceeding to which the Company is a party relating to the Securities
or the Offering.
(j) The
Company will (i) make available to each offeree of the Securities, the
Memorandum; and (ii) provide each offeree the opportunity to ask questions
of, and receive answers from, the officers and employees of the Company
concerning the terms and conditions of the Offering and to obtain any other
additional information about the Company and the Securities to the extent the
officers and employees of the Company possess the same or can acquire it without
unreasonable effort or expense and it is not otherwise confidential or trade
secret information.
(k) None of
BCT Companies are in default in the performance or observance
of any material obligation (i) under their respective charters or by-laws
(or similar constituent documentation), or any indenture, mortgage, contract,
purchase order or other agreement or instrument to which any of them is a party
or by which any of them or any of their respective properties are bound or
affected; or (ii) with respect to any order, writ, injunction or decree of
any court of any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
there exists no condition, event or act which constitutes, nor which after
notice, the lapse of time or both, could constitute a default under any of the
foregoing, which in either case would have a material adverse effect on the
business, including proposed business, and prospects of the
Company.
(l) Each of
the BCT Companies has full right, power and authority to execute and deliver
this Agreement, the other Transaction Documents, any document, certificate or
instrument required hereunder or to be executed or delivered at any Closing in
connection with the Offering, and to perform all of their respective obligations
hereunder and thereunder or contemplated hereby or thereby. The Transaction
Documents and other documents have been, or will be, duly executed and delivered
by the applicable BCT Company and the execution and delivery by the applicable
BCT Company of the Transaction Documents and the performance of all of
their respective obligations will be duly authorized by all requisite
corporate action by the applicable BCT Company, and each other document
(assuming the due authorization and execution of the other parties thereto)
executed and delivered and obligation performed constitutes, or will constitute,
the legal, valid and binding obligation of the applicable BCT Company
enforceable in accordance with its respective terms.
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(m) The
(i) authorization, execution, delivery and performance of the Transaction
Documents will not, to the best of the Company’s knowledge, (1) violate any
provision of law or statute or any order of any court or other governmental
agency applicable to any BCT Company, or (2) conflict with or result in
any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time or both) a default under, or result
in the creation of any material lien, security interest, charge or encumbrance
upon any of the properties or assets of any BCT Company under their respective
charters or by-laws, or any indenture, mortgage, lease agreement or other
material agreement or instrument to which any BCT Company is a party or by which
they or any of their respective properties are bound or affected except for
violations, conflicts breaches and defaults that would not, individually or in
the aggregate materially and adversely affect the Company, the Co-Placement
Agents or any investor.
(n)
No permit, consent, approval,
authorization, order of, or filing with, any court or governmental authority is
required in connection with the execution and delivery by the BCT Companies of
this Agreement or to consummate the Offering.
(o) There is
no action, suit or proceeding before or by any United States or
non-United States court or governmental agency or body, now pending or, to the
knowledge of the Company, threatened against or affecting any BCT Company, or
any of their properties, which would reasonably be anticipated to result in any
material adverse change in the condition (financial or otherwise) or in the
earnings, prospects and business of the Company, the business plan as described
in the Memorandum, and the properties or assets of the Company taken as a whole
( together, a “Material
Adverse Effect”).
(p) The
Company has (i) duly and timely filed all tax returns required to be filed
by the Company under applicable law that include or relate to the Company, its
income, assets, payroll, operations or business, which tax returns are true,
correct and complete in all material respects; (ii) duly and timely paid,
in full, all taxes which are currently due and payable and for which the Company
is liable; or (iii) adequately reserved for taxes that have not been paid or are
in dispute.
(q) The
Company, to the best of its knowledge, is not in default under any agreement,
lease, license contract or commitment, whether oral or written including,
without limitation, agreements including and related to the Reverse Transaction,
consulting agreements with non-Company personnel, or with employees and
consultants (the “Company
Agreement(s)”), to which the Company is a party or by which any of its
assets are bound, and there is no event known to the Company that, with notice,
or lapse of time, or both, would constitute a default by any party to any
Company Agreement or give any party the right to terminate or modify any of the
same and the Company has not received notice that any party to any Company
Agreement intends to cancel or terminate any Company Agreement or to exercise or
not to exercise any renewal or extension options under any Company Agreement,
except as to any events described in this subparagraph that would not have a
Material Adverse Effect;
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(r) The
Company holds, and is in compliance with, all permits, licenses, registrations
and authorizations required by it in connection with the conduct of the business
of the Company as currently conducted under all domestic and foreign, Federal,
state and local laws, rules and regulations (the “Permits”),
except where the failure to be in compliance has not had, and is not reasonably
expected to have, a Material Adverse Effect;
(s) The
Company’s financial statements included in the Memorandum and those filed with
the Securities and Exchange Commission will be true and correct and fairly
present, in accordance with generally accepted accounting principles,
consistently applied, the financial condition of the Company as of the dates
specified;
(t) Since
December 31, 2006, the Company has conducted its business in the ordinary
course and has not suffered any Material Adverse Effect. The Company does not
have any liabilities or obligations
(whether actual or accrued,
accruing or contingent, or otherwise) which, individually or in aggregate, would
be deemed material, other than those set forth in the balance sheet included
within the financial statements included in the Memorandum, and those incurred,
in the ordinary course of its business, since December 31,
2008.
(u) The
capitalization of the Company shall be correctly and completely described in the
Memorandum and, except as shall be disclosed therein, no person has any right of
first refusal, pre-emptive right, right of participation, or any similar right
to participate in the transactions contemplated by the
Documents. There are no outstanding options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to shares of capital stock of the
Company, except as shall be reflected in the capitalization tables included in
the Memorandum. All of the outstanding shares of capital stock of the
Company have been validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding interests was issued in violation of any pre-emptive rights or
similar rights to subscribe for or purchase securities.
(v) The
Company has rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
its business (collectively, the “Intellectual
Property Rights”), except to the extent that the failure to have such
Intellectual Property Rights, individually or in the aggregate, would not have
or reasonably be expected to result in a Material Adverse Effect. No
claims have been made or threatened by any third party to the effect that
Intellectual Property Rights used by the Company violate or infringe upon the
rights of such claimant. To the actual knowledge of the Company, all
of the Intellectual Property Rights are enforceable and there is no existing
infringement by another person of any of the Intellectual Property
Rights.
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(w) At the
Closing, the Company will deliver, or cause to be delivered, to the Co-Placement
Agents, in each case in form and substance satisfactory to the Co-Placement
Agents and their counsel: (i) a certificate of the Company signed by the
Chief Executive Officer and the Chief Financial Officer thereof certifying
(1) that the representations and warranties of the Company contained in
this Agreement are true and accurate in all material respects as of the Closing;
and, (2) that the representations and warranties of the Company contained
in each subscription agreement entered into with a prospective purchaser of the
Securities are true and correct in all material respects as of the date of such
certificate, except to the extent any such representation or warranty was
expressly made as of any other date, in which case such representation and
warranty was true and correct in all material respects as of such other date;
and at the Closing, and (ii) an opinion of the Company’s PRC, Hong Kong, British
Virgin Islands and domestic legal counsel, in form and substance reasonably
satisfactory to the Co-Placement Agents.
(x) The
Company further agrees that it will not consummate the Offering unless it
delivers or causes to be delivered the items described herein to the Placement
Agent at the Closing. The consummation of the offering and the
release of the purchaser funds to the Company shall be further subject to the
completion of the Closing.
(y) The
Company will be responsible for and comply with all applicable notification and
fee requirements to qualify the Offering under the state securities
or “blue sky” laws of such jurisdiction in which any sales pursuant to the
offering may be transacted and as may otherwise be required or as requested by
either of the Co-Placement Agents provided that, in connection therewith, the
Company shall not be required to qualify as a foreign corporation.
(z) The
Company will take all such action as may be required to provide that the
subsidiaries, affiliates and parent entities within the Company group will not
offer or sell any securities in circumvention of this Agreement.
5. Representations,
Warranties and Covenants of Pubco. Pubco represents, warrants
and covenants to each Co-Placement Agent that:
(a) All
corporate action on the part of Pubco, its officers, directors, and shareholders
necessary for the (A) authorization, execution, and delivery of (1) the Common
Stock, (2) the Warrants, (3) the Escrow Agreement, (4) the Warrant Shares and
all other relevant documents, and (B) the performance of all obligations of
Pubco under any of the Transaction Documents, and (C) the authorization,
issuance (or reservation for issuance), and delivery of the Securities has been
taken and the Transaction Documents to which Pubco is a party constitute valid
and legally binding obligations of Pubco, enforceable in accordance with their
respective terms.
(b) The
Securities when issued and delivered in accordance with the terms of the
Subscription Documents and this Agreement will be duly and validly
issued. The Common Stock, Warrants and Warrant Shares have been duly
and validly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be duly and validly issued, fully paid and
non-assessable. The holders of the Securities will not be subject to
personal liability by reason of being such holders and will not be subject to
the preemptive rights of any holders of any security of Pubco or similar
contractual rights granted by Pubco.
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(c) Immediately
prior to the Closing, the Agent’s Warrants (as defined in Section
6(e)
hereof) to be issued at such Closing, and all other aspects of compensation
and/or expenses to be paid to the Co-Placement Agents, will have been duly and
validly authorized by Pubco. No holder of any of the Agent’s Warrants
will be subject to personal liability solely by reason of being such a holder,
and none of the Agent’s Warrants (or underlying securities), are or will be
subject to preemptive rights, right of first refusal and/or other similar
rights. Neither the issue of the Securities, the Agent Warrants, nor
the Common Stock issuable upon exercise of the Agent Warrants will cause an
adjustment under anti-dilution or exercise rights of any holders of any
outstanding shares of capital stock, options, warrants or other rights to
acquire any securities of Pubco. Immediately prior to the Closing, a
sufficient number of authorized but unissued shares of Common Stock will have
been reserved for full issuance upon the exercise of the Agent’s Warrants and
the Warrants.
(d) Pubco’s
common stock is eligible for quotation on the Over-the-Counter Bulletin Board
under the symbol “PDNK.” Pubco has received no notice and has no
reason to believe the Common Stock will not continue to be eligible for
quotation on the OTCBB.
(e) Pubco has
not been subject to any order, judgment or decree of any court of competent
jurisdiction temporarily, preliminary or permanently enjoining such person for
failing to comply with Section 503 of Regulation D or with any other
United States securities laws, rules and regulations.
(f) Pubco has
filed all SEC reports required to be filed of it and is current in its reporting
requirements. All Pubco SEC reports when made did not contain any
false or misleading statements.
(g) For the
benefit of the Co-Placement Agents, Pubco hereby incorporates by reference all
of its representations and warranties as set forth in the Reverse Transaction
Agreement with the same force and effect as if specifically set forth herein.
6. Co-Placement Agent
Appointment and Compensation.
(a) The
Company and Pubco hereby appoint the Co-Placement Agents as their exclusive
agents in connection with the Offering. The Company and Pubco
acknowledge that the Co-Placement Agents may use selected dealers (the “Selected
Dealers”) that are members of the Financial Industry Regulatory Authority
(“FINRA”)
to fulfill their agency hereunder provided that such dealers are compensated
solely by the Co-Placement Agents. Without the prior written consent
of the Co-Placement Agent, the Company has not and will not make, or permit to
be made, any offers or sales of the Units, other than through the Co-Placement
Agents. The Co-Placement Agents have no obligation to purchase any of
the Units. The agency of the Co-Placement Agents hereunder shall
continue until the later of the Termination Date and the Closing.
11
(b) The
Company will cause to be delivered to the Co-Placement Agents copies of the
Memorandum and has consented, and hereby consents, to the use of such copies for
the purposes permitted by the Securities Act and applicable securities laws, and
hereby authorizes the Co-Placement Agents and their respective agents, employees
and selected dealers to use the Memorandum in connection with the offering and
sale of the Units until the earlier of the Closing and the Termination Date, and
no other person or entity is or will be authorized to give any information or
make any representations other than those contained in the Memorandum or to use
any offering materials other than those contained in the Memorandum in
connection with the sale of the Units.
(c) The
Company will cooperate with the Co-Placement Agents by making available to their
representatives such information as may be requested in making a reasonable
investigation of the Company and its affairs and shall provide access to such
employees as shall be reasonably requested.
(d) As
compensation for its services under this Agreement, at the Closing (or any
subsequent closings), the Co-Placement Agents will receive:
(i) a cash fee (the “Selling
Commissions”)
equal to the sum of ten (10%) percent of the net proceeds of the Offering
released to the Company and received from investors that purchase Units;
and
(ii) a
non-accountable marketing allowance of three (3%) percent of the net proceeds of
the Offering released to the Company (the “Non-Accountable
Allowance”).
The Selling Commissions and
Non-Accountable Allowance are sometimes collectively referred to herein as the
“Agent’s
Fee.”
(e) As
additional compensation hereunder, at the Closing the Company will issue to the
Co-Placement Agents or their designees, for nominal consideration, warrants
(“Agent’s
Warrants”) to purchase ten (10%) percent of the gross number of Common
Shares sold at the Closing (including any Over-Allotment accepted by the Company
but not including the Warrant Shares). The Agent’s Warrants shall
have an initial per share exercise price equal to one hundred twenty (120%)
percent of the price per share of Common Stock underlying the Units ($3.05),
subject to adjustment. Each of the Co-Placement Agents will be
permitted to transfer some or all of their Agent’s Warrants to their affiliates,
registered representatives and to Selected Dealers who participate with the
Co-Placement Agents in the Offering. The Agent’s Warrants and the
Agent’s Fee are sometimes collectively referred to herein as the “Agent’s
Compensation.” The Agent’s
Warrants shall be exercisable, at any time and from time to time for period of 5
years after the date of issuance. The Agent’s Warrants shall contain
an immediate cashless exercise provision and shall contain the same
anti-dilution provisions as are included in the Warrants.
12
(f) The
Company shall pay all of the Co-Placement Agent’s expenses in connection with
the Offering, including, but not limited to, long distance telephone calls,
filing fees, mail, overnight packages, copying, and printing and shall pay up to
$100,000 of the Co-Placement Agent’s legal fees (excluding all expenses relating
to Blue Sky work and FINRA filings which will be additional
charges). In addition, the Company shall reimburse each of the
Co-Placement Agents for all reasonable professional consulting fees, including
travel to visit the Company’s facilities, not to exceed $20,000, in the
aggregate. Upon closing of the Offering, all the above fees and
expenses of the Co-Placement Agents will be paid by the Company immediately upon
request by the Co-Placement Agents. At the Closing, the Company shall
pay to May ▇▇▇▇▇ a one-time due diligence fee of $50,000.
(g) Right of
First Refusal. The Company will grant the Co-Placement Agents
a right of first refusal for a period of twelve (12) months from the date hereof
to act as exclusive placement agents on any future private placement of the
Company’s securities or as lead managing underwriters on any public offering of
the Company’s securities. It is understood that if a third (3rd)
party provides the Company with written terms with respect to a future
securities offering and/or sale (“Written
Offering Terms”), the Company shall promptly present same to the
Co-Placement Agents. Each of the Co-Placement Agents shall have ten
(10) business days from its actual receipt of the Written Offering Terms in
which to determine whether or not to accept such offer. If both of
the Co-Placement Agents refuse, and provided that such financing is consummated
with another placement agent or underwriter upon the same or better terms as the
Written Offering Terms, the Company may elect to use another broker/dealer, but
in no event shall such use of another broker/dealer result in the Co-Placement
Agents waiving and/or forfeiting its right of first refusal for subsequent
Company offerings of its securities.
7. Covenants
of the Company. The Company hereby covenants and agrees
that:
(a) Except
with the prior written consent of the Co-Placement Agents, the Company shall
not, at any time prior to the Closing, take any action which would cause any of
the representations, warranties and covenants made by it in this Agreement, the
Memorandum or the Subscription Documents not to be complete, accurate and
correct in any material respect on and as of the Closing Date with the same
force and effect as if such representations, warranties and covenants had been
made on and as of such date.
(b) If, at
any time prior to the Closing:
(i) any event
shall occur which materially affects the Company or as a result of which it
might become necessary to amend or supplement the Memorandum so that the
representations, warranties and covenants contained herein or in the Transaction
Documents remain materially true; or
(ii) in case
it shall, in the opinion of counsel to the Co-Placement Agents and the Company,
be necessary to amend or supplement the Memorandum to comply with Regulation D
or any other applicable securities laws or regulations,
13
the
Company shall, in the case of (i) above,
promptly notify the Co-Placement Agents and, in the event of either (i) or (ii) above shall, at its sole cost, prepare
and furnish to the Co-Placement Agents copies of appropriate amendments and/or
supplements to the Memorandum in such quantities as the Co-Placement Agents may
request. The Company shall not at any time, whether before or after
the Closing, prepare or use any amendment or supplement to the Memorandum of
which the Co-Placement Agents shall not previously have been advised and
furnished with a copy, or to which the Co-Placement Agents or their counsel will
have reasonably objected in writing or orally (confirmed in writing within 72
hours), or which is not in compliance in all material respects with the
Securities Act, the Regulations and other applicable securities laws. As soon as
the Company is advised thereof, the Company shall advise the C-Placement Agents
and their counsel, and confirm the advice in writing, of any order preventing or
suspending the use of the Memorandum, or the suspension of the qualification or
registration of the Securities for offering or the suspension of any exemption
for such qualification or registration of the Securities for offering in any
jurisdiction, or of the institution or threatened institution of any proceedings
for any of such purposes, and the Company shall use its best efforts to prevent
the issuance of any such order and, if issued, to obtain as soon as reasonably
possible the lifting thereof.
(c) The
Company shall comply with the Securities Act, the Regulations, the Exchange Act,
all applicable state securities laws and the rules and regulations thereunder in
the states in which the Co-Placement Agents’ counsel has advised the
Co-Placement Agents that the Units are qualified or registered for sale or
exempt from such qualification or registration, so as to permit the continuance
of the sales of the Units, and will file with the SEC, and shall promptly
thereafter forward to the Co-Placement Agents, any and all reports on Form D as
are required.
(d) The
Company shall use its commercial best efforts to qualify the Units for sale (or
seek exemption therefrom) under the securities laws of such jurisdictions in the
United States as may be mutually agreed to by the Company and the Co-Placement
Agents, and the Company shall make such applications and furnish information as
may be required for such purposes, provided that the Company shall not be
required to qualify as a foreign corporation in any jurisdiction. The
Company shall, from time to time, prepare and file such statements and reports
as are or may be required to continue such qualifications in effect for so long
a period as the Co-Placement Agents may reasonably request.
(e) The
Company shall place a legend on the certificates representing the Common Stock,
Warrants and the Warrant Shares issued to subscribers stating that the
securities evidenced thereby have not been registered under the Securities Act
or applicable state securities laws, setting forth or referring to the
applicable restrictions on transferability and sale of such securities under the
Securities Act and applicable state laws.
(f) The
Company shall apply the net proceeds from the sale of the Units for such
purposes as are specifically described in the “Use of
Proceeds” section of the Memorandum. Except as may be
expressly and specifically set forth in the “Use of
14
Proceeds”
section of the Memorandum, the net proceeds of the Offering shall not be used to
pay any obligation and/or repay indebtedness of the Company, including, without
limitation, indebtedness to officers, directors or stockholders of the Company
without the prior written consent of the Co-Placement Agents.
(g) During
the Offering Period, the Company shall afford prospective purchasers of Units an
opportunity to ask questions of and receive answers from an officer of the
Company concerning the terms and conditions of the Offering and the opportunity
to obtain such other additional information necessary to verify the accuracy of
the Memorandum to the extent it possesses such information or can acquire it
without unreasonable expense.
(h) Except
with the prior written consent of the Co-Placement Agents (which consent shall
not be unreasonably withheld) or as expressly disclosed in the Memorandum, the
Company shall not, at any time prior to the Termination Date, engage in or
commit to engage in any transaction outside the ordinary course of business or
issue, agree to issue or set aside for issuance any securities (debt or equity)
or any rights to acquire any such securities except as expressly set forth in
the Memorandum.
(i) Until the
Termination Date, neither the Company nor any person or entity acting on its
behalf shall negotiate with any other placement agent or underwriter with
respect to a private or public offering of the Company’s debt or equity
securities in the United States except to the extent that such a negotiation is
contemplated in the Memorandum. Neither the Company nor anyone acting
on its behalf shall, until the Termination Date, offer for sale to, or solicit
offers to subscribe for Units from, or otherwise approach or negotiate in
respect thereof with any other person.
(j) Until the
earlier of (i) the Termination Date and (ii) the Closing, the Company will not
issue any press release, grant any interview, or otherwise communicate with the
media in any manner whatsoever without the Co-Placement Agents’ express prior
written consent, unless in the reasonable judgment of the Company and its
counsel, and after notification to the Co-Placement Agents, such press release
or other communication is required by law.
(k) The
Company shall pay all expenses incurred in connection with the preparation and
printing of all necessary offering documents, amendments, and instruments
related to the Offering and the issuance of the Units, the Securities, the
Warrant Shares and the Agent’s Warrants, and shall also pay its own expenses for
accounting fees, legal fees, bound volumes of closing documents, and other costs
involved with the Offering. The Company shall provide at its own expense such
quantities of the Memorandum and other documents and instruments relating to the
Offering as the Co-Placement Agents may reasonably request. In
addition, the Company shall pay all filing fees and costs for Blue Sky services
and related filings and expenses of the Co-Placement Agents’ counsel with
respect to Blue Sky exemptions (collectively, the “Blue Sky
Expenses”), which shall be paid to the Co-Placement Agents’ counsel upon
the First Closing (or upon demand by the Co-Placement Agents if a First Closing
does not incur within a reasonable period of time). Additional Blue
Sky Expenses incurred
15
after the
First Closing, if any, shall be paid at any subsequent Closing, as
applicable. The Blue Sky filings shall be prepared by the
Co-Placement Agents’ counsel for the Company’s account. Further, as
promptly as practicable after the Closing, the Company shall prepare, at its own
expense, velobound "closing binders" relating to the Offering and will
distribute such binders to the individuals designated by counsel to the
Co-Placement Agents. Lastly, upon a determination by the Co-Placement
Agents that one or more FINRA Rule 2710 filings are required, the Company will
pay all filing fees costs and expenses in connection with such filing to be
prepared by the Co-Placement Agents’ counsel.
(l) On or
before the Closing Date, the Company shall deliver to the Co-Placement Agents,
lock up agreements (the “Lock Up
Agreements”) executed by among others, (i) the original shareholders of
BCT; and (ii) the original shareholder of Forever Well (collectively, the “Shareholders”)
pursuant to which the Shareholders shall be prohibited from selling any shares
of stock of the Company for a period of one year after the effective date of the
Registration Statement.
(i) Effective
as of the Closing Date, the Co-Placement Agents (and/or their designee) shall
have the right to nominate, and the Company shall use its best efforts to have
appointed, one (1) person (the “Placement
Agent Director”) to serve as a member of Pubco’s Board of
Directors. The Company covenants and agrees to take, or to cause to
be taken on its behalf, all action necessary and/or reasonably requested by the
Co-Placement Agents to cause the Placement Agent Director to be appointed to the
Board of Directors within ten (10) business days of the Placement Agent’s
nomination of such person. The Placement Agent Director’s appointment
to Pubco’s Board of Directors shall be for a period of two (2) years commencing
on the date of such person’s appointment to the Board of Directors.
(ii) In the
event that at any time and/or from time to time, a Placement Agent Director is
not serving as a Director on Pubco’s Board of Directors for any reason or no
reason, then the Placement Agent may designate one (1) person (the “Observer”)
to attend all meetings (including telephone meetings) of Pubco’s Board of
Directors for a two (2) year period, commencing on the Closing
Date. The Observer shall be entitled to attend all such meetings and
to receive all notices and other correspondence and communications sent by Pubco
to its Board of Directors as when and in the same manner as provided to the
other Directors; provided, however, the Observer
shall agree to hold in confidence and trust and to act in a fiduciary manner
with respect to all information so provided; and provided, further, that Pubco
reserves the right to withhold any information and to exclude the Observer from
any meeting or portion thereof if access to such information or attendance at
such meeting could adversely affect the attorney-client privilege between Pubco
and its counsel or result in disclosure of trade secrets or a conflict of
interest, or if the Observer is a competitor of Pubco.
(m) During
the one (1) year period following the final Closing, the Company shall not file
and/or issue any shares of Common Stock pursuant to an S-8 Registration
Statement.
16
(n) Registration
Rights.
(i) The
Company will grant to each investor that purchases Units in the Offering the
registration rights (including penalty provisions), set forth in the
registration rights agreements (the “Registration
Rights Agreements”) by and between the Company and each of the
investors.
(ii) The
Placement Agent (and any Selected Dealers participating in the Offering) shall
be afforded registration rights identical to those afforded to investors in the
Registration Rights Agreements with respect to the Common Stock issuable upon
exercise of the Agent Warrants, except for the delinquent filing and
effectiveness cash penalties afforded such investors thereunder, and such
registration rights shall be subject applicable Rule 415 limitations and other
applicable SEC Guidance.
(o) The
Company will hire within sixty (60) days after the Closing a bilingual Chief
Financial Officer, fluent in English.
(p) The
Company will retain an experienced PCAOB auditor with prior China public company
experience within thirty (30) days after to the Closing.
(q) The
Company will begin discussion with an investor relations/public relations firm,
reasonably acceptable to the Co-Placement Agents, within a reasonable time after
the Closing, not to exceed 60 days after the Closing and shall retain such
investor relations/public relations firm at such time as there is an effective
registration statement or the Common Stock is available for resale under Rule
144. The Company shall agree to escrow $150,000 of the Offering net
proceeds for the Co-Placement Agents to pay such firm.
(r) The
Company and the Co-Placement Agents shall negotiate a make good agreement (the
“Make Good
Agreement”) based on Twenty Six Million Dollars ($26,000,000) recurring
operating net income before extraordinary gains and excluding non-cash expenses
for the year ending December 31, 2010. At the Closing, the management
of the Company shall place in escrow management’s shares, in aggregate equal to
Four Million (4,000,000) shares of the Company’s Common Stock under the Make
Good provisions in the Subscription Agreement.
(s) Commencing
on the date hereof, and for the two year period following the Closing, the
Company shall not pay any dividends and/or increase the compensation of its
officers.
(t) Immediately
after the Closing, the Company shall use its best efforts to have its Common
Stock listed on Nasdaq or NYSE Amex Equities as soon as
practicable.
8. Conditions
of Co-Placement Agents’ Obligations. The obligations of the
Co-Placement Agents hereunder are subject to the fulfillment, at or before the
Closing, of the following additional conditions:
17
(a) Each of
the representations and warranties made by the Company herein shall be true and
correct in all material respects at all times prior to and on the Closing Date,
except to the extent any such representation or warranty expressly speaks as of
an earlier date.
(b) The
Company shall have performed and complied in all material respects with all
agreements, covenants and conditions required to be performed by and complied
with it under the Transaction Documents at or before the Closing.
(c) No order
suspending the use of the Memorandum or enjoining the offering or sale of the
Units shall have been issued, and no proceedings for that purpose or a similar
purpose shall have been initiated or pending, or, to the best of the Company’s
knowledge, are contemplated or threatened.
(d) The
Co-Placement Agents shall have received certificates of the Chief Executive
Officer and Chief Financial Officer of the Company, dated as of the Closing
Date, certifying, in such detail as the Co-Placement Agents may reasonably
request, as to the fulfillment of the conditions set forth in paragraphs (a),
(b) and (c) above.
(e) The
Company shall have delivered to the Co-Placement Agents on the Closing
Date:
(i) a good
standing certificate with respect to each of the BCT Companies and Pubco
certified by the secretary of state of their respective jurisdictions of
incorporation and each jurisdiction in which each of them is qualified to do
business as a foreign corporation dated no earlier than five business days prior
to the Closing Date;
(ii) certified
resolutions of the Company’s Board of Directors approving this Agreement and the
other Transaction Documents, and the transactions and agreements contemplated by
this Agreement and the other Transaction Documents;
(iii) the Lock
Up Agreements; and
(iv) the
Reverse Transaction Documents.
(f) On or
prior to the date hereof and at the Closing, either the Chief Executive Officer
or the Chief Financial Officer of the Company shall have provided a certificate
to the Co-Placement Agents confirming that there have been no undisclosed
material and adverse changes in the condition (financial or otherwise) or
prospects of the Company from the date of the Memorandum, the absence of
undisclosed liabilities and such other matters relating to the financial
condition and prospects of the Company that the Co-Placement Agents may
reasonably request.
(g) At the
Closing, the Company shall pay and deliver to the Co-Placement Agents the
Agent’s Fee, calculated in accordance with Section
6(d)
and, if applicable, the Blue Sky Expenses in accordance with Section
7(k)
hereof.
18
(h) At the
Closing, the Company shall have delivered to the Co-Placement Agents and/or
their respective designees, the appropriate number of Agent’s Warrants,
calculated in accordance with Section
6(e) hereof.
(i) There
shall have been delivered to the Co-Placement Agents a signed opinion of the
Company’s PRC, Hong Kong, British Virgin Islands and domestic legal counsel,
dated as of each Closing Date, in the form mutually agreed upon by the Company
and the Co-Placement Agents.
(j) At the
Closing, each officer, director and significant shareholder of the Company shall
deliver to the Placement Agent a 10b-5 Letter, in form and substance
satisfactory to the Company and the Co-Placement Agents, signed and executed by
each such person.
(k) All
proceedings taken at or prior to the Closing in connection with the
authorization, issuance and sale of the Securities and the Agent’s Warrants will
be reasonably satisfactory in form and substance to the Co-Placement Agents and
their counsel, and such counsel shall have been furnished with all such
documents, certificates and opinions as it may reasonably request upon
reasonable prior notice in connection with the transactions contemplated
hereby.
9. Indemnification
and Contribution.
(a) Indemnification
of the Placement Agent by the Company. The Company agrees to
indemnify and hold harmless the Co-Placement Agents and each person, if any, who
controls either of the Co-Placement Agents within the meaning of the Securities
Act and/or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such Co-Placement Agent or controlling person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Transaction Documents, or (B) in
any blue sky application or other document executed by the Company specifically
for blue sky purposes or based upon any other written information furnished by
the Company or on its behalf to any state or other jurisdiction in order to
qualify any or all of the Securities under the securities laws thereof (any such
application, document or information being hereinafter called a “Blue Sky
Application”), (ii) any breach by the Company of any of its
representations, warranties or covenants contained herein or in any of the
Transaction Documents, (iii) the omission or alleged omission by the
Company to state in the Transaction Documents or in any Blue Sky Application a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (iv) any liability incurred by a Co-Placement Agent arising from
the Escrow Agreement between the Company, the Escrow Agent and the Co-Placement
Agents not due to a Co-Placement Agent Non-Indemnity Event (hereinafter
defined); and will reimburse such Co-Placement Agent and each such controlling
person for any legal or other expenses reasonably incurred by the Co-Placement
Agent or such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action, whether
19
arising
out of an action between the Co-Placement Agent and the Company or the
Co-Placement Agent and a third party; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon (i) an untrue statement or
omission made in reliance upon and in conformity with written information
regarding such Co-Placement Agent that is furnished to the Company by such
Co-Placement Agent specifically for inclusion in the Offering Documents or any
such Blue Sky Application or (ii) any breach by such Co-Placement Agent of
the representations, warranties or covenants contained herein (together, (i) and
(ii) above are referred to as the “Placement
Agent Non-Indemnity Events”).
(b) Indemnification
of the Selected Dealers by the Company. The Company agrees to
indemnify and hold harmless each Selected Dealer and each person, if any, who
controls a Selected Dealer within the meaning of the Securities Act and/or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Selected Dealer or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained (A) in the Offering Documents, or (B) in any Blue Sky Application,
(ii) any breach by the Company of any of its representations, warranties or
covenants contained herein or in any of the Offering Documents, or (iii) the
omission or alleged omission by the Company to state in the Offering Documents
or in any Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and will reimburse each Selected Dealer
and each such controlling person for any legal or other expenses reasonably
incurred by such Selected Dealer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action,
whether arising out of an action between such Selected Dealer and the Company or
such Selected Dealer and a third party; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon (i) an untrue statement or omission
made in reliance upon and in conformity with written information regarding such
Selected Dealer specifically for inclusion in the Offering Documents or any such
Blue Sky Application or (ii) any breach by such Selected Dealer of the
representations, warranties or covenants contained herein (together, (i) and
(ii) above are referred to as the “Selected
Dealer Non-Indemnity Events”).
(c) Procedure. Promptly
after receipt by an indemnified party under this Section
9 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 9,
notify in writing the indemnifying party of the commencement thereof; and the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability under this Section 9
as to the particular item for which indemnification is then being sought, except
and to the extent that the indemnifying party is materially prejudiced thereby,
from any other liability that it may have to any indemnified
party. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may wish, jointly with any other
20
indemnifying
party, similarly notified, to assume the defense thereof, with counsel who shall
be to the reasonable satisfaction of such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 9
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation. Any such indemnifying party shall not be liable to any
such indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
(d) Contribution. If
the indemnification provided for in this Section 9
is unavailable to any indemnified party (other than as a result of the failure
to notify the indemnifying party as provided in Section
9(c)
above) in respect to any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, will contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand, and the applicable
Co-Placement Agent or Selected Dealer, on the other hand, from the Offering, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the Company, on the one hand, and of the applicable Co-Placement Agent or
Selected Dealer, on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or expenses
as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the applicable
Co-Placement Agent or Selected Dealer, on the other hand, shall be deemed to be
in the same proportion as the total proceeds from the Offering received by the
Company bear to the commissions received by the applicable Co-Placement Agent or
Selected Dealer. The relative fault of the Company, on the one hand,
and the applicable Co-Placement Agent or Selected Dealer, on the other hand,
will be determined with reference to, among other things, whether the untrue or
statement of a material fact or the omission to state a material fact relates to
information supplied by the Company, on the one hand, and the applicable
Co-Placement Agent or Selected Dealer, on the other hand, and their relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the foregoing, the
applicable Co-Placement Agent’s obligations under this Section
8
(d)
shall not exceed the actual commissions received by the applicable Co-Placement
Agent.
(e) Equitable
Considerations. The Company, the Co-Placement Agents and each
Selected Dealer agree that it would not be just and equitable if contribution
pursuant to this Section
9
were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph.
(f) Attorneys’
Fees. The amount payable by a party under this Section
9
as a result of the losses, claims, damages, liabilities or expenses referred to
above will be deemed to include any reasonable legal or other fees or expenses
reasonably incurred by
21
such
party in connection with investigating or defending any action or claim
(including, without limitation, fees and disbursements of counsel incurred by an
indemnified party in any action or proceeding between the indemnifying party and
indemnified party or between the indemnified party and any third party or
otherwise). Notwithstanding the foregoing, with respect to any third
party action, fees and disbursements of separate counsel for the indemnified
party shall only be paid by the indemnifying party if there is a conflict of
interest between the indemnified party and the indemnifying party and, in such,
case, only with respect to one counsel for all the indemnified
parties.
10. Termination.
(a) The
Offering may be terminated by the Co-Placement Agents at any time prior to the
Termination Date in the event that:
(i) any of
the representations, warranties or covenants of the Company contained herein, in
the Memorandum or in any other Transaction Document shall prove to have been
false or misleading in any material respect when actually made;
(ii) the
Company shall have failed to perform any of its material obligations hereunder
or under any other Transaction Documents; or
(iii) there
shall occur any event which could materially adversely affect the transactions
contemplated hereby or the other Transaction Documents or the ability of the
Company to perform thereunder.
(b) If this
Offering expires on the Termination Date due to the failure to raise the Minimum
Amount, the Co-Placement Agents shall be entitled to reimbursement for all of
their out of pocket expenses, including, but not limited to, all legal fees and
expenses of its counsel.
(c) Upon any
such termination, the Co-Placement Agents and the Company will cause, via
written instructions to the Escrow Agent, all monies received with respect to
the subscriptions for Units not accepted by the Company to be promptly returned
to such subscribers without interest, penalty, expense or
deduction.
11. Survival.
(a) The
obligations of the parties under Section
9 above
and to otherwise pay any costs and expenses hereunder and to provide
indemnification and contribution as provided herein shall survive any
termination or expiration hereunder. The provisions of Sections
6 and 14
hereto shall also survive any termination or expiration hereunder.
(b) The
respective indemnities, agreements, representations, warranties and other
statements of the Company or the Co-Placement Agents set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of, and regardless of any access to
information by, the Company or the Co-Placement Agents, or any of their officers
or directors or any controlling person thereof, and will survive the sale of the
▇▇▇▇▇.
▇▇
▇▇. Notices. All notices and
other communications given or made pursuant hereto shall be in writing and shall
be delivered by overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address which shall be effective upon receipt) or sent by electronic
transmission, with confirmation received,
(a) if sent
to the Co-Placement Agents, will be mailed, delivered or telefaxed and confirmed
to:
May ▇▇▇▇▇ Partners, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ May
Fax number: (▇▇▇) ▇▇▇-▇▇▇▇
American Capital Partners
LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn : ▇▇▇▇▇ ▇▇▇▇▇
Fax number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (such copy shall not
constitute notice):
Gusrae, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Fax number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) and if
sent to the Company, to:
China Baicaotang Medicine
Limited
▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
Attention: Tang ▇▇▇ ▇▇▇▇,
President
Fax number:
with a copy to (such copy shall not
constitute notice):
▇▇▇▇▇▇
& Jaclin, LLP
▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax
Number: (▇▇▇) ▇▇▇-▇▇▇▇
23
13. Counterparts. This
Agreement and any amendments, waivers, consents, or supplements may be executed
in one or more counterparts, each of which when so executed and delivered shall
be deemed an original, but all of which counterparts together shall constitute
but one and the same instrument. Delivery of an executed counterpart
of a signature page to this Agreement, any amendments, waivers, consents or
supplements, by facsimile shall be as effective as delivery of a manually
executed counterpart thereof.
14. Applicable
Law; Costs. This Agreement shall be governed by and construed
solely and exclusively in accordance with the internal laws of the State of New
York without regard to the conflicts of laws principles thereof. The parties
hereto hereby expressly and irrevocably agree that any suit or proceeding
arising directly and/or indirectly pursuant to or under this Agreement shall be
brought solely in a federal or state court located in the City, County and State
of New York. By its execution hereof, the parties hereby covenant and
irrevocably submit to the inpersonam jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto expressly and
irrevocably waive any claim that any such jurisdiction is not a convenient forum
for any such suit or proceeding and any defense or lack of in personam jurisdiction
with respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto of
all of its reasonable counsel fees and disbursements.
15. Miscellaneous. No
provision of this Agreement may be changed or terminated except by a writing
signed by the party or parties to be charged therewith. Unless expressly so
provided, no party to this Agreement will be liable for the performance of any
other party’s obligations hereunder. Any party hereto may waive compliance by
the other with any of the terms, provisions and conditions set forth herein;
provided, however that any such waiver shall be in writing specifically setting
forth those provisions waived thereby. No such waiver shall be deemed to
constitute or imply waiver of any other term, provision or condition of this
Agreement. This Agreement contains the entire agreement between the parties
hereto and is intended to supersede any and all prior agreements between the
parties relating to the same subject matter. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original and all of
which together shall constitute a single agreement.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
24
[SIGNATURE
PAGE TO PLACEMENT AGENT AGREEMENT]
If the
foregoing is in accordance with your understanding of our agreement, kindly sign
and return this Agreement, whereupon it will become a binding agreement between
the Company and the Co-Placement Agents in accordance with its
terms.
Very
truly yours,
|
INGENIOUS
PARAGON GLOBAL LIMITED
By:
___________________________
Name:
Title:
|
HEFENG
PHARMACEUTICAL COMPANY LTD.
By:
___________________________
Name:
Title:
|
|
FOREVER
WELL ASIA PACIFIC LIMITED
By:
___________________________
Name:
Title:
|
GUANGXI
LIUZHOU BAICAOTANG MEDICINE RETAIL LIMITED
By:
___________________________
Name:
Title:
|
|
CHINA
BAICAOTANG MEDICINE LIMITED
By:
___________________________
Name:
Tang ▇▇▇ ▇▇▇▇
Title:
Chief Executive Officer
|
PURDEN
LAKE RESOURCES CORP.
By:
___________________________
Name:
Title:
|
Accepted
and agreed to this ____ day of __________, 2009
|
MAY
▇▇▇▇▇ PARTNERS, LLC
By:
___________________________
Name: ▇▇▇▇
May
Title: CEO
|
AMERICAN
CAPITAL PARTNERS LLC
By:
___________________________
Name:
Title:
|
25