STOCK PURCHASE AGREEMENT
STOCK
PURCHASE AGREEMENT (this “Agreement”),
dated
as of July 13, 2007, by and between (i) Southridge Technology Group, Inc.,
a
Delaware corporation (“Pubco”)
that
will acquire all of the issued and outstanding capital stock of RxElite Holdings
Inc., a Delaware corporation (“RxElite”),
and
succeed to the business of RxElite as its sole line of business (on a combined,
post-acquisition basis, Pubco and its subsidiary, RxElite, are collectively
referred to as “Seller”)
and
(ii) International Capital Advisory Inc. (the “Buyer”).
WITNESSETH:
WHEREAS,
Seller desires to sell to the Buyer warrants to purchase shares of Seller’s
common stock (the “Securities”)
in
consideration of certain consulting services provided by the Buyer; and
WHEREAS,
Seller has agreed to effect the registration of the shares of Common Stock
of
Seller underlying the Warrants (the “Underlying
Shares”)
subject to and on the terms and conditions set forth in an amended and restated
registration rights agreement substantially in the form of Exhibit
B
hereto
(the “Registration
Rights Agreement”
and
together with this Agreement and the Warrants, the “Transaction
Documents”).
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties agree as
follows:
1. Sale
and Purchase of the Warrants.
1.1 Sale
and Purchase.
Subject
to the terms and conditions of this Agreement, at the Closing (as defined in
Section 2 hereof), Seller shall issue to the Buyer, and the Buyer shall purchase
from Seller, the Warrants listed on Exhibit
A
hereto
in consideration for certain consulting services provided by the Buyer (the
“Consideration”).
1.2 Consideration
and Payment.
(a) The
Warrants to purchase shares of Pubco’s Common Stock (“Common
Stock”)
shall
be exercisable for two years following the date Pubco amends its certificate
of
incorporation in order to, among other things, increase its authorized capital
to allow for full exercise of all Warrants, at an exercise price US$6.62 or
US$9.38 per share, as indicated on Exhibit
A
and
shall be in the form of Exhibit
C
hereto.
(b) Delivery
of Agreement.
Upon
the execution of this Agreement, the Consideration for the Securities shall
be
deemed delivered by the Buyer upon execution, delivery and performance of the
relevant provisions of the Consulting Agreement attached as Exhibit
D
hereto.
2. Closing.
The
closing of the sale and purchase of the Securities hereunder (the “Closing”)
shall
be deemed to take place at the offices of Seller, at 4:00 p.m., local time,
on
the date hereof or at such later time or date as the Buyer and Seller may
mutually agree in writing. The date upon which the Closing shall occur is herein
called the “Closing
Date”.
3. Representations
and Warranties of Buyer.
The
Buyer hereby represents and warrants to Seller as follows:
3.1 Due
Existence; Authority.
If the
Buyer is a company, it is a duly organized legal entity, validly existing and
in
good standing under the laws of the state of its organization and has the
requisite company power and authority to execute and deliver this Agreement
and
to perform its obligations hereunder. If the Buyer is a partnership, syndicate
or other form of unincorporated organization, the Buyer has the necessary legal
capacity and authority to execute and deliver this Agreement and to observe
and
perform its covenants and obligations hereunder and has obtained all necessary
approvals in respect thereof. If the Buyer is a natural person, the Buyer has
obtained the age of majority and has the legal capacity and competence to
execute this Agreement and to take all actions required pursuant
thereto.
3.2 Enforceability.
This
Agreement has been duly executed and delivered by Buyer and is the valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws generally affecting
the enforcement of creditors' rights, specific performance, injunctive or other
equitable remedies.
3.3 Investment
Representations.
The
Buyer is acquiring the Securities, and any capital stock issuable upon exercise
of the Securities, for the Buyer’s own account, for investment and not with a
view to, or for sale in connection with, any distribution of such securities
or
any part thereof. The Buyer (i) has such knowledge and experience in financial
and business affairs that it is capable of evaluating the merits and risks
involved in purchasing the Securities, (ii) is able to bear the economic risks
(including, a complete loss) involved in purchasing the Securities and has
the
adequate means of providing for its current needs and contingencies, (iii)
has
had the opportunity to ask questions of, and receive answers from, Seller and
persons acting on Seller’s behalf concerning Seller’s business, management, and
financial affairs and the terms and conditions of the Securities. The Buyer’s
jurisdiction of residence is set forth on the signature page hereto.
3.4 1933
SEC Act.
The
Buyer acknowledges that (i) it has received and had the opportunity to review
the draft of a Current Report on Form 8-K containing such information about
RxElite as would be required to be disclosed in a Registration Statement on
Form
10-SB and accompanying Capitalization Table (the “Jumbo
8-K”),
attached as Exhibit
E,
with
respect to the pending acquisition of RxElite by Pubco describing Seller’s
business and operations following such acquisition, and (ii) it has reviewed
the
Jumbo 8-K, including, without limitation, the description of business and risk
factors with respect to Seller and this offering set forth in the Jumbo 8-K.
The
Buyer acknowledges that all documents, records and books pertaining to this
investment have been made available for inspection by the Buyer, the Buyer’s
attorney and/or the Buyer’s accountant as set forth in Rule 502 of Regulation D
under the Act and that all records and books of RxElite were available during
reasonable business hours at RxElite’s principal place of business. The Buyer
and/or its adviser(s) have had a reasonable opportunity to ask questions of
and
receive answers from RxElite, or a person or persons acting on its behalf,
concerning the terms and conditions of the offering of the Securities, and
to
obtain additional information, to the extent possessed or obtainable without
unreasonable effort or expense. All such questions have been answered to the
full satisfaction of the Buyer.
3.5 Accredited
Investor; Residence.
The
Buyer is an “accredited investor” as such term is defined in Rule 501 of
Regulation D under the Act. The jurisdiction referred to under “Address” in the
signature page attached hereto is the Buyer’s residence or place of business and
is not created or used solely for the purpose of acquiring the Securities and
the Buyer is not purchasing the Securities for the account or benefit of any
person in any jurisdiction other than such jurisdiction;
3.6 THE
BUYER RECOGNIZES THAT AN INVESTMENT IN SELLER IS SPECULATIVE AND INVOLVES A
HIGH
DEGREE OF RISK, AND THAT PURCHASERS OF SECURITIES COULD LOSE THEIR ENTIRE
INVESTMENT.
3.7 Certain
Securities Matters.
In
reliance upon the Buyer’s representations and warranties in this Agreement
(including Appendix
A
to this
Agreement), neither the offering nor the sale of the Securities has been
registered under the Act or any state securities laws or regulations. The Buyer
was not offered or sold the Securities, directly or indirectly, by means of
any
form of general solicitation or general advertising, including the following:
(i) any advertisement, article, notice, or other communication published in
any
newspaper, magazine, or similar medium or broadcast over television or radio;
or
(ii) to the knowledge of the Buyer, any seminar or meeting whose attendees
had
been invited by any general advertising. There is no public market for the
Securities and Seller is under no obligation to register the Securities on
the
Buyer’s behalf or to assist the Buyer in complying with any exemption from
registration (other than as set forth in the Registration Rights Agreement).
The
Buyer has not received or been provided with a prospectus, offering memorandum
or sales or advertising literature and the Buyer’s decision to purchase the
Securities was not based upon and the Buyer has not relied upon any verbal
or
written representations as to fact made by Seller or any other person (other
than those representations and warranties set forth in Article 3 of this
Agreement) but that the Buyer’s decision was based upon the information about
Seller that is publicly available.
3.8 Liquidity.
The
Buyer must hold the Securities indefinitely unless the sale or transfer thereof
is subsequently registered under the Act or an exemption from such registration
is available. The Buyer may not subsequently sell, assign, pledge, or otherwise
transfer the Securities except: (i) pursuant to an effective registration
statement registering the securities under the Act and/or applicable state
securities laws, or (ii) pursuant to the opinion of counsel, which is
satisfactory to Seller, that such registration under the Act and/or such state
securities laws is not required to effect such subsequent sale, assignment,
pledge, or other transfer.
3.9 Legend.
The
following legend referring to the foregoing restrictions will be set forth
on
certificates representing the Securities, as set forth below:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.
3.10 Certain
Prohibited Persons.
The
Buyer is not a person or entity (a “Person”)
with
whom a United States citizen, entity organized under the laws of the United
States or its territories or entity having its principal place of business
within the United States or any of its territories (collectively, a
“U.S.
Person”)
is
prohibited from transacting business of the type contemplated by this Agreement,
whether such prohibition arises under United States law, regulation, executive
orders and lists published by the Office of Foreign Assets Control, Department
of the Treasury (“OFAC”)
(including those executive orders and lists published by OFAC with respect
to
Persons that have been designated by executive order or by the sanction
regulations of OFAC as Persons with whom U.S. Persons may not transact business
or must limit their interactions to types approved by OFAC (“Specially
Designated Nationals and Blocked Persons”)
or
otherwise. Neither the Buyer nor any Person who owns an interest in the Buyer
(collectively, a “Purchaser
Party”)
is a
Person with whom a U.S. Person, including a United States Financial Institution
as defined in 31 U.S.C. Section 5312, as amended (“Financial
Institution”),
is
prohibited from transacting business of the type contemplated by this Agreement,
whether such prohibition arises under United States law, regulation, executive
orders and lists published by the OFAC (including those executive orders and
lists published by OFAC with respect to Specially Designated Nationals and
Blocked Persons) or otherwise.
3.11 Certain
Legislation.
To the
best of the Buyer’s knowledge, neither the Buyer nor any Purchaser Party, nor
any Person providing funds to the Buyer: (i) is under investigation by any
governmental authority for, or has been charged with, or convicted of, money
laundering, drug trafficking, terrorist related activities, any crimes which
in
the United States would be predicate crimes to money laundering, or any
violation of any Anti-Money Laundering Laws (as hereinafter defined); (ii)
has
been assessed civil or criminal penalties under any Anti-Money Laundering Laws;
or (iii) has had any of its funds seized or forfeited in any action under any
Anti-Money Laundering Laws. For purposes of this Section,
the
term “Anti-Money
Laundering Laws”
shall
mean laws, regulations and sanctions, state and federal, criminal and civil,
that: (i) limit the use of and/or seek the forfeiture of proceeds from illegal
transactions; (ii) limit commercial transactions with designated countries
or
individuals believed to be terrorists, narcotics dealers or otherwise engaged
in
activities contrary to the interests of the United States; (iii) require
identification and documentation of the parties with whom a Financial
Institution conducts business; or (iv) are designed to disrupt the flow of
funds
to terrorist organizations. Such laws, regulations and sanctions shall be deemed
to include the USA Patriot Act of 2001, Pub. L. No. 107-56 (the “Patriot
Act”),
the
Bank Secrecy Act, 31 U.S.C. Section 5311 et. seq. (the “Bank
Secrecy Act”),
the
Trading with the Enemy Act, 50 U.S.C. Appendix, the International Emergency
Economic Powers Act, 50 U.S.C. Section 1701 et. seq., and the sanction
regulations promulgated pursuant thereto by the OFAC, as well as laws relating
to prevention and detection of money laundering in 18 U.S.C. Sections 1956
and
1957.
3.12 Bank
Act.
The
Buyer is in compliance with any and all applicable provisions of the Patriot
Act
including, without limitation, amendments to the Bank Secrecy Act. If the Buyer
is a Financial Institution, it has established and is in compliance with all
procedures required by the Buyer and the Bank Secrecy Act.
3.13 Appendix.
The
Buyer has accurately and truthfully completed Appendix
A
attached
hereto.
3.14 Covenants
of Purchasers Not to Short Stock.
The
Buyer, on behalf of itself and its affiliates, hereby covenants and agree not
to, directly or indirectly, offer to “short sell”, contract to “short sell” or
otherwise “short sell” the securities of Seller, including, without limitation,
the Securities.
3.15 Restrictions
in The People’s Republic of China.
This
Agreement and any offering materials may not be circulated or distributed in
The
People’s Republic of China (“PRC”)
and
the securities may not be offered or sold directly or indirectly to any resident
of the PRC, or offered or sold to any person for re-offering or re-sale directly
or indirectly to any resident of the PRC except pursuant to the applicable
laws
and regulations of the PRC.
4. Further
Assurances.
Each of
the parties shall, prior to or at the Closing, as may be appropriate, execute
such documents and other papers and take such other further actions as may
be
reasonably required to carry out the provisions hereof and effectuate the
transactions contemplated hereby. Each party shall use its commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions to
its
obligation to effect the Closing, including promptly obtaining any consents
required in connection herewith.
5. Conditions
Precedent to the Obligation of Buyer to Close.
The
obligation of the Buyer to complete the Closing, and the right for Seller to
accept any purchase of Securities hereunder, is subject to the fulfillment
on or
prior to the Closing Date of all of the following conditions, any one or more
of
which may be waived by the holders of a majority of the Securities sold
hereunder, collectively, in writing:
5.1 Registration
Rights Agreement.
Seller
shall have duly executed and delivered to the Buyer the Registration Rights
Agreement.
5.2 Jumbo
8-K.
RxElite
shall have provided the Buyer with a substantially completed Jumbo
8-K.
5.3 Pubco
Merger.
Pubco
shall have consummated its acquisition of RxElite’s issued and outstanding
capital stock and Pubco shall have succeeded to RxElite’s business as its sole
line of business.
6. Conditions
Precedent to the Obligation of Seller to Close.
The
obligation of Seller to complete the Closing is subject to the fulfillment
on or
prior to the Closing Date of all of the following conditions, any one or more
of
which may be waived by Seller in writing:
6.1 Agreements
and Conditions.
On or
before the Closing Date, the Buyer shall have complied with and performed and
satisfied in all material respects all agreements and conditions to be complied
with and performed by such date pursuant to this Agreement.
6.2 Execution
and Delivery of Agreement.
The
Buyer shall have executed and delivered to Seller the Consulting Agreement
attached as Exhibit
D.
6.3 Appendix.
The
Buyer shall have completed and delivered to Seller Appendix A
to this
Agreement, which shall be acceptable to Seller, in Seller’s
discretion.
6.4 Registration
Rights Agreement.
The
Buyer shall have duly executed and delivered to Seller the Registration Rights
Agreement.
6.5 Jumbo
8-K.
RxElite
shall have provided the Buyer with the Jumbo 8-K.
6.6 Pubco
Merger.
Pubco
shall have consummated its acquisition of RxElite’s issued and outstanding
capital stock and Pubco shall have succeeded to RxElite’s business as its sole
line of business.
7. Miscellaneous.
7.1 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered by hand or by facsimile transmission,
when telexed, or upon receipt when mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) If
to
Seller:
RxElite
Holdings Inc.
0000
X.
Xxxx Xx., Xxx. 000
Xxxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxx, CEO
Facsimile:
(000) 000-0000
With
a
copy (which copy shall not constitute notice) to:
Xxxxxxxx
Xxxxxxxx
00000
Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxx xx Xxxxx
Facsimile:
(000) 000-0000
(ii) If
to the
Buyer: to the address listed on the signature page hereto.
7.2 Entire
Agreement; Exercise of Rights.
(a) This
Agreement (including the Appendices and Exhibits hereto) embodies the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof. No amendment or waiver of any provision of this Agreement, or
consent to the departure by any party from any such provision, shall be
effective unless it is in writing and signed by Seller and the holders of a
majority of the Securities sold hereunder. Any such waiver or consent shall
be
effective only in the specific instance and for the specific purpose for which
given.
(b) No
failure on the part of a party to exercise, and no delay in exercising, any
right under this Agreement, or any agreement contemplated hereby, shall operate
as a waiver hereof by such party, nor shall any single or partial exercise
of
any right under this Agreement, or any agreement contemplated hereby, preclude
any other or further exercise thereof or the exercise of any other right.
7.3 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the County of New York, State of New York. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the County of New York, State of New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect
to
the enforcement of this Agreement), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court. Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by delivering a copy thereof
via overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right
to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed
by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
7.4 Expenses.
Seller
and the Buyer shall, bear their respective expenses incurred in connection
with
the negotiation, preparation, execution and performance of this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel, brokers
or finders, and accountants.
7.5 Acknowledgment;
Waiver of Conflicts.
The
Buyer
acknowledges that: (a) it has read this Agreement; (b) it has been represented
in the preparation, negotiation and execution of this Agreement by legal counsel
of its own choice or has voluntarily declined to seek such counsel; and (c)
it
understands the terms and consequences of this Agreement and is fully aware
of
the legal and binding effect of this Agreement. The Buyer understands that
RxElite has been represented in the preparation, negotiation and execution
of
this Agreement by Xxxxxxxx & Xxxxxxxx LLP, counsel to RxElite, and that
Xxxxxxxx & Xxxxxxxx LLP has not represented any Buyer or any stockholder,
director or employee of Seller or any Investor in the preparation, negotiation
and execution of this Agreement. Each of the Buyer and Seller acknowledges
that
Xxxxxxxx & Xxxxxxxx LLP has in the past represented and is now or may in the
future represent the Buyer or its affiliates in matters unrelated to the
transactions contemplated by this Agreement, including the representation of
the
Buyer or its affiliates in matters of a nature similar to those contemplated
by
this Agreement. Each of the Buyer and Seller hereby acknowledges that it has
had
an opportunity to ask for and has obtained information relevant to such
representation, including disclosure of the reasonably foreseeable adverse
consequences of such representation, and hereby waives any conflict arising
out
of such representation with respect to the matters contemplated by this
Agreement.
7.6 Stock
Dividend.
As soon
as practicable following the Closing, Pubco shall declare a stock dividend
of
10.036789 shares for each outstanding share of Common Stock (the “Dividend”),
such
that following consummation of the Dividend, the adjusted exercise price of
each
Warrant shall be $0.60 or $0.85 per share, as indicated on Exhibit
A,
and the
adjusted number of shares of Common Stock issuable pursuant to the Warrants
shall be 2,500,000 and 1,250,000 as indicated on Exhibit
A.
7.7 Limitations
on Registration Rights.
Notwithstanding any other provision of Section 2 of the Registration Rights
Agreement, if Seller determines that it is desirable in order to comply with
the
requirements of the Securities and Exchange Commission that the number of
securities to be registered in a registration statement filed pursuant to the
Registration Rights Agreement be reduced, the Buyer hereby acknowledges and
agrees that the Registrable Securities (as that term is defined in the
Registration Rights Agreement) held by the Buyer that would otherwise be
registered pursuant to the Registration Rights Agreement shall not be included
on a registration statement until the Holders (as that term is defined in the
Registration Rights Agreement) of Registrable Securities sold in consideration
for (i) cash, or (ii) the conversion of certain Convertible Debentures
originally issued in 2006 have been included in a registration statement filed
pursuant to the Registration Rights Agreement.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
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Seller:
By:
/s/ Xxxxxx Xxxx
Name:
Xxxxxx Xxxx
Title:
Chief Executive Officer
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|
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Buyer:
International Capital Advisory, Inc.
By:
/s/ Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Vice President
Address
____________________________
_________________________
Facsimile:
___________________________
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APPENDIX
A
THIS
APPENDIX MUST BE COMPLETED BY THE BUYER THAT IS RESIDENT IN THE UNITED STATES
OF
AMERICA
NAME
OF BUYER:
_____________________
I. PLEASE
INITIAL THE SPACE AFTER THE DEFINITION OF “ACCREDITED INVESTOR” THAT APPLIES TO
YOU. (ONLY ONE SPACE NEEDS TO BE INITIALED.)
(i) Any
natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his purchase exceeds $1,000,000. __________
(For
purposes of calculating an investor’s net worth, “net worth” is defined as the
difference between total assets and total liabilities, including home, home
furnishings, and personal automobiles.)
(ii) Any
natural person who had an individual income in excess of $200,000 in each of
the
two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year. __________
(iii) Any
entity in which all of the equity owners are accredited investors.
__________
II. Please
indicate the form of ownership desired for the Securities:
_______
Individual (one signature required)
_______
Joint Tenants with right of survivorship (both parties must sign)
_______
Tenants by the Entirety (both parties must sign)
_______
Tenants in Common (all parties must sign)
_______
Limited Liability Company (signature of authorized party or parties
required)
III.
_____________________________________________________________________________
Please
PRINT here the exact name Buyer desires for registration of the
Securities.
EXHIBIT
A
|
#
Shares of Common Stock Underlying Warrant Pre-Dividend
|
|
Exercise
Price Pre-Dividend
|
|
#
Shares of Common Stock Underlying Warrant Post-Dividend
|
|
Exercise
Price Post-Dividend
|
|
226,515
|
$6.26
|
2,500,000
|
$0.60
|
|||
|
113,257
|
$9.38
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1,250,000
|
$0.85
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EXHIBIT
B
REGISTRATION
RIGHTS AGREEMENT
EXHIBIT
C
FORM
OF
WARRANT
EXHIBIT
D
CONSULTING
AGREEMENT
AMENDED
AND RESTATED
ADVISORY
CONSULTING AGREEMENT
Dated
as of July 13, 2007
This
Amended and Restated Advisory Consulting Agreement (this “Agreement”)
amends
and restates the prior Advisory Consulting Agreement, dated as of September
18,
2006, by and between in its entirety RxElite (“RxElite”
or
the
“Company”)
and
International Capital Advisory Inc. (“ICA”).
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1.
|
Scope
of Agreement:
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During
the term hereof, ICA will undertake certain Advisory Services on behalf of
the
Company, including:
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(a)
|
Structuring
and negotiating a potential merger and acquisition transaction involving
the Company and a target public entity to be identified by ICA, in
which
the Company would be merged with and into the public entity (the
“Merger
Transaction”),
with the surviving entity to continue the business of the Company.
Any
Merger Transaction shall be subject to the Company’s approval (at the
Company’s sole discretion).
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(b)
|
Advising
in connection with the placement of equity financing of up to $15
million
US for the Company, with the express purpose of going public (the
“Equity
Funding”).
Any financing shall be subject to the Company’s approval (at the Company’s
sole discretion).
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(c)
|
ICA
shall aid RxElite in developing a capital market strategy and introduce
RxElite to investment dealers, analysts, corporate finance
representatives, institutional investors and retail brokers throughout
North America, when appropriate. ICA shall work with the Company’s US
Investor Relations firm and RxElite’s internal investor relations
department on a regular basis to develop a long-term North American
program to enhance RxElite’s presence in the capital markets. This will
include setting up road shows and dealer presentations throughout
North
America and Europe.
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(d)
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ICA
shall aid RxElite in identifying potential acquisition targets in
Canada,
the US and Europe. As part of a potential M&A transaction, ICA may
introduce RxElite to parties who can facilitate a possible M&A
financing. ICA will be required to seek RxElite’s approval before
approaching any companies or financing sources, and any companies
agreed
upon must be listed in Attachment A.
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(e)
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ICA
shall aid RxElite in sourcing, negotiating and/or facilitating possible
joint-ventures with pharmaceutical companies and medical device companies
to enhance its distribution capabilities, product pipeline or licensing
initiatives. ICA will be required to seek RxElite’s approval before
approaching any companies, and any companies agreed upon must be
listed in
Attachment A.
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In
performing such Advisory Services, ICA will exercise reasonable care in
accordance with the standards of the investment banking
profession.
2. Fees
Structure:
The
following outlines the fees structure:
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(a)
|
In
connection with the $15 million Equity Funding and the Merger Transaction,
ICA shall be paid
|
|
(i)
|
a
cash consulting fee in the amount of $1,500,000 (“Cash Consulting Fee”),
and
|
|
(ii)
|
ICA
will also be issued two Warrants:
|
|
(x)
|
a
Warrant to acquire 226,515 shares (2,500,000 shares following the
11.036789 for 1 forward stock split) of Common Stock of Southridge
Technology Group, Inc. (“STG”),
exercisable at $6.62 per share ($0.60 per share following the 11.036789
for 1 forward stock split); and
|
|
(y)
|
a
Warrant to acquire 113,257 shares (1,250,000 shares following the
11.036789 for 1 forward stock split) of Common Stock of STG, exercisable
at $9.38 per share ($0.85 per share following the 11.036789 for 1
forward
stock split).
|
The
exact
amount of the Cash Consulting Fee and the exact number of Warrants shall be
subject to final adjustment, as agreed to by the Company and ICA, in good faith,
and shall be based on the time and efforts expended by ICA and the success
of
the $15 million Equity Funding and the Merger Transaction.
The
payment of the Cash Consulting Fee will occur at such times as may be mutually
agreed by the Company and ICA.
To
the
extent permitted by law and to the extent that the Company’s legal advisors
advise the Company that the Company may register the Warrants without reducing
the number of securities that may be registered by cash purchasers in the $15
million Equity Funding, the Company shall include the Warrant in the
registration statement relating to the securities of cash purchasers in the
$15
million Equity Funding.
ICA
hereby acknowledges and agrees that the tender of the Warrants to ICA shall
occur only after (and is in all respects subject to and conditioned upon) the
completion of the acquisition by STG of the Company’s issued and outstanding
capital stock and succession by STG of the Company’s business as its sole line
of business as provided in the Securities Purchase Agreement of even date
herewith.
ICA
acknowledges and agrees that the Warrant will be in the form of the Warrants
delivered to purchasers in the Equity Financing, provided, however, that the
exercise price of some of the Warrants will be $6.62
(in lieu
of $9.38),
as
described above.
|
(b)
|
The
Company will pay ICA a monthly consulting fee of $10,000 for 12 months
with the first payment due upon full execution of this
Agreement. Additionally,
once the first 12 month period described herein is completed, RxElite
will
pay ICA a monthly retainer of US $12,500 for the subsequent twelve
month
period. All payments are due and payable on the first day of each
month.
|
|
(c)
|
if
a merger or acquisition is completed or a funding related to a merger
or
acquisition is completed with any company or entity introduced directly
by
ICA (not including the Reverse Take-Over Merger), then RxElite pays
a work
fee to ICA in an amount equal to the greater of 6% of the total value
of
the transaction or US $150,000. ICA will be required to seek RxElite’s
approval before approaching any companies, and any merger or acquisition
candidate companies agreed upon must be listed in Attachment
A.
|
| (d) |
if
a strategic or partnership agreement, including without limitation,
a
distribution, marketing, licensing, product or manufacturing agreement,
is
entered into or from an ICA Prospect, the transaction fee to be paid
to
ICA shall be an upfront payment and commission equal to the following
percentage of "gross revenues", as defined below, of all products
or
services sold to, or through, RxElite or the ICA Prospect, in any
market
addressed by the business
relationship:
|
●
up-front
one-time payment equal to US $35,000.00 per product;
●
Year
1: 1% of gross revenues ●
Year
2: 2% of gross revenues
●
Year
3: 3% of gross revenues Year 4: 3% of gross
revenues
Year
5: 3% of gross
revenues
For
the
purpose of this provision, a "year" shall commence on the date of the first
sale
of a product/service under the distribution, marketing, manufacturing or
licensing agreement and each anniversary date thereafter. ICA
will
be required to seek RxElite’s approval before approaching any strategic or
partnership agreement, including without limitation, a distribution, marketing,
licensing, product or manufacturing agreement or related companies, and any
ICA
Prospect companies agreed upon must be listed in Attachment A.
| (e) |
All
air, hotel, meal, gas, and parking expenses and all other reasonable
expenses relating to RxElite activities, submitted on a monthly
basis. Any
trip must be pre-approved by RxElite. Office and office expenses
shall be
paid as a flat fee of $300 monthly during the term of the
agreement.
|
|
3.
|
Confidentiality:
|
The
Company and ICA agree to hold confidential the terms and conditions of this
Agreement except as required by applicable law including, without limitation,
the rules and regulations of the Securities and Exchange Commission. Each party
hereby consents to the granting of an injunction against it by any court of
competent jurisdiction to enjoin it from violating the foregoing confidentiality
provisions. Each party hereby agrees that the other will not have an adequate
remedy at law in the event of a breach of the confidentiality provisions
contained herein, and such party will suffer irreparable damage and injury
as a
result of any such breach. Resort to such equitable relief shall not, however,
be construed to be a waiver of any other rights or remedies which such party
may
have
4.
Term:
|
(a)
|
This
Agreement shall be for a minimum period of 24 months commencing on
the
effective date of this Agreement, and renewable in writing thereafter
on a
month to month basis or such other time period as mutually agreed
to by
the parties. This agreement may be terminated by either party in
writing
with 30 days notice, but no sooner than the 24th
month of the agreement.
|
|
(b)
|
In
the event that a funding has not occurred by December 31, 2007, this
agreement is automatically
terminated.
|
|
(c)
|
Notwithstanding
the termination of this Agreement, the provisions of Section 2(c)
and 2(d)
shall survive for twelve months following termination, and in the
case of
2(d), the Company shall make all payments due to ICA for the time
periods
and amounts as outlined in 2(d).
|
This
agreement constitutes the entire agreement by the parties. Any previous written
acknowledgement, statement or prior understanding whether in writing or
discussed orally between the parties related to the agreement or the
relationship between the parties (including, without limitation, the letter
agreement dated as of September 18, 2006) is
superseded by this agreement.
Unless
otherwise stated, all figures in this Agreement are stated in US dollars. Please
confirm your agreement with the foregoing terms by signing this Agreement in
the
place provided below and returning two executed copies to the offices of ICA
to
the attention of Xx. Xxxxxx Xxxxx.
Yours
very truly,
On
behalf
of
INTERNATIONAL
CAPITAL ADVISORY INC.
By:
_________________________________________
Xx.
Xxxxxx Xxxxx
Vice-President
Acknowledged
and agreed.
On
behalf
of
RxElite
Holdings Inc.
By:
_________________________________________
Mr.
Xxxxxx Xxxx, CEO
Date:
ATTACHMENT
A
EXHIBIT
E
JUMBO
8-K
