LOAN CONVERSION
AGREEMENT
This Loan Conversion Agreement (this “
Agreement ”) is dated May 15, 2009, among Renhuang
Pharmaceuticals, Inc., a Nevada Corporation, (the “
Company ”) and the investors listed and identified on
the signature pages hereto (each an “Investor” and
together, the “ Investors ”).
WHEREAS, the Investors provided the Company with
a loan in the aggregate amount of $1.5 million on January 29, 2008
for a term of one year in anticipation of a private placement by
the Company (the “Bridge Loan”).
WHEREAS, it was understood at the time of the
making of the Bridge Loan that the [Principal and any accrued and
unpaid interest of the] Bridge Loan was convertible into shares of
the Company’s common stock, par value $0.001 (“
Common Stock ”), at the conversion price of
$1.25 per share at the option of the Investors with a 50% warrant
coverage which permits the Investors to purchase shares of the
Common Stock at an exercise price equal to 125% of the conversion
price.
WHEREAS, Company was not able to complete the
private placement due to market conditions and as a result of
certain circumstances, the Company was not able to file required
periodic reports with the Securities and Exchange Commission (the
“SEC”) and was delisted from the Over-the-Counter
Bulletin Board (“OTCBB”).
WHEREAS, the Company was not able to repay the
Bridge Loan and is willing to reduce the conversion price to $0.70
per share and the warrant exercise price to $0.875 per share in
exchange for the Investors’ (i) waiver of the repayment of
the Bridge Loan and any accrued but unpaid interest thereupon and
(ii) conversion of the Bridge Loan into shares of the Common Stock
plus warrants (the “ Warrants ”) to
purchase shares of the Common Stock (the “
Securities ”)
WHEREAS, subject to the terms and conditions set
forth in this Agreement and pursuant to Regulation D and Regulation
S, or other applicable exemptions under the Securities Act of 1933,
as amended (the “ Securities Act ”), the
Company desires to issue and sell to the Investor, and the Investor
desires to convert into and purchase from the Company certain
Securities of the Company, as more fully described in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual
covenants contained in this Agreement, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Investor agree as
follows:
I. PURCHASE AND SALE
A.
Closing . Subject to the terms and conditions set
forth in this Agreement, the Company shall issue and sell to the
Investors (i) shares of Common Stock of the Company as set forth on
the signatures and (ii) Warrants to purchase shares of the Common
Stock as set forth on the signature pages in exchange for the
waiver of the Bridge Loan and any accrued interest thereupon by the
Investors. The Investors shall receive the Shares and
Warrants in lieu of the repayment of the principal of the Bridge
Loan and any accrued interest thereupon. The closing of
the transactions contemplated hereby shall take place at the
offices of Cadwalader Wickersham & Taft LLP, 79 Jianguo Road,
China Central Place, Tower 2, Room 2301, Beijing, China 100025, on
May 15, 2009 or at such other location or time as the parties may
agree (the “ Closing Date ”).
1. On
the Closing Date, the Company shall deliver or cause to be
delivered to the Investor the following:
(a) certificates
evidencing the Shares, registered in the name of the Investors;
and
(b) warrants,
substantially in the form attached hereto as Exhibit A, in the name
of the Investors and duly authorized and executed by the
Company.
2. The Investor
shall deliver or cause to be delivered to the Company the
following:
(a) any
documentation evidencing the Bridge Loan for
cancellation;
(b) a
waiver and release, substantially in the form attached hereto as
Exhibit B, duly authorized and executed by the
Investors.
II. REPRESENTATIONS AND
WARRANTIES
A.
Representations and Warranties of the
Company.
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Organization
and Qualification . The
Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Nevada, with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently
conducted.
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Authorization and Power; Enforcement
. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by it of the
transactions contemplated hereby, including the issuance of the
securities, has been duly authorized by all necessary action on the
part of the Company. This Agreement is the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms.
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Issuance of
the Securities . The
Shares are duly authorized and, when issued and paid for in
accordance with this Agreement, will be duly and validly issued,
fully paid and nonassessable. The shares issuable upon exercise of
the Warrants (“ Warrant Shares ”), when
issued in accordance with the terms of the Warrants, will be
validly issued, fully paid and nonassessable.
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B.
Representations and
Warranties of the Investor . Each of the Investors, severally
and not jointly, hereby represents and warrants to the Company as
follows:
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Organization
and Standing of the Investor . If such Investor is an entity, such
Investor is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization.
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Authorization and Power; Enforcement.
Such Investor has the
requisite power and authority to enter into and perform this
Agreement and the transactions contemplated hereby and to purchase
the Securities being sold to it hereunder. The
execution, delivery and performance of this Agreement by such
Investor and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate or partnership action, and no further
consent or authorization of such Investor or its Board of
Directors, stockholders, partners, members, as the case may be, is
required. This Agreement has been duly authorized,
executed and delivered by such Investor and constitutes, or shall
constitute when executed and delivered, a valid and binding
obligation of such Investor enforceable against such Investor in
accordance with the terms hereof.
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No
Conflicts. The execution, delivery and
performance of this Agreement and the consummation by such Investor
of the transactions contemplated hereby or relating hereto do not
and will not (i) result in a violation of such Investor’s
charter documents or bylaws or other organizational documents or
(ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of any agreement, indenture or instrument or
obligation to which such Investor is a party or by which its
properties or assets are bound, or result in a violation of any
law, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to such Investor or its
properties (except for such conflicts, defaults and violations
as would not, individually or in the aggregate, have a material
adverse effect on such Subscriber). Such Investor is not
required to obtain any consent, authorization or order of, or make
any filing or registration with, any court or governmental agency
in order for it to execute, deliver or perform any of its
obligations under this Agreement or to purchase the Securities in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Investor is assuming and
relying upon the accuracy of the relevant representations and
agreements of the Company herein.
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Access to
Information . &nb
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