SETTLEMENT AGREEMENT AND RELEASE
SETTLEMENT
AGREEMENT AND RELEASE
This
Settlement Agreement and Release (“Agreement”) is entered into this 30th day of
June, 2010 (the “Effective Date”) by and among HUIFENG BIO-PHARMACEUTICAL
TECHNOLOGY, INC. (the “Company”), Jing Xx Xxxx (“Xxxx”), PROFESSIONAL OFFSHORE
OPPORTUNITY FUND, LTD. (“PROOF”), Xxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxxxx Xxxxx,
ANCORA GREATER CHINA FUND (“ANCORA”), STRATEGIC ALLIANCE FUND, L.P. (“STRATEGIC
ALLIANCE”), STRATEGIC ALLIANCE FUND II, L.P. (together with PROOF, Xxxxx
Xxxxxxxx, Xxxxx Xxxx, Xxxxxxx Xxxxx, ANCORA and STRATEGIC ALLIANCE, the
“Buyers”) and Xxxxxxxx & Worcester LLP (the “Escrow Agent”). The Company,
Wang and the Buyers will sometimes be referred to collectively in this Agreement
as the “Parties.”
RECITALS
WHEREAS,
on December 31, 2007, the Company entered into a series of agreements, including
a Securities Purchase Agreement, a Registration Rights Agreement, certain
Convertible Promissory Notes (the “Notes”), certain warrant agreements (the
“Warrants”), an Escrow Agreement and Pledge Agreements (collectively referred to
herein as the “Transaction Documents”) with the Buyers;.
WHEREAS,
pursuant to Section 1.2(e) of the Securities Purchase Agreement, Wang’s
placement of 1,400,000 of his personal shares of the Company’s common stock, par
value $.018 per share (the “Shares”), in escrow is a condition to
closing;
WHEREAS,
pursuant to the Escrow Agreement effective as of December 31, 2007, the Parties
have agreed that the Shares will be distributed pro rata to the Buyers if net
income of the Company for fiscal year 2008 is below $3,800,000;
WHEREAS,
according to the Company’s audited financial statements for the fiscal year
2008, the net income of the Company for fiscal year 2008 is below
$3,800,000;
WHEREAS,
to avoid the expense and uncertainty inherent in any litigation, the Parties are
agreeing to resolve the issues of releasing the Shares from escrow and any of
Buyers’ claims against the Company (the “Escrow Shares Claims”) in accordance
with this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the sufficiency and receipt of which is hereby acknowledged, the Parties
hereby make the following:
AGREEMENT
1. Acknowledgment of
Recitals. The factual statements set forth in the
Recitals are hereby incorporated herein and reaffirmed by the Parties as if
fully set forth in this Agreement.
2. Company’s
Obligations. The Company is hereby relieved and no
longer obligated to the net income performance targets as set forth in and
required by the Escrow Agreement dated as of December 31, 2007.
3. Release
of Escrow Shares.
(a) In
connection with the foregoing release and discharge by the Buyers, the Parties
agree to release 900,000 Shares from escrow pro rata to the Buyers on June 30,
2010.
(b) The
remaining 500,000 Shares shall remain in escrow and shall be returned to Wang
immediately if:
(1) the
Company obtains financing in the aggregate amount of at least $3,000,000 by
December 31, 2010; and
(2) the
Company completes the listing of its common stock for trading on any
major exchanges for securities trading such as Amex or NASDAQ within twelve (12)
months from the date of this Agreement.
Notwithstanding
the foregoing, if, and only if, the Company does not meet the two requirements
by the required deadline indicated above, the Escrow Agent shall send the Stock
Power and Guarantee Letter in the forms attached hereto as Exhibit A and Exhibit B,
respectively, (together, the “Releasing Documents”) to the Transfer Agent
immediately to release the 500,000 Shares from escrow pro rata to the Buyers.
The Releasing Documents shall be delivered to the Transfer Agent as
follows:
Interwest
Transfer Company, Inc.
0000
Xxxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx
Xxxx, XX 00000
Phone:
(000)000-0000
Facsimile:
(000)000-0000
4. Notes
Conversion
In
connection with the conversion of the Notes, the Company hereby agrees not to
withhold any necessary and required documents to be sent to the Transfer Agent
to effectuate the Notes conversion pursuant to the applicable laws; nor does the
Company change the legal counsel acceptable to the Transfer Agent to effectuate
the Notes conversion without the Buyers’ consent.
5. Miscellaneous
Provisions.
(a) This
Agreement is made exclusively for the benefit of and solely for the protection
of the Buyers on the one hand, and the Company and Wang on the other hand, and
no other person or persons shall have the right to enforce the provisions hereof
by action or legal proceedings or otherwise.
(b) This
Agreement is entered into, shall be performed entirely within, shall be governed
by, and shall be construed in accordance with, the laws of the State of New York
for contracts made and to be performed therein.
(c) Each
of the Parties acknowledges that he or it: (i) has read and understands the
provisions of this Agreement; (ii) has consulted, with legal counsel who has
read and reviewed this Agreement; (iii) understands the rights and remedies that
the Parties are receiving, the rights that the Buyers are forbearing from and
the rights and remedies that the Buyers are waiving by their agreement thereto;
and (iv) has made the agreements set forth herein knowingly, voluntarily and
intentionally.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first written above, which shall be deemed its Effective Date.
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By:
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Name:
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Title:
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Jing
Xx Xxxx
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By:
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Name:
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Title:
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PROFESSIONAL
OFFSHORE
OPPORTUNITY
FUND, LTD.
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By:
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Name:
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Title:
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Xxxxx
Xxxxxxxx
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By:
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Name:
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Title:
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Xxxxx
Xxxx
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By:
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Name:
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Title:
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Xxxxxxx
Xxxxx
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By:
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Name:
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Title:
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ANCORA
GREATER CHINA FUND
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By:
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Name:
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Title:
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STRATEGIC
ALLIANCE FUND, L.P.
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By:
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Name:
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Title:
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STRATEGIC
ALLIANCE FUND II, L.P.
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By:
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Name:
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Title:
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ESCROW
AGENT:
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Xxxxxxxx
& Worcester, LLP
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By:
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Name:
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Title:
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Exhibit
A
Stock
Power
For Value Received,
__________________________________________________________________
hereby sell, assign and transfer unto
__________________________________________________________________________________________(________________)_ Shares of the Capital
Stock of_____________________________ standing
in _________________________________________ name on the books of
said ____________________________________________ represented by Certificate No.
________________________ herewith and do hereby irrevocably constitute and
appoint _________________________________________ attorney to cancel the said
stock on the books
of the within named Company with full power of substitution in the
premises.
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Dated
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Signed
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x
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Jin
Xx Xxxx
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Medallion
Guaranteed by:
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Exhibit
B
Guarantee
Letter
SPECIFICALLY
LIMITED TO THE TRANSFERS OF CERTIFICATES NUMBERED __________,
HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC. HEREBY GUARANTEES
THE SIGNATURE OF
Jing Xx
Xxxx
AND AGREES TO INDEMNIFY
AND SAVE HARMLESS INTERWEST TRANSFER CO., INC. AND EACH AND
ALL OF ITS TRANSFER AGENTS, REGISTRARS, OR OTHER AGENTS OR
EMPLOYEES FROM AND AGAINST ANY AND ALL LOSS OR DAMAGE OR
EXPENSE, WHICH MAY ARISE DIRECTLY OR INDIRECTLY BY REASON
THEREOF.
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(Signature
of President or Secretary)
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