SUBSCRIPTION AGREEMENT
Exhibit
10.1
SUBSCRIPTION
AGREEMENT (“Subscription Agreement”) made as of this [__] day of
[__________________], 2006, by and among SRKP 8, Inc., a Delaware corporation
(the “Company”); Kunming Shenghuo Pharmaceutical (Group) Co., Ltd., a company
formed under the laws of the People's Republic of China and upon the Closing
Date (as defined below) a 93.75%-owned subsidiary of the Company (the
"Kunming"); and the undersigned (the “Subscriber”).
WHEREAS,
the Company, Kunming, and Lan’s Int’l Medicine Investment Co., Limited are
parties to a certain Share Exchange Agreement dated as of June 30, 2006 (the
“Exchange Agreement”), pursuant to which Kunming will become a 93.75%-owned
subsidiary of the Company and 93.75% of the outstanding securities of Kunming
will be exchanged for securities in the Company (the “Share Exchange”).
Immediately after the effective time of the Share Exchange (the “Closing Date”),
the Company will assume the business and operations of Kunming.
WHEREAS,
as a condition to the closing of the Share Exchange, the Company intends to
obtain subscriptions for the purchase and sale, in a private placement
transaction (the “Offering”) pursuant to Regulation D promulgated under the
Securities Act of 1933, as amended (the “Act”), of shares of common stock (the
“Shares”) of the Company, par value $0.001 per share (“Common Stock”) on the
terms and conditions hereinafter set forth, and the Subscriber desires to
acquire that number of Shares set forth on the signature page
hereof.
NOW,
THEREFORE, for and in consideration of the promises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:
1. Subscription
Procedure
1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase from the Company such number of Shares
as
is set forth upon the signature page hereof at a price of $0.90 per Share (the
“Purchase Price”). The Company agrees to sell such Shares to the Subscriber for
the Purchase Price.
1.2 The
subscription period will begin as of July 14, 2006 and will terminate (if the
Closing Date has not earlier occurred) at 5:00 PM Eastern Standard Time on
August 11, 2006, unless extended by the Company, Kunming and the Placement
Agent
(as defined below) for up to an additional 90 days (the “Termination Date”). The
Shares will be offered on a “best efforts” basis as more particularly set forth
in a Confidential Private Placement Memorandum and any supplements thereto
(the
“Offering Memorandum”) which shall supercede in its entirety that Executive
Summary dated July 14, 2006. The final Offering Memorandum will be provided
to
Subscribers in the Offering no later than five days prior to the Termination
Date. The consummation of the Offering is subject to the satisfaction of a
number of conditions to be further described in the Offering Memorandum, one
or
more of which conditions may not occur.
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1.3 Placement
of Shares will be made by WestPark Capital, Inc. (the “Placement Agent”), which
will receive certain compensation therefor as will be more fully described
in
the Offering Memorandum.
1.4 The
Purchase Price will be placed in escrow pursuant to an escrow agreement (the
“Escrow Agreement”) by and among the Placement Agent, the Company and Law
Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇, a Professional Corporation as escrow agent, and
shall
be paid over to the Company at the closing of the purchase of the Shares in
the
Offering (the “Closing”) to occur on the Closing Date.
1.5 The
certificates for the Common Stock bearing the name of the Subscriber will be
delivered by the Company no later than fifteen (15) days following the Closing
Date. The Subscriber hereby authorizes and directs the Company to deliver the
securities to be issued to such Subscriber pursuant to this Subscription
Agreement to the residential or business address indicated in the Investor
Questionnaire, as attached.
1.6 The
Purchase Price for the Shares purchased hereunder shall be paid by certified
check, payable to Law Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇, a Professional Corporation,
as
escrow agent, or by wire transfer to Law Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇ pursuant
to
the following instructions:
Law
Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇, a Professional Corporation
Subscription
Escrow Account #2
▇▇▇▇▇
Fargo Bank
1801
Avenue of the Stars
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account
#
5763556098
ABA
#
▇▇▇▇▇▇▇▇▇
1.7 The
Company and/or Kunming may, in their sole discretion, reject any subscription,
in whole or in part, or terminate or withdraw the Offering in its entirety
at
any time prior to a closing in relation thereto. Neither the Company nor the
Placement Agent shall be required to allocate among investors on a pro rata
basis in the event of an over-subscription.
2. Representations
and
Covenants of Subscriber
2.1 The
Subscriber recognizes that the purchase of Shares involves a high degree of
risk
in that (i) the Company will need additional capital to operate its business
but
has no assurance of additional necessary capital; (ii) an investment in the
Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the Shares;
(iii) an investor may not be able to liquidate his or her investment; (iv)
transferability of the securities comprising the Shares is extremely limited;
(v) an investor could sustain the loss of his or her entire investment; and
(vi)
the Company is and will be subject to numerous other risks and uncertainties,
including without limitation, significant and material risks relating to the
Company’s business and the business and operations of Kunming, and the
industries, markets and geographic regions in which the Company will compete,
as
well as risks associated with the Offering, the Share Exchange and the other
transactions contemplated herein, in the Offering Memorandum and in the Exchange
Agreement, all as more fully set forth herein and to be set forth in the
Offering Memorandum. For the avoidance of doubt, all references to the Company
in this Section 2.1 include the Company’s business and operations after it
acquires the business and operations of Kunming through the Share Exchange.
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2.2 The
Subscriber represents that he or she is an “accredited investor” as such term is
defined in Rule 501 of Regulation D promulgated under the Act, as indicated
by
his or her responses to the Investor Questionnaire, the form of which is
attached hereto as Exhibit
A,
and
that he or she is able to bear the economic risk of an investment in the Shares.
The Subscriber must complete the applicable Investor Questionnaire to enable
the
Company and Kunming to access the Subscriber’s eligibility for the
Offering.
2.3 The
Subscriber acknowledges that he or she has prior investment experience,
including without limitation, investment in non-listed and non-registered
securities, or he or she has employed the services of an investment advisor,
attorney or accountant to read all of the documents furnished or made available
by the Company or Kunming both to him and to all other prospective investors
in
the Shares and to evaluate the merits and risks of such an investment on his
or
her behalf, and that he or she recognizes the highly speculative nature of
this
investment.
2.4 The
Subscriber acknowledges receipt and careful review of the Offering Memorandum,
this Subscription Agreement, and the attachments hereto and thereto
(collectively, the “Offering Documents”) and hereby represents that he or she
has been furnished or given access by the Company or Kunming during the course
of this Offering with or to all information regarding the Company and Kunming
and their respective financial conditions and results of operations which he
or
she had requested or desired to know; that all documents which could be
reasonably provided have been made available for his or her inspection and
review; that he or she has been afforded the opportunity to ask questions of
and
receive answers from duly authorized representatives of the Company and Kunming
concerning the terms and conditions of the Offering, and any additional
information which he or she had requested. The Subscriber further represents
and
acknowledges that the Subscriber has not seen or received any advertisement
or
general solicitation with respect to the sale of any of the securities of the
Company, including, without limitation, the Shares.
2.5 The
Subscriber acknowledges that this Offering of Shares may involve tax
consequences, and that the contents of the Offering Documents do not contain
tax
advice or information. The Subscriber acknowledges that he or she must retain
his or her own professional advisors to evaluate the tax and other consequences
of an investment in the Shares.
2.6 The
Subscriber acknowledges that this Offering of Shares has not been reviewed
or
approved by the United States Securities and Exchange Commission (“SEC”) because
the Offering is intended to be a nonpublic offering pursuant to Section 4(2)
of
the Act. The Subscriber represents that the Shares are being purchased for
his
or her own account, for investment and not for distribution or resale to others.
The Subscriber agrees that he or she will not sell or otherwise transfer any
of
the securities comprising the Shares unless they are registered under the Act
or
unless an exemption from such registration is available and, upon the Company’s
request, the Company receives an opinion of counsel reasonably satisfactory
to
the Company confirming that an exemption from such registration is available
for
such sale or transfer.
2.7 The
Subscriber understands that the Shares have not been registered under the Act
by
reason of a claimed exemption under the provisions of the Act which depends,
in
part, upon his investment intention. The Subscriber realizes that, in the view
of the SEC, a purchase now with the intention to distribute would represent
a
purchase with an intention inconsistent with his or her representation to the
Company, and the SEC might regard such a distribution as a deferred sale to
which such exemption is not available.
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2.8 The
Subscriber understands that Rule 144 (the “Rule”) promulgated under the Act
requires, among other conditions, a one year holding period prior to the resale
(in limited amounts) of securities acquired in a non-public offering, such
as
the Offering, without having to satisfy the registration requirements under
the
Act. Except as specifically set forth in Section 4.1, the Subscriber understands
that the Company makes no representation or warranty regarding its fulfillment
in the future of any reporting requirements under the Securities Exchange Act
of
1934, as amended (the “Exchange Act”), or its dissemination to the public of any
current financial or other information concerning the Company, as is required
by
Rule 144 as one of the conditions of its availability. The Subscriber consents
that the Company may, if it desires, permit the transfer of the Shares out
of
his or her name only when his or her request for transfer is accompanied by
an
opinion of counsel reasonably satisfactory to the Company that neither the
sale
nor the proposed transfer results in a violation of the Act, any applicable
state “blue sky” laws or any applicable securities laws of any other country,
province or jurisdiction (collectively, “Securities Laws”). The Subscriber
agrees to hold the Company, Kunming and their respective directors, officers
and
controlling persons and their respective heirs, representatives, successors
and
assigns harmless and to indemnify them against all liabilities, costs and
expenses incurred by them as a result of any misrepresentation made by him
contained herein or in the Investor Questionnaire or any sale or distribution
by
the undersigned Subscriber in violation of any Securities Laws.
2.9 The
Subscriber consents to the placement of one or more legends on any certificate
or other document evidencing his or her Shares and the Common Stock included
in
the Shares stating that they have not been registered under the Act and are
subject to the terms of this Subscription Agreement, and setting forth or
referring to the restrictions on the transferability and sale
thereof.
2.10 The
Subscriber understands that the Company and Kunming will review this
Subscription Agreement and the Investor Questionnaire and, if the Subscriber
is
a natural person, the Company and Kunming are hereby given authority by the
undersigned to call his or her bank or place of employment. The Subscriber
further authorizes the Company and Kunming to review the financial standing
of
the Subscriber; and the Subscriber agrees that the Company and Kunming reserve
the unrestricted right to reject or limit any subscription and to close the
offer at any time.
2.11 The
Subscriber hereby represents that the address of Subscriber furnished by him
at
the end of this Subscription Agreement and in the Investor Questionnaire is
the
undersigned's principal residence if he or she is an individual or its principal
business address if it is a corporation or other entity.
2.12 The
Subscriber acknowledges that if the Subscriber is a Registered Representative
of
a National Association of Securities Dealers, Inc. (“NASD”) member firm, he or
she must give such firm the notice required by the NASD Conduct Rules, or any
applicable successor rules of the NASD, receipt of which must be acknowledged
by
such firm on the signature page hereof. The Subscriber shall also notify the
Company if the Subscriber or any affiliate of Subscriber is a registered
broker-dealer with the SEC, in which case the Subscriber represents that the
Subscriber is purchasing the Shares in the ordinary course of business and,
at
the time of purchase of the Shares, has no agreements or understandings,
directly or indirectly, with any person to distribute the Shares or any portion
thereof.
2.13 The
Subscriber hereby represents that, except as set forth herein, no
representations or warranties have been made to the Subscriber by either the
Company or Kunming or their agents, employees or affiliates and in entering
into
this transaction, the Subscriber is not relying on any information, other than
that contained herein and the results of independent investigation by the
Subscriber.
2.14 The
Subscriber agrees that he or she will purchase securities in the Offering only
if his or her intent at such time is to make such purchase for investment
purposes and not with a view toward resale.
2.15 If
the
undersigned Subscriber is a partnership, corporation, trust or other entity,
such partnership, corporation, trust or other entity further represents and
warrants that: (i) it was not formed for the purpose of investing in the
Company; (ii) it is authorized and otherwise duly qualified to purchase and
hold
the Shares; and (iii) that this Subscription Agreement has been duly and validly
authorized, executed and delivered and constitutes the legal, binding and
enforceable obligation of the undersigned
.
2.16 If
the
Subscriber is not a United States person, such Subscriber hereby represents
that
it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Shares
or
any use of this Subscription Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Shares, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any governmental or
other consents that may need to be obtained, and (iv) the income tax and other
tax consequences, if any, that may be relevant to the purchase, holding,
redemption, sale or transfer of the Shares. Such Subscriber's subscription
and
payment for, and his or her continued beneficial ownership of the Shares, will
not violate any applicable securities or other laws of the Subscriber's
jurisdiction
.
2.17 The
undersigned hereby covenants and agrees that neither it nor any of its
affiliates has or will have an open position (e.g., short sale) in the Common
Stock prior to the Registration Statement (as defined below) being declared
effective by the SEC with the intent of covering such open position with Common
Stock being registered in the Registration Statement. The undersigned hereby
acknowledges and understands that the SEC has taken the position that such
an
open position would constitute a violation of Section 5 of the Act.
2.18 The
Subscriber understands and acknowledges that (i) the Shares are being
offered and sold to Subscriber without registration under the Act in a private
placement that is exempt from the registration provisions of the Act under
Section 4(2) of the Act and (ii) the availability of such exemption depends
in part on, and that the Company will rely upon the accuracy and truthfulness
of, the foregoing representations, and such Subscriber hereby consents to such
reliance.
3. Representations
by the Company
and
Kunming
Except as set forth in the reports filed by the Company pursuant to the
Securities Exchange Act of 1934, as amended (the “SEC Reports”), each of the
Company and, as applicable, Kunming severally represent and warrant to the
Subscriber that:
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3.1 Organization
and Authority.
The
Company and Kunming, and each of their respective subsidiaries, (i) is a
corporation and company, respectively, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and formation,
respectively, (ii) has all requisite corporate power and company power,
respectively, and authority to own, lease and operate its properties and to
carry on its business as presently conducted, and (iii) has all requisite
corporate power and company power, respectively, and authority to execute,
deliver and perform their obligations under this Subscription Agreement and
the
Offering Documents being executed and delivered by it in connection herewith,
and to consummate the transactions contemplated hereby and thereby.
3.2 Qualifications.
The
Company and Kunming, and each of their respective subsidiaries, is duly
qualified to do business as a foreign corporation and foreign company,
respectively, and is in good standing in all jurisdictions where such
qualification is necessary and where failure so to qualify could have a material
adverse effect on the business, properties, operations, condition (financial
or
other), results of operations or prospects of the Company and its subsidiaries
(after the effective time of the Share Exchange), taken as a whole.
3.3 Capitalization
of the Company.
Immediately after the effective time of the Share Exchange (but before the
closing of this Offering), the authorized capital stock the capitalization
of
the Company will consist of 100,000,000 shares of Common Stock, $0.001 par
value
per share and 10,000,000 shares of “blank check” Preferred Stock, par value
$0.001 per share. Of the authorized capital stock of the Company, immediately
after the effective time of the Share Exchange (taking into account the
cancellation of 2,040,000 shares of Common Stock but before the closing of
this
Offering), there will be outstanding 16,922,450 shares of Common Stock, no
warrants to purchase shares of Common Stock (excluding warrants to be issued
to
the Placement Agent further to the Offering, and no options to purchase shares
of Common Stock. Except as disclosed in the SEC Reports or the Offering
Memorandum, there are no additional outstanding options, warrants, script 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 from the Company, any
shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any subsidiary is or may become bound
to
issue additional shares of Common Stock, or securities or rights convertible
or
exchangeable into shares of Common Stock. The shares of the Company’s capital
stock outstanding immediately after the effective time of the Share Exchange
(but before the closing of the Offering) are or will be duly authorized and
validly issued and are or will be fully paid and nonassessable. None of the
outstanding shares of Common Stock or options, warrants, or rights or other
securities entitling the holders to acquire Common Stock has been issued in
violation of the preemptive rights of any security holder of the Company. No
holder of any of the Company’s securities has any rights, “demand,” “piggy-back”
or otherwise, to have such securities registered by reason of the intention
to
file, filing or effectiveness of the Registration Statement (as defined below),
except as contemplated by the Exchange Agreement. The Shares to be issued to
the
Subscriber have been duly authorized, and when issued and paid for in accordance
with this Subscription Agreement, the Common Stock will be duly and validly
issued, fully paid and non-assessable will be duly and validly issued, fully
paid and non-assessable.
3.4 Authorization.
This
Subscription Agreement, assuming due execution and delivery by the Subscriber,
when the Subscription Agreement is executed and delivered by the Company, will
be, valid and binding obligations of the Company, enforceable in accordance
with
their respective terms, except as the enforceability hereof and thereof may
be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors’ rights
generally and general principles of equity, regardless of whether enforcement
is
considered in a proceeding in equity or at law.
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3.5 Non-Contravention.
The
execution and delivery of the this Subscription Agreement by the Company and
Kunming, the issuance of the Shares as contemplated herein and in the Offering
Memorandum and the completion by the Company and Kunming of the other
transactions contemplated herein and in the Offering Memorandum do not and
will
not, with or without the giving of notice or the lapse of time, or both, (i)
result in any violation of any provision of the articles of incorporation or
by-laws or similar instruments of the Company or Kunming or their respective
subsidiaries, (ii) conflict with or result in a breach by the Company or Kunming
or their respective subsidiaries of any of the terms or provisions of, or
constitute a default under, or result in the modification of, or result in
the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or Kunming or their
respective subsidiaries, pursuant to any agreements, instruments or documents
filed as exhibits to the SEC Reports or any indenture, mortgage, deed of trust
or other agreement or instrument to which Kunming or any of its subsidiaries
is
a party or by which Kunming or any of its subsidiaries or any of its properties
or assets are bound or affected, in any such case which would have a material
adverse effect on the business, properties, operations, condition (financial
or
other), results of operations or prospects of the Company and Kunming and their
respective subsidiaries, taken as a whole, or the validity or enforceability
of,
or the ability of the Company or Kunming to perform their obligations under
this
Agreement or as described in the Offering Memorandum, the Offering Documents,
(iii) violate or contravene any applicable law, rule or regulation or any
applicable decree, judgment or order of any court, United States federal or
state regulatory body, administrative agency or other governmental body having
jurisdiction over Kunming or any of its subsidiaries or any of its respective
properties or assets that would have a material adverse effect on the business,
properties, operations, condition (financial or other), results of operations
or
prospects of the Company and its subsidiaries (after the effective time of
the
Share Exchange), taken as a whole, or the validity or enforceability of, or
the
ability of the Company or Kunming to perform its obligations under this
Agreement or as described in the Offering Memorandum or (iv) have any material
adverse effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company or its subsidiaries (after the
effective time of the Share Exchange) to own or lease and operate any of its
properties and to conduct any of its business or the ability of the Company
or
its subsidiaries to make use thereof.
3.6 Information
Provided.
The
Company hereby represents and warrants to the Subscriber that the information
to
be set forth in the Offering Memorandum and as set forth in the SEC Reports
and
any other document provided by the Company (or the Company’s authorized
representatives) to the Subscriber in connection with the transactions
contemplated by this Subscription Agreement, does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, it being understood that for purposes
of
this Section 3.6, any statement contained in such information shall be deemed
to
be modified or superseded for purposes of this Section 3.6 to the extent that
a
statement in any document included in such information which was prepared and
furnished to the Subscriber on a later date or filed with the SEC on a later
date modifies or replaces such statement, whether or not such later prepared
and
furnished or filed statement so states. Kunming hereby represents and warrants
to the Subscriber that the information to be set forth in the Offering
Memorandum and any other document provided by Kunming (or Kunming’s authorized
representatives) to the Subscriber in connection with the transactions
contemplated by this Subscription Agreement, does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading.
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3.7 Absence
of Certain Proceedings.
Except
as disclosed in the SEC Reports, neither the Company nor Kunming is aware of
any
action, suit, proceeding, inquiry or investigation before or by any court,
public board or body, or governmental agency pending or threatened against
or
affecting the Company or Kunming or any of their respective subsidiaries, in
any
such case wherein an unfavorable decision, ruling or finding would have a
material adverse effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company or
Kunming, or the transactions contemplated by the Offering Documents or which
could adversely affect the validity or enforceability of, or the authority
or
ability of the Company or Kunming to perform its obligations under this
Agreement or as described in the Offering Memorandum; and to the Company’s and
Kunming’s knowledge there is not pending or contemplated any, and there has been
no, investigation by the SEC involving the Company or Kunming or any of their
current or former directors or officers.
3.8 Compliance
with Law.
Neither
the Company nor Kunming nor any of their respective subsidiaries is in violation
of or has any liability under any statute, law, rule, regulation, ordinance,
decision or order of any governmental agency or body or any court, domestic
or
foreign, except where such violation or liability would not individually or
in
the aggregate have a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company and its subsidiaries (after the effective time of the Share
Exchange), taken as a whole; and to the knowledge of the Company and Kunming
there is no pending investigation that would reasonably be expected to lead
to
such a claim.
3.9 Tax
Matters.
The
Company and Kunming and each of their respective subsidiaries has filed all
federal, state and local income and franchise tax returns required to be filed
and has paid all taxes shown by such returns to be due, and no tax deficiency
has been determined adversely to the Company or Kunming or any of their
respective subsidiaries which has had (nor does the Company or Kunming or any
of
their respective subsidiaries have any knowledge of any tax deficiency which,
if
determined adversely to the Company or Kunming or any of their respective
subsidiaries, might have) a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations, or prospects
of the Company or any of its subsidiaries (after the effective time of the
Share
Exchange), taken as a whole.
4. Registration
Rights
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4.1 Registration
Requirement.
Subject
to the terms and limitations hereof, the Company shall file a registration
statement on Form SB-2 or other appropriate registration document under the
Act
(the “Registration Statement”) for resale of the Shares (the “Registrable
Securities”) and shall use its reasonable best efforts to maintain the
Registration Statement effective for a period of twenty-four (24) months at
the
Company’s expense (the “Effectiveness Period”). The Company shall file such
Registration Statement no later than thirty (30) days after the Closing Date
(the “Registration Filing Date”), and shall use reasonable best efforts to cause
such Registration Statement to become effective within one hundred and fifty
(150) days after the Closing Date, or one hundred eighty (180) days after the
Closing Date if the Registration Statement is subject to a full review by the
SEC. Subject to the conditions and limitations hereof, including the limitations
set forth in Section 4.2, the Company’s failure to satisfy the obligations
specified in the immediately preceding sentence shall require the Company to
make a cash payment, as liquidated damages, to the Subscriber of 0.0333% of
the
Purchase Price of the Shares sold to the Subscriber under this Subscription
Agreement for each business day of such failure. For the avoidance of doubt,
any
right to receive such cash payment shall be Subscriber’s sole and exclusive
remedy for the failure of the Company to satisfy the obligations under this
Section 4.1.
4.2 Limitation
to Registration Requirement.
Notwithstanding the foregoing, the Company shall not be obligated to effect
any
registration of the Registrable Securities or take any other action pursuant
to
this Section 4: (i) in any particular jurisdiction in which the Company would
be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Act, or
(ii) during any period in which the Company suspends the rights of a subscriber
after giving the Subscriber written notification of a Potential Material Event
(defined below) pursuant to Section 4.6 hereof.
4.3 Expenses
of Registration.
Except
as otherwise expressly set forth, the Company shall bear all expenses incurred
by the Company in compliance with the registration obligation of the Company,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company incurred in
connection with any registration, qualification or compliance pursuant to this
Subscription Agreement and all underwriting discounts, selling commissions
and
expense allowances applicable to the sale of any securities by the Company
for
its own account in any registration. All underwriting discounts, selling
commissions and expense allowances applicable to the sale by Subscriber of
Registrable Securities and all fees and disbursements of counsel for the
Subscriber shall be borne by the Subscriber.
4.4 Indemnification.
(a) To
the
extent permitted by law the Company will indemnify each Subscriber, each of
its
officers, directors, agents, employees and partners, and each person controlling
such Subscriber, with respect to each registration, qualification or compliance
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document prepared by the Company (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
the
Company of the Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and subject to the
provisions of Section 4.4(c) below, will reimburse each such Subscriber, each
of
its officers, directors, agents, employees and partners, and each person
controlling such Subscriber, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses as they are
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not
be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omissions) based upon written
information furnished to the Company by (or on behalf of) such Subscriber or
underwriter, or if the person asserting any such loss, claim, damage or
liability (or action or proceeding in respect thereof did not receive a copy
of
an amended preliminary prospectus or the final prospectus (or the final
prospectus as amended and supplemented) at or before the written confirmation
of
the sale of such Registrable Securities to such person because of the failure
of
the Subscriber or underwriter to so provide such amended preliminary or final
prospectus (or the final prospectus as amended and supplemented); provided,
however, that the indemnity agreement contained in this subsection shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or action
to
the extent that it arises out of or is based upon a violation which occurs
in
reliance upon and in conformity with written information furnished expressly
for
use in connection with such registration by the Subscriber, any such partner,
officer, director, employee, agent or controlling person of such Subscriber,
or
any such underwriter or any person who controls any such underwriter; provided,
however, that the obligations of the Company hereunder shall be limited to
an
amount equal to the portion of net proceeds represented by the Registrable
Securities pursuant to this Subscription Agreement.
8
(b) To
the
extent permitted by law, each Subscriber whose Registrable Securities are
included in any registration, qualification or compliance effected pursuant
to
this Subscription Agreement will indemnify the Company, and its directors,
officers, agents, employees and each underwriter, if any, of the Company’s
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of the Act and the rules
and
regulations thereunder, each other such Subscriber and each of their officers,
directors, partners, agents and employees, and each person controlling such
Subscriber, and their respective counsel against all claims, losses, damages
and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material
fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Subscribers, directors,
officers, partners, persons, underwriters or control persons for any legal
or
any other expenses as they are reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in
each case to the extent, but only to the extent, that such untrue statement
(or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Subscriber; provided,
however,
that
the obligations of any Subscriber hereunder shall be limited to an amount equal
to the net proceeds to such Subscriber from Registrable Securities sold under
such registration statement, prospectus, offering circular or other document
as
contemplated herein; provided, further, that the indemnity agreement contained
in this subsection shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Subscriber, which consent shall not be unreasonably withheld
or delayed.
(a) Each
party entitled to indemnification under this Section (the “Indemnified Party”)
shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who
shall
conduct the defense of such claim or any litigation resulting therefrom, shall
be approved by the Indemnified Party (whose approval shall not unreasonably
be
withheld), and the Indemnified Party may participate in such defense at such
party’s expense; and provided further that if any Indemnified Party reasonably
concludes that there may be one or more legal defenses available to it that
are
not available to the Indemnifying Party, or that such claim or litigation
involves or could have an effect on matters beyond the scope of this Agreement,
then the Indemnified Party may retain its own counsel at the expense of the
Indemnifying Party; and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party
of its obligations under this Agreement unless and only to the extent that
such
failure to give notice results in material prejudice to the Indemnifying Party.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and
as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
9
(b) If
the
indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any
loss,
liability, claim, damage or expense referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one
hand and of the Indemnified Party on the other in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or expense
as
well as any other relevant equitable considerations. The relative fault of
the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties’
relative intent, knowledge, access to information and opportunity to correct
or
prevent such statement or omission.
4.5 Transfer
or Assignment of Registration Rights.
The
Registrable Securities, and any related benefits to the Subscriber hereunder
may
be transferred or assigned by the Subscriber to a permitted transferee or
assignee, provided that the Company is given written notice of such transfer
or
assignment, stating the name and address of said transferee or assignee and
identifying the Registrable Securities with respect to which such registration
rights are being transferred or assigned; provided further that the transferee
or assignee of such Registrable Securities shall be deemed to have assumed
the
obligations of the Subscriber under this Subscription Agreement by the
acceptance of such assignment and shall, upon request from the Company, evidence
such assumption by delivery to the Company of a written agreement assuming
such
obligations of the Subscriber.
4.6 Registration
Procedures.
In the
case of the registration effected by the Company pursuant to this Subscription
Agreement, the Company will keep the Subscriber advised in writing as to the
initiation of each registration and as to the completion thereof. The Company
will:
(a) Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Act with respect to
the
disposition of securities covered by such registration statement;
(b) Respond
as promptly as reasonably practicable to any comments received from the SEC
with
respect to a registration statement or any amendment thereto.
(c) Notify
the Subscriber as promptly as reasonably practicable and (if requested by any
such person) confirm such notice in writing no later than one trading day
following the day (A) when a prospectus or any prospectus supplement or
post-effective amendment to a registration statement is proposed to be filed
and
(B) with respect to a registration statement or any post-effective amendment,
when the same has become effective;
(d) Furnish
such number of prospectuses and other documents incident thereto, including
supplements and amendments, as the Subscriber may reasonably request;
(e) Furnish
to the Subscriber, upon request, a copy of all documents filed with and all
correspondence from or to the SEC in connection with any such registration
statement other than non-substantive cover letters and the like;
(f) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a registration
statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; and
(g) Use
its
reasonable best efforts to comply with all applicable rules and regulations
of
the SEC.
Notwithstanding
the foregoing, if at any time or from time to time after the date hereof, the
Company notifies the Subscriber in writing of the existence of an event or
circumstance that is not disclosed in the Registration Statement and that may
have a material effect on the Company or its business (a “Potential Material
Event”), the Subscriber shall not offer or sell any Registrable Securities, or
engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until the Company notifies the Subscriber that such Potential
Material Event either has been added to the Registration Statement by amendment
or supplement or no longer constitutes a Potential Material Event; provided,
that
the Company may not so suspend the right of Subscriber for more than 120 days
in
the aggregate.
10
4.7 Statement
of Beneficial Ownership.
The
Company may require the Subscriber to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Subscriber and the controlling person thereof and any other such information
regarding the Subscriber, the Registrable Securities held by the Subscriber
and
the intended method of disposition of such securities as shall be reasonably
required with respect to the registration of the Subscriber’s Registrable
Securities. The Subscriber hereby understands and agrees that the Company may,
in its sole discretion, exclude the Subscriber’s shares of Common Stock from the
Registration Statement in the event that the Subscriber fails to provide such
information requested by the Company within the time period reasonably specified
by the Company or is required to do so by law or the SEC.
4.8 Compliance.
Subscriber covenants and agrees that such Subscriber will comply with the
prospectus delivery requirements of the Act as applicable to such Subscriber
in
connection with sales of Registrable Securities pursuant to the registration
statement required hereunder.
4.9 Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective registration
statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a registration statement relating
to
an offering for its own account or the account of others under the Act of any
of
its Common Stock, other than an offering of securities issued pursuant to a
Strategic Issuance (as defined below) and other than a Form S-4 or Form S-8
registration statement (each as promulgated under the Act or their then
equivalents relating to equity securities to be issued solely in connection
with
any business combination transaction, acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans), then the Company shall send to the Subscriber (together with
any
other holders of its Common Stock possessing “piggyback registration rights”
comparable to those granted to the Subscriber hereunder (“Rightsholders”))
written notice of such determination and, if within fifteen (15) days after
receipt of such notice, the Subscriber shall so request in writing, the Company
shall include in such registration statement all or any part of such Registrable
Securities such Subscriber requests to be registered; provided that the Company
shall not be required to register any Registrable Securities pursuant to this
Section that are eligible for resale pursuant to Rule 144(k) promulgated under
the Act; and provided further that the Company may, without the consent of
the
Subscriber, withdraw such registration statement before its becoming effective
if the Company or other stockholders have elected to abandon the proposal to
register the securities proposed to be registered thereunder. If the
registration statement is being filed for an underwritten public offering,
the
Subscriber must timely execute and deliver the usual and customary agreement
among the Company, such Subscriber and the underwriters relating to the
registration. If the registration statement is being filed for an underwritten
offer and sale by the Company of securities for its own account and the managing
underwriters advise the Company in writing that in their opinion the offering
contemplated by the registration statement cannot be successfully completed
if
the Company were to also register the Registrable Shares of the Subscriber
requested to be included in such registration statement, then the Company will
include in the registration: (i) first, any securities the Company proposes
to
sell, (ii) second, any securities of any person whose securities are being
registered as a result of the exercise of a demand registration right, and
(iii)
third, that portion of the aggregate number of shares being requested for
inclusion in the registration statement by (X) the Subscriber and (Y) all other
Rightsholders, which in the opinion of such managing underwriters can
successfully be sold, such number of shares to be taken pro
rata
from the
Rightsholders on the basis of the total number of shares being requested for
inclusion in the registration statement by each Rightsholder. “Strategic
Issuance” shall mean an issuance of securities: (i) in connection with a
“corporate partnering” transaction or a “strategic alliance” (as determined by
the Board of Directors of the Company in good faith); (ii) in connection with
any financing transaction in respect of which the Company is a borrower; or
(iii) to a vendor, lessor, lender, or customer of the Company, or a research,
manufacturing or other commercial collaborator of the Company, in a transaction
approved by the Board of Directors, provided in any case, that such issuance
is
not being made primarily for the purpose of avoiding compliance with this
Subscription Agreement.
11
5. Miscellaneous
5.1 Any
notice or other communication given hereunder shall be deemed sufficient if
in
writing and sent by registered or certified mail, return receipt requested,
addressed to the Company, at No. 2, Jing You Road, Kungming National Economy
& Technology Developing District, P.R.C., Attention: Mr. Lan Gui Hua
with
a copy to
(which
shall not constitute notice) ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP,
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., and to the Subscriber at his or her address
indicated on the signature page of this Subscription Agreement. Notices shall
be
deemed to have been given three (3) business days after the date of mailing,
except notices of change of address, which shall be deemed to have been given
when received.
5.2 This
Subscription Agreement may be amended through a written instrument signed by
the
Subscriber, Kunming and the Company; provided, however, that the terms of
Section 4 of this Subscription Agreement may be amended without the consent
or
approval of the Subscriber so long as such amendment applies in the same fashion
to the subscription agreements of all of the other subscribers for Shares in
the
Offering and at least holders of a majority of the Shares sold in the Offering
have given their approval of such amendment, which approval shall be binding
on
all holders of Shares.
5.3 This
Subscription Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Subscription Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges
and
supersedes all prior discussions, agreements and understandings of any and
every
nature among them.
5.4 Notwithstanding
the place where this Subscription Agreement may be executed by any of the
parties hereto, the parties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and governed by the laws of the
State of Delaware.
5.5 This
Subscription Agreement may be executed in counterparts. It shall not be binding
upon the Company and Kunming unless and until it is accepted by the Company
and
Kunming. Upon the execution and delivery of this Subscription Agreement by
the
Subscriber, this Subscription Agreement shall become a binding obligation of
the
Subscriber with respect to the purchase of Shares as herein provided; subject,
however, to the right hereby reserved to the Company to enter into the same
agreements with other subscribers and to add and/or to delete other persons
as
subscribers. This Agreement may be executed and delivered by
facsimile.
12
5.6 The
holding of any provision of this Subscription Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Subscription Agreement, which shall remain in full force
and
effect.
5.7 It
is
agreed that a waiver by either party of a breach of any provision of this
Subscription Agreement shall not operate, or be construed, as a waiver of any
subsequent breach by that same party.
5.8 The
parties agree to execute and deliver all such further documents, agreements
and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Subscription
Agreement.
5.9 The
Company agrees not to disclose the names, addresses or any other information
about the Subscribers, except as required by law, provided that the Company
may
provide information relating to the Subscriber as required in any registration
statement under the Act that may be filed by the Company pursuant to the
requirements of this Subscription Agreement.
5.10 The
obligation of the Subscriber hereunder is several and not joint with the
obligations of any other subscribers for the purchase of Shares in the Offering
(the “Other Subscribers”), and the Subscriber shall not be responsible in any
way for the performance of the obligations of any Other Subscribers. Nothing
contained herein or in any other agreement or document delivered at the Closing,
and no action taken by the Subscriber pursuant hereto, shall be deemed to
constitute the Subscriber and the Other Subscribers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Subscriber and the Other Subscribers are in any way acting
in concert with respect to such obligations or the transactions contemplated
by
this Subscription Agreement. The Subscriber shall be entitled to protect and
enforce the Subscriber’s rights, including without limitation the rights arising
out of this Subscription Agreement, and it shall not be necessary for any Other
Subscriber to be joined as an additional party in any proceeding for such
purpose. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. The Subscriber is not acting
as
part of a “group” (as that term is used in Section 13(d) of the ▇▇▇▇ ▇▇▇) in
negotiating and entering into this Subscription Agreement or purchasing the
Shares or acquiring, disposing of or voting any of the underlying shares of
Common Stock. The Company hereby confirms that it understands and agrees that
the Subscriber is not acting as part of any such group.
[SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF, the parties have executed this Subscription Agreement as of
the
day and year first written above.
|
Full Legal Name of Subscriber (Please print) |
Full Legal Name of Co-Subscriber (if applicable) |
||
|
Signature of (or on behalf of) Subscriber Name:
Title:
|
Signature of or on behalf of Co-Subscriber (if applicable) |
||
|
Address of Subscriber |
Address of Co-Subscriber (if applicable) |
||
|
Social Security or Taxpayer |
Social Security or Taxpayer Identification |
||
| Identification Number of Subscriber | Number of Co-Subscriber (if applicable) | ||
|
Number of Shares Subscribed For |
|||
| Subscription Agreed to and Accepted | |||
| SRKP 8, INC. |
KUNMING SHENGHUO PHARMACEUTICAL
(GROUP) CO., LTD.
|
||
| By:_________________________________ | By:__________________________________ | ||
| Name:_______________________________ | Name:________________________________ | ||
| Title:________________________________ | Title:_________________________________ |
14