REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT dated as of the 31st
day of
December, 2007 (this "Agreement") by and between HUIFENG BIO-PHARMACEUTICAL
TECHNOLOGY, INC., a Nevada corporation (the "Corporation"), PROFESSIONAL
OFFSHORE OPPORTUNITY FUND, LTD., Xxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxxxx Xxxxx,
ANCORA GREATER CHINA FUND, STRATEGIC ALLIANCE FUND, L.P. and STRATEGIC ALLIANCE
FUND II, L.P. (collectively, the “Investor”).
WITNESSETH:
WHEREAS,
the Investor owns or has the right to purchase or otherwise acquire shares
of
the Common Stock (as hereinafter defined) of the Corporation; and
WHEREAS,
the Corporation and the Investor deem it to be in their respective best interest
to set forth the rights of the Investor in connection with the registration
of
such Common Stock under applicable securities laws; and
WHEREAS,
the execution and delivery of this Agreement is a condition to the loan facility
to be provided by the Investor to the Corporation on the date
hereof;
NOW,
THEREFORE, in consideration of the premises and mutual covenants and obligations
hereinafter set forth, the Corporation and the Investor hereby agree as
follows:
Section
1. Definitions.
As
used
in this Agreement the following terms shall have the following
meanings:
(a) "Commission"
means the Securities and Exchange Commission or any other Federal agency at
the
time administering the Securities Act.
(b) "Common
Stock" means the common stock, par value $.018, of the Corporation.
(c) "Exchange
Act" means the Securities Exchange Act of 1934 or any successor Federal statute,
and the rules and regulations of the Commission promulgated thereunder, all
as
the same shall be in effect from time to time.
(d) "Investor"
means Professional Offshore Opportunity Fund, Ltd., Professional Traders Fund
LLC and each additional person who shall execute a counterpart signature page
hereto, and includes any successor to, or assignee or transferee of, any such
person who or which agrees in writing to be treated as an Investor hereunder
and
to be bound by the terms and comply with all applicable provisions hereof.
(e) "Other
Shares" means at any time those shares of Common Stock which do not constitute
Primary Shares or Registrable Shares.
(f) "Primary
Shares" means at any time the authorized but unissued shares of Common Stock
held by the Corporation in its treasury.
(g) "Registrable
Shares" means shares of Common Stock currently held by the Investor or acquired
by the Investor through the Transaction set forth in this Agreement, whether
acquired or acquirable pursuant to or in connection with the Warrant, the
Secured Convertible Note or any other agreements in connection with this
transaction. As to any particular Registrable Shares, once issued, such
Registrable Shares shall cease to be Registrable Shares when (i) they have
been
registered under the Securities Act, the registration statement in connection
therewith has been declared effective and they have been disposed of pursuant
to
such effective registration statement, (ii) they are eligible to be sold or
distributed pursuant to Rule 144 within any consecutive three month period
(including, without limitation, Rule 144(k)) without volume limitations, or
(iii) they shall have ceased to be outstanding.
(h) "Rule
144" means Rule 144 promulgated under the Securities Act or any successor rule
thereto.
(i) "Securities
Act" means the Securities Act of 1933 or any successor Federal statute, and
the
rules and regulations of the Commission thereunder, all as the same shall be
in
effect from time to time.
(j) "Secured
Convertible Note" means each Secured Convertible Note dated the date hereof
in
the principal aggregate amount of $2,000,000 issued by the Corporation to the
Investor.
(k) "Warrant"
means each Warrant dated the date hereof issued by the Corporation to the
Investor.
Section
2. Registration.
(a) Mandatory
Registration.
The
Corporation shall prepare, and as soon as practicable, but not later than thirty
(30) calendar days following the date hereof, file with the SEC a Registration
Statement or Registration Statements (as necessary) on Form SB-2 (or, if such
form is unavailable for such a registration, on such other form as is available
for such a registration), covering the resale of all of two times the number
of
the Registrable Securities, which Registration Statement(s) shall state that,
in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon stock splits, stock dividends or similar
transactions.
(b) The
Corporation shall have the Registration Statement filed with the SEC within
thirty (30) calendar days following the Closing Date. If the Registration
Statement covering the Registrable Securities required to be filed by the
Corporation pursuant to Section 2(a) hereof is not filed within thirty (30)
calendar days following the Closing Date, then the Corporation shall pay the
Investor the sum of one percent (1%) of the face amount of the Secured
Convertible Note as liquidated damages, and not as a penalty, for each thirty
(30) calendar day period, pro rata, following the thirty (30) calendar day
period until the Registration Statement is filed. The Corporation shall pay
such
liquidated damages in cash.
Notwithstanding
the foregoing, the amounts payable by the Corporation pursuant to this Section
shall not be payable to the extent any delay in the filing of the Registration
Statement occurs because of an act of, or a failure to act or to act timely
by
the Investor. The damages set forth in this Section shall continue until the
obligation is fulfilled and shall be paid within three (3) business days after
each thirty (30) day period, or portion thereof, until the Registration
Statement is filed. Failure of the Corporation to make payment within said
three
(3) business days shall be considered a default.
The
Corporation acknowledges that its failure to have the Registration Statement
filed within said thirty (30) calendar day period will cause the Investor to
suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Agreement a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to quantify such damages and, as such, agree that the form
and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Corporation
from its obligations to register the Common Stock and deliver the Common Stock
pursuant to the terms of this Agreement and the Subscription Agreement.
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Notwithstanding
the foregoing provisions of Section 2(a) and 2(b) providing for liquidated
damages under certain circumstances, as the sole exception to the requirement
to
pay such damages, in the event the SEC disallows registration of the Registrable
Securities pursuant to Rule 415 under the Securities Act, no such damages shall
be payable so long as the Corporation then uses its best efforts to register
the
maximum number of Registrable Securities in such registration statements as
the
SEC permits and uses its best efforts thereafter to register in appropriate
registration statements any Registrable Securities not included in such
registration statements.
(c) The
Corporation shall cause a Registration Statement to be declared effective by
the
SEC within one hundred twenty (120) calendar days after the Closing Date. If
the
Registration Statement covering the Registrable Securities required to be filed
by the Company pursuant to Section 2(a) hereof is not declared effective within
one hundred and twenty (120) calendar days following the Closing Date, then
the
Corporation shall pay the Investor the sum of one percent (1%) of the face
amount of the Secured Convertible Note as liquidated damages and not as a
penalty for each thirty (30) calendar day period, pro
rata,
following the one hundred twenty (120) calendar day period, until the
Registration Statement is declared effective. The Corporation shall pay such
liquidated damages in cash.
If
the
Registration Statement covering the Registrable Securities required to be filed
by the Corporation pursuant to Section 2(a) hereof is declared effective, but
after the effective date the Investor's right to sell is suspended,
then
the Corporation shall pay the Investor the sum of one percent (1%) of the face
amount of the Secured Convertible Debenture for
each
thirty (30) calendar day period, pro rata, following the suspension until such
suspension ceases.
Notwithstanding
the foregoing, the amounts payable by the Corporation pursuant to this Section
shall not be payable to the extent any delay in the effectiveness of the
Registration Statement occurs because of an act of or a failure to act or to
act
timely by the Investor. The damages set forth in this Section shall continue
until the obligation is fulfilled and shall be paid within three (3) business
days after each thirty (30) day period, or portion thereof, until the
Registration Statement is declared effective or such suspension is released.
Failure of the Corporation to make payment within said three (3) business days
shall be considered a default.
The
Company acknowledges that its failure to have the Registration Statement
declared effective within said one hundred and twenty (120) period or to permit
the suspension of the effectiveness of the Registration Statement, will cause
the Investor to suffer damages in an amount that will be difficult to ascertain.
Accordingly, the parties agree that it is appropriate to include in this
Agreement a provision for liquidated damages. The parties acknowledge and agree
that the liquidated damages provision set forth in this section represents
the
parties' good faith effort to quantify such damages and, as such, agree that
the
form and amount of such liquidated damages are reasonable and will not
constitute a penalty. The payment of liquidated damages shall not relieve the
Corporation from its obligations to register the Common Stock and deliver the
Common Stock pursuant to the terms of this Agreement and the Subscription
Agreement.
(d) The
Corporation agrees not to include any other securities in this Registration
Statement without Investor's prior written consent. Furthermore, the Company
agrees that it will not file any other Registration Statement for other
securities (other than those for the equity credit line financing, strategic
partners or in connection with a merger or acquisition), until ninety (90)
calendar days after the Registration Statement for the Registrable Securities
is
declared effective.
(e) In
no
event shall the corporation be obligated to pay liquidated damages pursuant
to
this Section 2 in excess of $300,000 in the aggregate.
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(f) Piggyback
Registration.
Without
limiting the obligations set forth in Section 2(a) through and including 2(d)
of
this Agreement, if the Corporation at any time proposes for any reason to
register Primary Shares, Registrable Shares or other shares under the Securities
Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act
or
any successor forms thereto), it shall give written notice to the Investor
of
its intention so to register such Primary Shares, Registrable Shares or Other
Shares at least 30 days before the initial filing of such registration statement
and, upon the written request, delivered to the Corporation within 20 days
after
delivery of any such notice by the Corporation, of the Investor to include
in
such registration Registrable Shares (which request shall specify the number
of
Registrable Shares proposed to be included in such registration and shall state
that such Investor desires to sell such Registrable Shares in the public
securities markets), the Corporation shall cause all such Registrable Shares
to
be included in such registration on the same terms and conditions as the
securities otherwise being sold in such registration; provided,
however,
that if
the managing underwriter advises the Corporation that the inclusion of all
Registrable Shares requested to be included in such registration would interfere
with the successful marketing (including pricing) of the Primary Shares,
Registrable Shares or Other Shares proposed to be registered by the Corporation,
then the number of Primary Shares, Registrable Shares and Other Shares proposed
to be included in such registration shall be included in the following order:
(g) if
the
Corporation proposes to register Primary Shares, or Primary Shares and Other
Shares:
(i) First,
the
Primary Shares; and
(ii) Second,
the
Registrable Shares and Other Shares requested to be included in such
registration (or, if necessary, such Registrable Shares and Other Shares
pro rata
among
the holders thereof based upon the number of Registrable Shares and Other Shares
requested to be registered by each such holder); or
(h) if
the
Corporation proposes to register Other Shares pursuant to a request for
registration by the holders of such Other Shares (other than pursuant to Section
2 hereof):
(i) First,
the
Other Shares held by the parties demanding such registration; and
(ii) Second,
the
Registrable Shares and Other Shares (other than shares registered pursuant
to
Section 2(c)(1) hereof) requested to be registered by the holders hereof (or,
if
necessary, pro rata
among
the holders thereof based on the number of Registrable Shares and Other Shares
requested to be registered by such holders).
Section
3. Preparation
and Filing.
If
and
whenever the Corporation is under an obligation pursuant to the provisions
of
this Agreement to effect the registration of any Registrable Shares, the
Corporation shall as expeditiously as practicable:
(a) prepare
and file with the Commission a registration statement with respect to such
Registrable Shares and use its best efforts to cause such registration statement
to become effective and, upon the request of the holders of a majority of the
Registrable Shares being registered thereunder, keep such registration statement
effective for a period of up to one hundred twenty (120) days or until the
distribution contemplated in the registration statement has been completed;
provided,
however,
that
(i) such 120-day period shall be extended for a period of time equal to the
period the holders of Registrable Shares refrain from selling any securities
included in such registration at the request of an underwriter of Common Stock
(or other securities) of the Company; and (ii) in the case of any registration
of Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Shares are sold, provided that Rule 415, or any successor rule
under
the Securities Act, permits an offering on a continuous or delayed basis;
and provided further
that
applicable rules under the Securities Act governing the obligation to file
a
post-effective amendment permit (in lieu of filing a post-effective amendment
which (I) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement) the
incorporation by reference, in the registration statement, of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange
Act.
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(b) prepare
and file with the Commission 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
Securities Act with respect to the disposition of all securities covered by
such
registration statement.
(c) furnish,
at least five business days before filing a registration statement that
registers such Registrable Shares, a prospectus relating thereto or any
amendments or supplements relating to such a registration statement or
prospectus, to one counsel selected by the Investor (the "Investor’s Counsel"),
copies of all such documents proposed to be filed (it being understood that
such
five-business-day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are supplied
to
the Investor’s Counsel in advance of the proposed filing by a period of time
that is customary and reasonable under the circumstances);
(d) notify
in
writing the Investor’s Counsel promptly (i) of the receipt by the Corporation of
any notification with respect to any comments by the Commission with respect
to
such registration statement or prospectus or any amendment or supplement thereto
or any request by the Commission for the amending or supplementing thereof
or
for additional information with respect thereto, (ii) of the receipt by the
Corporation of any notification with respect to the issuance by the Commission
of any stop order suspending the effectiveness of such registration statement
or
prospectus or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose and (iii) of the receipt by
the
Corporation of any notification with respect to the suspension of the
qualification of such Registrable Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purposes;
(e) use
its
best efforts to register or qualify such Registrable Shares under such other
securities or blue sky laws of such jurisdictions as the Investors reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Investors to consummate the disposition
in
such jurisdictions of the Registrable Shares owned by the Investors; provided,
however, that the Corporation will not be required to qualify generally to
do
business, subject itself to general taxation or consent to general service
of
process in any jurisdiction where it would not otherwise be required to do
so
but for this paragraph (e) or to provide any material undertaking or make any
changes in its By-laws or Certificate of Incorporation which the Board of
Directors determines to be contrary to the best interests of the Corporation
or
to modify any of its contractual relationships then existing;
(f) furnish
to the Investors holding such Registrable Shares such number of copies of a
summary prospectus, if any, or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such
other documents as such Investors may reasonably request in order to facilitate
the public sale or other disposition of such Registrable Shares;
(g) without
limiting subsection (e) above, use its best efforts to cause such Registrable
Shares to be registered with or approved by such other governmental agencies
or
authorities as may be necessary by virtue of the business and operations of
the
Corporation to enable the Investors holding such Registrable Shares to
consummate the disposition of such Registrable Shares;
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(h) notify
the Investors holding such Registrable Shares on a timely basis at any time
when
a prospectus relating to such Registrable Shares is required to be delivered
under the Securities Act within the appropriate period mentioned in subparagraph
(a) of this Section 3, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the request
of
the Investors, prepare and furnish to such Investors a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the offerees of such shares, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(i) subject
to the execution of confidentiality agreements in form and substance
satisfactory to the Corporation, make available upon reasonable notice and
during normal business hours, for inspection by the Investors holding such
Registrable Shares, any underwriter participating in any disposition pursuant
to
such registration statement and any attorney, accountant or other agent retained
by the Investors or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of
the
Corporation (collectively, the "Records"), as shall be reasonably necessary
to
enable them to exercise their due diligence responsibility, and cause the
Corporation's officers, directors and employees to supply all information
(together with the Records, the "Information") reasonably requested by any
such
Inspector in connection with such registration statement. Any of the Information
which the Corporation determines in good faith to be confidential and of which
determination the Inspectors are so notified, shall not be disclosed by the
Inspectors unless (i) the disclosure of such Information is necessary to avoid
or correct a misstatement or an omission in the registration statement, (ii)
the
release of such Information is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (iii) such Information has been made
generally available to the public; the Investors agree that they will, upon
learning that disclosure of such information is sought in a court of competent
jurisdiction, give notice to the Corporation and allow the Corporation, at
the
Corporation's expense, to undertake appropriate action to prevent disclosure
of
the Information deemed confidential;
(j) use
its
best efforts to obtain from its independent certified public accountants "cold
comfort" letters addressed to the Corporation and any selling shareholders
in
customary form and at customary times and covering matters of the type
customarily covered by cold comfort benefits;
(k) use
its
best efforts to obtain from its counsel an opinion or opinions in customary
form
addressed to the Corporation and any selling shareholders;
(l) in
the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each holder of Registrable Shares
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(m) provide
a
transfer agent and registrar (which may be the same entity and which may be
the
Corporation) for such Registrable Shares and a CUSIP number for all such
Registrable Shares, in each case not later than the effective date of such
registration;
(n) issue
to
any underwriter to which the Investors holding such Registrable Shares may
sell
shares in such offering certificates evidencing such Registrable Shares;
6
(o) list
such
Registrable Shares on any national securities exchange on which any shares
of
the Common Stock are listed or, if the Common Stock is not listed on a national
securities exchange, use its best efforts to qualify such Registrable Shares
for
inclusion on the automated quotation system of the National Association of
Securities Dealers, Inc. (the "NASDAQ"),
or
such
other national securities exchange as the holders of a majority of such
Registrable Shares shall reasonably request;
(p) otherwise
use its best efforts to comply with all applicable rules and regulations of
the
Commission and make available to its security holders, as soon as reasonably
practicable, earnings statements (which need not be audited) covering a period
of 12 months beginning within three months after the effective date of the
registration statement, which earnings statements shall satisfy the provisions
of Section 11 (a) of the Securities Act; and
(q) subject
to all the other provisions of this Agreement, use its best efforts to take
all
other steps necessary to effect the registration of such Registrable Shares
contemplated hereby.
(r) Each
holder of the Registrable Shares, upon receipt of any notice from the
Corporation of any event of the kind described to Section 3(h) hereof, shall
forthwith discontinue disposition of the Registrable Shares pursuant to the
registration statement covering such Registrable Shares until such holders'
receipt of the copies of the supplemented or amended prospectus contemplated
by
Section 3(h) hereof, and, if so directed by the Corporation, such holder shall
deliver to the Corporation all copies, other than permanent file copies then
in
such holder's possession, of the prospectus covering such Registrable Shares
at
the time of receipt of such notice.
Section
4. Expenses.
All
expenses (other than underwriting discounts and commissions relating to the
Registrable Shares, as provided in the last sentence of this Section 4) incurred
by the Corporation in complying with Section 3, including, without limitation,
all registration and filing fees (including all expenses incident to filing
with
the Financial Industry Regulatory Authory, Inc. “FINRA”), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Corporation's counsel and accountants, and a $5,000 expense
payment to the Investor to pay for its review of the Corporation’s filings,
shall be paid by the Corporation; provided,
however,
that
all underwriting discounts and selling commissions applicable to the Registrable
Shares and Other Shares shall be borne by the holders selling such Registrable
Shares and Other Shares, in proportion to the number of Registrable Shares
and
Other Shares sold by each such holder. The $5,000 payment to the Investor shall
be paid to the Investor on Closing.
Section
5. Indemnification.
(a) In
connection with any registration of any Registrable Shares under the Securities
Act pursuant to this Agreement, the Corporation shall indemnify and hold
harmless the holders of Registrable Shares, each underwriter, broker or any
other person acting on behalf of the holders of Registrable Shares and each
other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any
of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or allegedly untrue
statement of a material fact contained in the registration statement under
which
such Registrable Shares were registered under the Securities Act, the Exchange
Act or any preliminary prospectus or final prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement thereto or
any
document incident to registration or qualification of any Registrable Shares,
or
arise out of or are based upon the 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, with respect to any prospectus, necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, or any violation by the Corporation of the Securities
Act or state securities or blue sky laws applicable to the Corporation and
relating to action or inaction required of the Corporation in connection with
such registration or qualification under such state securities or blue sky
laws;
and shall reimburse the holders of Registrable Shares, such underwriter, such
broker or such other person acting on behalf of the holders of Registrable
Shares and each such controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however,
that
the Corporation shall not be liable in any such case to the extent that any
such
loss, claim, damage, liability or action (including any legal or other expenses
incurred) arises out of or is based upon an untrue statement or allegedly untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment supplement or document
incident to registration or qualification of any Registrable Shares in reliance
upon and in conformity with written information furnished to the Corporation
through an instrument duly executed by the holders of Registrable Shares or
their counsel or underwriter specifically for use in the preparation thereof;
provided further,
however,
that
the foregoing indemnity agreement is subject to the condition that, insofar
as
it relates to any untrue statement, omission or alleged omission made in any
preliminary prospectus but eliminated or remedied in the final prospectus (filed
pursuant to Rule 424 of the Securities Act), such indemnity agreement shall
not
inure to the benefit of any Investor, underwriter, broker or other person acting
on behalf of holders of the Restricted Shares from whom the person asserting
any
loss, claim, damage, liability or expense purchased the Restricted Shares which
are the subject thereof, if a copy of such final prospectus had been made
available to such person and such Investor, underwriter, broker or other person
acting on behalf of holders of the Registrable Shares and such final prospectus
was not delivered to such person with or prior to the written confirmation
of
the sale of such Registrable Shares to such person.
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(b) In
connection with any registration of Registrable Shares under the Securities
Act
pursuant to this Agreement, each holder of Registrable Shares shall severally
and not jointly indemnify and hold harmless (in the same manner and to the
same
extent as set forth in the preceding paragraph of this Section 5) the
Corporation, each director of the Corporation, each officer of the Corporation
who shall sign such registration statement, each underwriter, broker or other
person acting on behalf of the holders of Registrable Shares and each person
who
controls any of the foregoing persons within the meaning of the Securities
Act
with respect to any statement or omission from such registration statement,
any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Corporation or such underwriter specifically for
use in connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document;
provided,
however,
that
the maximum amount of liability in respect of such indemnification shall be
limited, in the case of each Seller of Registrable Shares, to an amount equal
to
the net proceeds actually received by such Seller from the sale of Registrable
Shares effected pursuant to such registration.
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action involving a claim referred to in the preceding paragraphs of this Section
5, such indemnified party will, if a claim in respect thereof is made against
an
indemnifying party, give written notice to the latter of the commencement of
such action. The failure of any indemnified party to notify an indemnifying
party of any such action shall not (unless such failure shall have a material
adverse effect on the indemnifying party) relieve the indemnified party on
account of this Section 5. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in
and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with
the
defense thereof; provided,
however,
that if
any indemnified party shall have reasonably concluded that there may be one
or
more legal or equitable defenses available to such indemnified party which
are
additional to or conflict with those available to the indemnifying party, or
that such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section 5, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party (but shall have the right to participate
therein with counsel of its choice) and such indemnifying party shall reimburse
such indemnified party and any person controlling such indemnified party for
that portion of the fees and expenses of any counsel retained by the indemnified
party which is reasonably related to the matters covered by the indemnity
agreement provided in this Section 5. If the indemnifying party is not entitled
to, or elects not to, assume the defense of a claim, it will not be obligated
to
pay the fees and expenses of more than one counsel with respect to such claim.
8
(d) If
the
indemnification provided for in this Section 5 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any
loss,
claim, damage, liability or action referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amounts paid or payable by such indemnified party as a result
of such loss, claim, damage, liability or action 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, claim, damage, liability or action
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 or alleged 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. In no event shall
contribution obligations of this Section 5(b) exceed the net profits from the
offering received by such holder after deducting underwriting fees, discounts
and commissions. No person guilty of fraudulent misrepresentation shall be
entitled to contribution from any person.
Section
6. Underwriting
Agreement.
Notwithstanding
the provisions of Sections 2, 3, 4 and 5, to the extent that the Investor shall
enter into an underwriting or similar agreement, which agreement contains
provisions covering one or more issues addressed in such Sections, the
provisions contained in such agreement addressing such issue or issues shall
control; provided,
however,
that
any such agreement to which the Corporation is not a party shall not be binding
upon the Corporation. No holder may participate in any underwritten registration
hereunder unless such holder (a) agrees to such holder's securities on the
basis
provided in any underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably and customarily required under the terms of such
underwriting arrangements.
Section
7. Information
by Investor.
The
Investor shall furnish to the Corporation such written information regarding
the
Investors and the distribution proposed by the Investor as the Corporation
may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this
Agreement.
Section
8. Exchange
Act Compliance.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the Commission may at any
time
permit an Investor to sell securities of the Corporation to the public without
registration or pursuant to a registration on Form S-3, the Company agrees,
on
and after becoming subject to reporting obligations under the federal securities
laws, to:
9
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144, at all times after ninety (90) days after the effective date of the
first registration statement filed by the Corporation for the offering of its
securities to the general public;
(b) file
with
the Commission in a timely manner all reports and other documents required
of
the Corporation under the Securities Act and the Exchange Act; and
(c) furnish
to any Investor, so long as the Investor owns any Registrable Shares, forthwith
upon request (i) a written statement by the Corporation that it has complied
with the reporting requirements of Rule 144 (at any time after ninety (90)
days
after the effective date of the first registration statement filed by the
Corporation), the Securities Act and the Exchange Act (at any time after it
has
become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Corporation and such other reports and documents so filed by
the
Corporation, and (iii) such other information as may be reasonably requested
in
availing any Investor of any rule or regulation of the Commission which permits
the selling of any such securities without registration or pursuant to such
form.
Section
9. No
Conflict of Rights.
The
Corporation shall not, after the date hereof, grant any registration rights
which conflict with or impair the registration rights granted hereby. In the
event the Corporation grants to any person any registration rights that are
superior in scope or substance to the registration rights granted to the
Investor, such superior rights shall be simultaneously granted to such holders.
Section
10. Termination.
This
Agreement shall terminate and be of no further force or effect when there shall
no longer be any Registrable Shares outstanding; provided that Sections 4 and
5
shall survive any termination of this Agreement.
Section
11. Successors
and Assigns.
This
Agreement shall bind and inure to the benefit of the Corporation and the
Investors and, subject to Section 12, the respective successors and assigns
of
the Corporation and the Investors.
Section
12. Assignment.
Each
Investor may assign its rights hereunder to any purchaser or transferee of
Registrable Shares; provided, however, that such purchaser or transferee shall,
as a condition to the effectiveness of such assignment, be required to execute
a
counterpart to this Agreement agreeing to be treated as an Investor whereupon
such purchaser or transferee shall have the benefits of, and shall be subject
to
the restrictions contained in, this Agreement as if such purchaser or transferee
was originally included in the definition of an Investor herein and had
originally been a party hereto
Section
13. Entire
Agreement.
This
Agreement and the other writings referred to herein or therein or delivered
pursuant hereto or thereto, contain the entire agreement among the Investor
and
the Corporation with respect to the subject matter hereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
10
Section
14. Notices.
All
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument delivered
in person or sent by telecopy, nationally-recognized overnight courier or first
class registered or certified mail return receipt requested, postage prepaid,
addressed to such party at the address set forth below or such other address
as
may hereafter be designated in writing by such party to the other parties:
if
to the
Corporation, to:
00X/X
Xxxxxx Xxxx Bldg. No. 25
Gaoxin
Road, Xx Xx 000000
Xxxxxxx
Xxxxxxxx, Xxxxx
Attention:
Xinwen Hou
Facsimile
Number: x00 00-0000 0000
if
to the
Investor, to:
Professional
Offshore Opportunity Fund, Ltd.
℅
Professional Traders Management, LLC
0000
Xxx
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxx 00000
Telephone:
000-000-0000
Fax:
000-000-0000
Attention:
Xxxxxx Xxxxxx
All
such
notices, requests, consents and other communications shall be deemed to have
been delivered (a) in the case of personal delivery or delivery by telecopy,
on
the date of such delivery, (b) in the case of dispatch by nationally-recognized
overnight courier, on the next business day following such dispatch and (c)
in
the case of mailing, on the third business day after the posting thereof.
Section
15. Modifications;
Amendments; Waivers.
The
terms
and provisions of this Agreement may not be modified or amended, nor may any
provision be waived, except pursuant to a writing signed by the Corporation
and
the holders of at least a majority of the Registrable Shares then outstanding.
Section
16. Counterparts.
This
Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section
17. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.
11
Section
18. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to contracts made and to be performed wholly
therein.
12
IN
WITNESS WHEREOF,
the
undersigned have executed and delivered this Agreement as of the date first
set
forth above.
|
By:
|
/s/
Jing’xx Xxxx
|
|
Jing’xx
Xxxx, CEO
|
|
| PROFESSIONAL OFFSHORE OPPORTUNITY | |
| FUND, LTD. | |
|
By:
|
/s/
Xxxxxx Xxxxxx
|
|
Xxxxxx Xxxxxx, Manager
|
|
|
/s/
Xxxxx Xxxxxxxx
|
|
|
Xxxxx
Xxxxxxxx
|
|
|
/s/
Xxxxx Xxxx
|
|
|
Xxxxx
Xxxx
|
|
|
/s/
Xxxxxxx Xxxxx
|
|
|
Xxxxxxx
Xxxxx
|
|
|
ANCORA
GREATER CHINA FUND
|
|
|
By:
|
/s/
Xxxx Xxxxxxxxxx
|
|
Xxxx Xxxxxxxxxx, VP and Managing Partner
|
|
|
STRATEGIC
ALLIANCE FUND, L.P.
|
|
|
By:
|
/s/
Xxxxxx Xxxxxxx
|
|
Xxxxxx Xxxxxxx, Co-Manager
|
|
|
STRATEGIC
ALLIANCE FUND II, L.P.
|
|
|
By:
|
/s/ Xxxxxx
Xxxxxxx
|
| Xxxxxx Xxxxxxx, Co-Manager | |
13
