Exhibit 10.2
SUBSCRIPTION AGREEMENT
This Agreement sets forth the terms pursuant to which _______________, residing
at ________________________________________, whose ID document number is
___________ (the "Subscriber") hereby tenders its subscription for the purchase
of _______ shares of Series A Convertible Preferred Stock, ("Series A
Convertible Preferred Stock") face value $1.00 per share, purchase price US$1.00
per share ("Purchase Price") convertible at a ratio of 1:1 ("Conversion Ratio")
into shares of the common stock ("Common Stock") of China Biopharmaceuticals
Holdings, Inc. (the "Company") and _______ of the purchase warrants ("Warrant")
to purchase shares of common stock at a price of $2.00 per share, issued in
connection with the Series A Convertible Preferred Stock of the Company and
further sets forth statements upon which the Company may rely to determine the
suitability of the Subscriber to purchase such shares of Series A Convertible
Preferred Stock and the Warrant. This Agreement shall be construed in connection
with the Certificate of Designation of Series A Convertible Preferred Stock and
the Warrant. Any capitalized terms not defined herein shall have the same
meaning as in the Certificate of Designation of Series A Convertible Preferred
Stock and the Warrant.
1. Representations and Warranties
The Subscriber hereby makes the following representations and
warranties:
(1) The Subscriber understands that the Series A Convertible Preferred
Stock must be acquired by the Subscriber solely for its own account and for
investment purposes only within the meaning of the Securities Act of 1933, as
amended ("1933 Act"), with no intention of assigning any participation or
interest therein, and not with a view to the distribution of the Series A
Convertible Preferred Stock or any part thereof.
(2) The Subscriber is either an individual, or an entity duly organized
and validly existing under the laws of its formation. The Subscriber is, and
will be at the time of the issuance of the Series A Convertible Preferred Stock
and the exercise of any of the warrants, an "accredited investor", as such term
is defined in Regulation D promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. The Subscriber has the authority and is duly and legally qualified
to purchase and own the Series A Convertible Preferred Stock. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.
(3) The Subscriber has been informed that the investment is a high risk
investment, and in evaluating such investment the Subscriber has consulted with
its own investment, and/or legal, and/or tax advisors.
(4) The Subscriber understands that the Series A Convertible Preferred
Stock are not being registered under the 1933 Act on the ground that the
issuance thereof is exempt from the registration requirements of the 1933 Act
under Section 4(2) thereof as a transaction by an issuer not involving any
public offering and pursuant to Rule 504 of Regulation D under the 1933 Act, and
that reliance on such exemption is predicated, in part, on the Subscriber's
representations and warranties and those of the other purchasers of the Series A
Convertible Preferred Stock.
(5) The Subscriber has no need for any liquidity in this investment and
the Subscriber is able to bear the economic risk of its investment for an
indefinite period of time. The Series A Convertible Preferred Stock has not been
registered under the 1933 Act and, therefore, cannot be sold or transferred
unless they are subsequently registered under the 1933 Act or an exemption from
such registration is available. The Subscriber understands that it will not be
able to sell, assign, pledge, hypothecate or transfer the Series A Convertible
Preferred Stock, or part thereof, received by the Subscriber unless a
registration statement under the 1933 Act with respect thereto is in effect, or
the Subscriber has received a written opinion of counsel satisfactory to the
Company that, after an investigation of the relevant facts, which shall be
recited in such opinion, such counsel is of the opinion that such sale,
assignment or transfer does not involve a transaction requiring registration
thereof under the 1933 Act and is in compliance with any relevant rule under the
1933 Act governing resales of securities acquired from an issuer thereof without
compliance with the registration requirements of the 1933 Act.
(6) It is understood that all documents, records and plans pertaining
to this investment and the Company have been made available for inspection to
the Subscriber, Subscriber's attorney and/or accountant and/or offeree
representative.
(7) The Subscriber has properly completed and submitted the Investor's
Questionnaire attached hereto as Exhibit A (the "Questionnaire") to the Company
and all the information in the Questionnaire is correct, accurate, and truthful
for the Company to rely on.
2. Company's Right to Refuse Subscription
The Subscriber understands that the Company has the absolute right to
reject all or part of the subscription being tendered herein.
3. No Assignment
The Subscriber agrees not to transfer or assign this subscription or
any interest therein.
4. Registration Rights
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The Company shall prepare and file with the Commission a registration
statement under the 1933 Act registering the Series A Convertible Preferred
Stocks and any common stock issuable upon exercise of Warrants for unrestricted
public resale by the Subscriber. The Company shall cause such registration
statement declared effective within one hundred and twenty (120) days after the
execution of this Agreement ("Effective Date"). If the registration statement is
not declared effective by the Effective Date, the conversion price shall be
reduced by 5% per share and the total number of shares of Common Stock issuable
upon exercise of the Warrant shall be increased by 5 per cent per month for
every month the shares are not registered after the Effective Date.
5. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the conflicts of laws
principles thereof.
6. Dispute Resolution
The Company and the Subscriber (collectively the "Parties" and
individually a "Party") shall make good faith effort to settle any dispute
arising from the interpretation or performance of this Agreement through
friendly negotiation. In case no settlement can be reached, each Party shall
submit the dispute to an arbitration panel ("Panel") under the auspices of the
American Arbitration Association ("AAA") at a venue located in New York City.
The Panel shall consist of one or three to be selected by the mutual agreement
of the Parties. If the Parties can not agree on the arbitrator, each may select
one arbitrator and the two designated arbitrators shall select the third
arbitrator. If the third arbitrator can not be agreed upon, the American
Arbitration Association in New York shall select the third arbitrator. A
majority decision by the three arbitrators shall be final and binding upon and
enforceable against the Parties. Such arbitration shall follow the rules of the
AAA.
7. Severability
If any one or more provisions of this Agreement are determined invalid,
illegal or non-enforceable in any way according to any laws or regulations, the
validity, legality and enforceability of other provisions hereof shall not be
affected or impaired in any way. All parties shall, through sincere
consultation, cause to replace those invalid, illegal or non-enforceable
provisions with valid ones, and from such valid provisions, similar economic
effects shall be tried to reach as from those invalid, illegal or
non-enforceable provisions.
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IN WITNESS WHEREOF, this Subscription Agreement is executed on this
______ day of ______, 2005.
Subscriber
By:
_______________________________________
Name:
Title:
China Biopharmaceuticals Holdings, Inc.
By:
_______________________________________
Name:
Title:
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Exhibit A
CHINA BIOPHARMACEUTICALS HOLDINGS, INC.
SELLING SHAREHOLDER QUESTIONNAIRE
________________________________________________________________________________
THIS DOCUMENT REQUIRES A RESPONSE NO LATER THAN MAY 24, 2005
________________________________________________________________________________
The undersigned beneficial holder of shares of Series A Convertible
Preferred Stock, par value $0.01 per share (the "Series A Convertible Preferred
Stock") of CHINA BIOPHARMACEUTICALS HOLDING, INC. (the "Company") and, as
applicable, warrants to purchase shares of common stock ("Common Stock") of the
Company. (the "Warrants"), understands that the Company proposes to file with
the Securities and Exchange Commission ("SEC") a registration statement on Form
SB-2 (the "Registration Statement") for the registration and resale under Rule
415 of the Securities Act of 1933, as amended (the "Securities Act"), of the
Series A Convertible Preferred Stock and/or Common Stock underlying the
Warrants, as applicable, in accordance with the terms of the Subscription
Agreement, dated as of May 13, 2005 (the "Subscription Agreement"), between the
Company and the initial purchasers named therein, or otherwise pursuant to an
agreement of the Company to register Series A Convertible Preferred Stock. A
copy of the Subscription Agreement is available from the Company upon request at
the address set forth below.
The Registration Statement has not yet been declared effective by the SEC.
In order to sell or otherwise dispose of any Series A Convertible Preferred
Stock pursuant to the Registration Statement, a beneficial owner of Series A
Convertible Preferred Stock generally will be required to be named as a selling
shareholder in the related prospectus, deliver a prospectus to each purchaser of
Series A Convertible Preferred Stock and, to the extent the undersigned is a
party to the Subscription Agreement, be bound by those provisions of the
Subscription Agreement applicable to such beneficial owner (including certain
indemnification provisions, as described below). Beneficial owners are
encouraged to complete and deliver this Selling Shareholder Questionnaire prior
to the effectiveness of the Registration Statement so that such beneficial
owners may be named as selling shareholders in the related prospectus at the
time of effectiveness. Any beneficial owner of Series A Convertible Preferred
Stock and/or Warrants wishing to include its Series A Convertible Preferred
Stock and/or Series A Convertible Preferred Stock underlying the Warrants must
deliver to the Company a properly completed and signed Selling Shareholder
Questionnaire. Unless a beneficial owner completes, signs and delivers to the
Company this Selling Shareholder Questionnaire, such beneficial owner will not
be named in the Registration Statement and will not be entitled to use the
related prospectus.
Certain legal consequences arise from being named as a selling shareholder
in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Series A Convertible Preferred Stock are advised to
consult their own securities law counsel regarding the consequences of being
named or not being named as a selling shareholder in the Registration Statement
and the related prospectus.
The undersigned beneficial owner (the "Selling Shareholder"), by signing
and returning this Selling Shareholder Questionnaire, understands that it will
be bound by the terms and conditions of this Selling Shareholder Questionnaire
and the Subscription Agreement.
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The undersigned hereby provides the following information to the Company
and represents and warrants that such information is accurate and complete:
Questionnaire
1. Name of the Selling Shareholder and DTC participant
(a) Full legal name of the Selling Shareholder:
______________________________________________________________________
(b) Full legal name of registered holder (if not the same as (a) above)
through which Series A Convertible Preferred Stock listed in (3) below
are held:
______________________________________________________________________
(c) If applicable, full legal name of DTC participant (if not the same as
(b) above) through which Series A Convertible Preferred Stock listed
in Item 3 below are held:
______________________________________________________________________
2. Contact information for the Selling Shareholder
Address for notices to Selling Shareholder:
___________________________________________________________________________
___________________________________________________________________________
Telephone: _______________________________________________________________
Fax: ______________________________________________________________________
Contact person: ___________________________________________________________
3. Beneficial ownership (as defined below) of Series A Convertible Preferred
Stock and Warrants
Please state the number of Series A Convertible Preferred Stock and
Warrants of the Company beneficially owned by the Selling Shareholder and
the respective CUSIP number of the Series A Convertible Preferred Stock
beneficially owned. Please indicate the number of Series A Convertible
Preferred Stock and Series A Convertible Preferred Stock underlying the
Warrants (as applicable) which you request to be registered in the
Registration Statement.
(a) Number of Series A Convertible Preferred Stock beneficially owned by
you:
______________________________________________________________________
(b) CUSIP No(s). of Series A Convertible Preferred Stock beneficially
owned by you:
______________________________________________________________________
(c) Please state the number of Series A Convertible Preferred Stock
beneficially owned by you which you request to be registered in the
Registration Statement:
______________________________________________________________________
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"Beneficial ownership" of a security means a person's ability, directly or
indirectly through any contract, arrangement, understanding, relationship or
otherwise, to exercise alone or together with others:
o voting power, which includes the power to vote, or to direct the
voting of, a security; or
o investment power, which includes the power to dispose, or to direct
the disposition, of a security.
This term also includes having the right to acquire beneficial ownership of a
security within 60 days, including any right to acquire the security through the
exercise of any option, warrant or right, through the conversion of a security,
pursuant to the power to revoke a trust, discretionary account or similar
arrangement or pursuant to the automatic termination of a trust, discretionary
account or similar arrangement.
(d) Please state the number of Warrants beneficially owned by you:
______________________________________________________________________
(e) Please state the number of Series A Convertible Preferred Stock
underlying the Warrants which you request to be registered in the
Registration Statement:
______________________________________________________________________
4. Relationship with the Company
Except as set forth below, the undersigned Selling Shareholder has not held
any position or office or has had any other material relationship with the
Company or any of its predecessors or affiliates (as each such term is
defined below) within the past three years.
State any exceptions below:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
"Affiliate" means a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with, a
specified person. "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of an
entity, whether through the ownership of voting securities, by contract or
otherwise.
"Predecessor" means a person the major portion of the business and assets of
which another person acquired in a single succession or in a series of related
successions in each of which the acquiring person acquired the major portion of
the business and assets of the acquired person. This definition includes
Champion Ventures, Inc., the Company's predecessor in its merger transaction
completed in 2002.
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5. Plan of distribution
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Series A Convertible Preferred Stock
listed above in Item 3 pursuant to the plan of distribution attached as
Exhibit A. State any exceptions here:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
6. Voting and investment power (to be completed only if the Selling
Shareholder is not a natural person)
(a) Please name each person or persons who have voting or investment power
over the Series A Convertible Preferred Stock beneficially owned (as
described in question 3 above) by the Selling Shareholder. Please
indicate the same information, as applicable, with respect to Series A
Convertible Preferred Stock issuable pursuant to exercise of the
Warrants held by you. Please note that:
o voting power includes the power to vote, or to direct the voting
of, the Series A Convertible Preferred Stock; and
o investment power includes the power to dispose, or to direct the
disposition, of the Series A Convertible Preferred Stock.
___________________________________________________________________________
___________________________________________________________________________
(b) For each person named in question 6(a) above, please state the number
of Series A Convertible Preferred Stock beneficially owned by the
Selling Shareholder in which that person has sole voting power, shared
voting power, sole investment power and/or shared investment power.
Please indicate the same information, as applicable, with respect to
Series A Convertible Preferred Stock issuable pursuant to exercise of
the Warrants held by you.
--------------------------------------------------- ------------------
Beneficial Ownership Number of Shares
--------------------------------------------------- ------------------
Total number of share as to which the person has
sole voting power
--------------------------------------------------- ------------------
Total number of shares as to which the person has
shared voting power
--------------------------------------------------- ------------------
Total number of shares as to which the person has
sole investment power
--------------------------------------------------- ------------------
Total number of shares as to which the person has
shared investment power
--------------------------------------------------- ------------------
If necessary, attach additional sheets of paper.
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7. Broker-Dealer
(a) Is the Selling Shareholder a broker-dealer? Yes [_] No [_]
(b) If "yes," were the Series A Convertible Preferred Stock issued to the
Selling Shareholder as compensation?
Yes [_] No [_]
8. Affiliate of Broker-Dealer
(a) Is the Selling Shareholder an affiliate of a broker-dealer?
Yes [_] No [_]
(b) If "yes,"
o did the Selling Shareholder purchase the Series A Convertible
Preferred Stock in the ordinary course of business?
Yes [_] No [_]
o at the time of the purchase, did the Selling Shareholder have any
agreement or understanding, directly or indirectly, with any
person to distribute the Series A Convertible Preferred Stock?
Yes [_] No [_]
The undersigned acknowledges that it understands its obligation to comply
with the provisions of the Securities Exchange Act of 1934, as amended, and the
rules thereunder relating to stock manipulation, particularly Regulation M
thereunder (or any successor rules or regulations), in connection with any
offering of Series A Convertible Preferred Stock pursuant to the Registration
Statement. The undersigned agrees that neither it nor any person acting on its
behalf will engage in any transaction in violation of such provisions.
To the extent the Selling Shareholder is a party to the Subscription
Agreement, the Selling Shareholder hereby acknowledges its obligations under the
Subscription Agreement to indemnify and hold harmless certain persons as set
forth therein. Pursuant to the Subscription Agreement, the Company has agreed
under certain circumstances to indemnify the Selling Shareholders' party thereto
against certain liabilities.
The undersigned hereby warrants and represents to the Company that the
undersigned acquired Series A Convertible Preferred Stock covered by the
Registration Statement in a private placement which was exempt from the
registration provisions of the Securities Act.
The undersigned hereby also agrees to timely advise the Company of sales of
Series A Convertible Preferred Stock, and, at such times as the Company may
reasonably request, of the number of Series A Convertible Preferred Stock
registered for resale by you under the Registration Statement then remaining
unsold, as well as to advise the Company promptly when you have sold all of your
Series A Convertible Preferred Stock.
In accordance with the undersigned's obligation under the Subscription
Agreement to provide such information as may be required by law for inclusion in
the Registration Statement, the undersigned agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof at any time while the Registration
Statement remains effective. All notices hereunder and pursuant to the
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Subscription Agreement shall be made in writing at the address set forth below.
In addition, the undersigned hereby agrees to give the Company three days' prior
notice in advance of sales of Series A Convertible Preferred Stock pursuant to
the Registration Statement, and the undersigned hereby further agrees not to
sell Series A Convertible Preferred Stock in the event the undersigned knows of
any undisclosed material developments or transactions relating to the Company.
The undersigned hereby acknowledges that it understands that any sales or
other dispositions of any Series A Convertible Preferred Stock pursuant to the
Registration Statement, once effective, must be settled with Series A
Convertible Preferred Stock bearing the Company's general (not necessarily
restricted) common shares CUSIP number. A beneficial owner named in the
Registration Statement may obtain Series A Convertible Preferred Stock bearing
the Company's general common shares CUSIP number for settlement purposes by
presenting the Series A Convertible Preferred Stock to be sold (with a
restricted CUSIP), together with a certificate of registered sale, to the
Company's transfer agent, North American Transfer Co. The form of certificate of
registered sale is available from the Company upon request. The process of
obtaining such shares might take a number of business days. SEC rules generally
require trades in the secondary market to settle in three business days, unless
the parties to any such trade expressly agree otherwise. Accordingly, a
beneficial owner who holds Series A Convertible Preferred Stock with a
restricted CUSIP at the time of the trade might wish to specify an alternate
settlement cycle at the time of any such trade to provide sufficient time to
obtain Series A Convertible Preferred Stock with an unrestricted CUSIP in order
to prevent a failed settlement.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers above and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Selling Shareholder Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated: Selling Shareholder
By:____________________________
Name:
Title:
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PLEASE FAX THE COMPLETED AND EXECUTED
QUESTIONNAIRE AND RETURN THE ORIGINAL,
NO LATER THAN JUNE 1, 2005,
TO:
China Biopharmaceuticals Holdings, Inc.
Suite 1601, Building A, Jinshan Tower
No. 8, Shan Xi Road
Nanjing, Jiangsu Province
People's Republic of China
210009
WITH A COPY TO:
HOWARD JIANG, ESQ., BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
FAX: (212) 759-9133