UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest event Reported): July 30, 2008 (July 24, 2008) |
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| CHINA BIOLOGIC PRODUCTS, INC. | ||||||||
| (Exact name of registrant as specified in its charter) | ||||||||
| Delaware | 000-52807 | 75-2308816 | ||||||
| (State of Incorporation) | (Commission File No.) | (IRS Employer ID No.) | ||||||
| No. 14 East Hushan Road, | ||||||||
| Taian City, Shandong 271000 | ||||||||
| People's Republic of China | ||||||||
| (Address of Principal Executive Offices) | ||||||||
| (+86) 538 -620-3897 | ||||||||
| Registrant's Telephone Number, Including Area Code | ||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS;
ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY
ARRANGEMENTS OF CERTAIN OFFICERS.
Departure of Directors.
On and effective July 24, 2008, Messrs. Chao Ming Zhao and
Guangli Pang resigned as directors of China Biologic Products, Inc. (the
"Company").
Messrs. Zhao’s and Pang’s resignations were submitted to
facilitate the appointment of the independent directors disclosed below and not
because of any disagreement with the Company on any matter relating to the
Company’s operations, policies or practices.
Mr. Zhao will continue to perform his role as Chief Executive
Officer of the Company.
Appointment of New Independent Directors.
On and effective July 24, 2008, the Board of Directors of the
Company appointed Mr. Sean Shao, Dr. Jie Gan, and Dr. Tong Jun Lin to serve on
the Board as “independent directors” of the Company (the “Independent Directors”),
as that term is defined by Rule 4200(a)(15) of the Marketplace Rules of The Nasdaq Stock Market, Inc. A copy of the press release announcing such
appointment is attached to this report as Exhibit 99.1.
On July 24, 2008, each of the Independent Directors also
entered into the Company’s form of Independent Director Agreement and
Indemnification Agreement. Under the terms of the Independent Director
Agreement, the Company agreed to pay each of the Independent Directors an annual
salary of $18,000 as compensation for the services to be provided by them as
Independent Directors, except that Mr. Shao will receive an additional $6,000 as
compensation for his role as head of the Company’s Audit Committee, as disclosed
in Item 8.01 below. In addition, the Company agreed to grant to each of the
Independent Directors an option to purchase 20,000 shares of the Company’s
common stock with an exercised price of $4.00 per share, of which 10,000 shares
will be vested on January 25, 2009 and the remaining 10,000 shares will be
vested on July 25, 2009.
Under the terms of the Indemnification Agreement, the Company
agreed to indemnify each of the Independent Directors against expenses,
judgments, fines, penalties or other amounts actually and reasonably incurred by
them in connection with any proceeding if the Independent Directors acted in
good faith and in the best interests of the Company. This brief description of
the terms of the Independent Director Agreement and Indemnification Agreement is
qualified by reference to the provisions of the forms of agreements attached to
this report as Exhibits 10.1 and 10.2.
Mr. Sean Shao
has served as the
Chief Financial Officer of Trina Solar Limited since August 2006, where he
assisted them in listing on the NYSE in December 2006. Prior to that, Mr. Shao
served, from September 2005 to August 2006, as the Chief Financial Officer of
ChinaEdu Corporation, a Chinese educational service provider, and from August
2004 to September 2005, as the Chief Financial Officer of Watchdata Technologies
Ltd., a Chinese security software company. Prior to that Mr. Shao served, from
October 1998 to July 2004, as a senior manager at Deloitte Touche Tohmatsu CPA
Ltd., Beijing, and from December 1994 to November 1997, as an assistant manager
at Deloitte & Touche, Toronto. Mr. Shao received his Master’s degree in Health
Care Administration from the University of California at Los Angeles in 1988 and
his Bachelor’s degree in Art from East China Normal University in 1982. Mr. Shao
is an associate member of the American Institute of Certified Public
Accountants. Mr. Shao also serves as an Independent Director of China
Information Security Technology, Inc., a provider of public security services in
China.
Dr. Jie Gan
has served as an associate professor of
finance in the School of Business and Management at Hong Kong University of
Science and Technology (HKUST) since 2002. Prior to joining HKUST, Dr. Gan
served, from 2000 to 2002, as an assistant professor at the Columbia University,
Graduate School of Business. Dr. Gan has also worked as a consultant for CRA
International (formerly Charles River Associates), one of the largest finance
and economics consulting firms in the U.S., and her consulting experience spans
company valuation, securities fraud and anti-trust, in a range of industries
including financial services, consumer goods and energy. Dr. Gan holds a Master
Degree of Urban Economics from Beijing University and a PhD in Financial
Economics from Massachusetts Institute of Technology and has been published in
top academic journals such as the Journal of Financial Economics and the Review
of Financial Studies.
Dr. Tong Jun Lin
has served as an Associate Professor in
the Departments of Microbiology and Immunology and Pediatrics, Dalhousie
University since 2000 and has focused his research in immune response to
microbial pathogens. Dr. Lin received his MD (1984) and PhD (1990) degrees from
the Institute of Materia Medica at the Chinese Academy of Medical Sciences, and
his post-doctoral training at the University of Alberta (1993-1997), Duke
University (1997-1998) and Dalhousie University (1998-2000). He has published 43
peer-reviewed research articles in leading journals and is a member of the
American Association of Immunologists and the Canadian Society for
Immunologists. Dr. Lin is a recipient of the New Investigator Award from
Canadian Institutes of Health Research (2003-2008) and an Award of Excellence in
Medical Research from Dalhousie University (2004).
There are no arrangements or understandings between any of
the Independent Directors and any other persons pursuant to which they were
selected as directors. There are no transactions between the Company and any of
the Independent Directors that would require disclosure under Item 404(a) of
Regulation S-K.
ITEM 8.01 OTHER EVENTS.
On July 24, 2008, the Board of Directors of the Company also established an Audit Committee and appointed the Company’s independent directors, Sean Shao, Jie Gan, and Tong Jun Lin as the members of the Audit Committee. Sean Shao was appointed as the Chair of the committee, and he will be paid an additional annual salary of $6,000 as compensation for this service. A copy of the Audit Committee Charter is attached to this report as Exhibit 99.2, and is incorporated herein by reference. The Audit Committee Charter will be posted on the corporate governance page of the Company’s website as soon as practical.
The Board of Directors of the Company also determined that Mr. Shao possesses the accounting or related financial management experience that qualifies him as "financially sophisticated" within the meaning of Rule 4350(d)(2)(A) of the Marketplace Rules of The Nasdaq Stock Market, Inc., and that he is an "audit committee financial expert" as defined by the rules and regulations of the Securities and Exchange Commission.
The Company’s announcement of the foregoing is included in the Press Release attached to this report as Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the
Securities and Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly authorized.
| CHINA BIOLOGIC PRODUCTS, INC. | ||
| Date: July 30, 2008 | /s/ Chao Ming Zhao | |
| Chao Ming Zhao | ||
| President and Chief Executive Officer | ||
EXHIBIT INDEX
CHINA BIOLOGIC PRODUCTS, INC.
INDEPENDENT DIRECTOR AGREEMENT
THIS AGREEMENT (The "
Agreement ") is made as of the ____ day of ____ and is by and between China Biologic Products, Inc., a Delaware corporation (hereinafter referred to as the " Company "), and _____ (hereinafter referred to as the " Director ").BACKGROUND
The Board of Directors of the Company desires to appoint the Director to fill an existing vacancy and to have the Director perform the duties of an independent director and the Director desires to be so appointed for such position and to perform the duties required of such position in accordance with the terms and conditions of this Agreement.
AGREEMENT
In consideration for the above recited promises and the mutual promises contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows:
1. DUTIES . The Company requires that the Director be available to perform the duties of an independent director customarily related to this function as may be determined and assigned by the Board of Directors of the Company and as may be required by the Company’s constituent instruments, including its certificate or articles of incorporation, bylaws and its corporate governance and board committee charters, each as amended or modified from time to time, and by applicable law, including by the Delaware General Corporation Law (the "DGCL"). The Director agrees to devote as much time as is necessary to perform completely the duties as the Director of the Company, including duties as a member of the Audit Committee and such other committees as the Director may hereafter be appointed to. The Director will perform such duties described herein in accordance with the general fiduciary duty of directors arising under the DGCL.
2.
TERM . The term of this Agreement shall commence as of the date of the Director’s appointment by the Board of Directors of the Company and shall continue until the Director’s removal or resignation.3. COMPENSATION . For all services to be rendered by the Director in any capacity hereunder, the Company agrees to (i) pay the Director a base fee of USD_____ per month and (ii), pursuant to the terms and conditions of the Company’s 2008 Equity Incentive Plan, grant to the Director ______ options of the common stock of the company with an exercise price of $4.00 which ____ options will be vested 6 months from the appointment date and the remaining ______ options to be vested after one year from the appointment date.
4.
5. CONFIDENTIALITY . The Company and the Director each acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, the Director shall necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to business methods, information systems, financial data and strategic plans which are unique assets of the Company (" Confidential Information "). The Director covenants not to, either directly or indirectly, in any manner, utilize or disclose to any person, firm, corporation, association or other entity any Confidential Information.
6. NON-COMPETE . During the term of this Agreement and for a period of twelve (12) months following the Director’s removal or resignation from the Board of Directors of the Company or any of its subsidiaries or affiliates (the " Restricted Period "), the Director shall not, directly or indirectly, (i) in any manner whatsoever engage in any capacity with any business competitive with the Company’s current lines of business or any business then engaged in by the Company, any of its subsidiaries or any of its affiliates (the " Company's Business ") for the Director’s own benefit or for the benefit of any person or entity other than the Company or any subsidiary or affiliate; or (ii) have any interest as owner, sole proprietor, shareholder, partner, lender, director, officer, manager, employee, consultant, agent or otherwise in any business competitive with the Company's Business; provided, however, that the Director may hold, directly or indirectly, solely as an investment, not more than two percent (2%) of the outstanding securities of any person or entity which are listed on any national securities exchange or regularly traded in the over-the-counter market notwithstanding the fact that such person or entity is engaged in a business competitive with the Company's Business. In addition, during the Restricted Period, the Director shall not develop any property for use in the Company’s Business on behalf of any person or entity other than the Company, its subsidiaries and affiliates.
7. TERMINATION . With or without cause, the Company and the Director may each terminate this Agreement at any time upon ten (10) days written notice, and the Company shall be obligated to pay to the Director the compensation and expenses due up to the date of the termination. Nothing contained herein or omitted herefrom shall prevent the shareholder(s) of the Company from removing the Director with immediate effect at any time for any reason.
8. INDEMNIFICATION . The Company shall indemnify, defend and hold harmless the Director, to the full extent allowed by the law of the State of Florida, and as provided by, or granted pursuant to, any charter provision, bylaw provision, agreement (including, without limitation, the Indemnification Agreement executed herewith), vote of stockholders or disinterested directors or otherwise, both as to action in the Director’s official capacity and as to action in another capacity while holding such office. The Company and the Director are executing the Indemnification Agreement in the form attached hereto as Exhibit A.
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9. EFFECT OF WAIVER . The waiver by either party of the breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.
10. NOTICE . Any and all notices referred to herein shall be sufficient if furnished in writing at the addresses specified on the signature page hereto or, if to the Company, to the Company’s address as specified in filings made by the Company with the U.S. Securities and Exchange Commission and if by fax to 011-86-538-6203895.
11. GOVERNING LAW . This Agreement shall be interpreted in accordance with, and the rights of the parties hereto shall be determined by, the laws of the State of Delaware without reference to that state’s conflicts of laws principles.
12. ASSIGNMENT . The rights and benefits of the Company under this Agreement shall be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns. The duties and obligations of the Director under this Agreement are personal and therefore the Director may not assign any right or duty under this Agreement without the prior written consent of the Company.
13. MISCELLANEOUS . If any provision of this Agreement shall be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of the this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein.
14. ARTICLE HEADINGS . The article headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
15. COUNTERPARTS . This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument. Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.
16. ENTIRE AGREEMENT . Except as provided elsewhere herein, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.
[ Signature Page Follows ]
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IN WITNESS WHEREOF, the parties hereto have caused this Independent Director
Agreement to be duly executed and signed as of the day and year first above
written.
| CHINA BIOLOGIC PRODUCTS, INC. | |
| By: __________________ | |
| Name: | |
| Title: | |
| INDEPENDENT DIRECTOR | |
| _____________________ | |
| Name: | |
| Address: |
EXHIBIT A
Form of Indemnification Agreement
(See Attached)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement, dated as of _____, 2008, is made by and between China Biologic Products, Inc., a Delaware corporation (the "
Company "), and ________, a director of the Company (the " Indemnitee ").RECITALS
A. The Company and the Indemnitee recognize that the present state of the law is too uncertain to provide the Company’s officers and directors with adequate and reliable advance knowledge or guidance with respect to the legal risks and potential liabilities to which they may become personally exposed as a result of performing their duties for the Company;
B. The Company and the Indemnitee are aware of the substantial growth in the number of lawsuits filed against corporate officers and directors in connection with their activities in such capacities and by reason of their status as such;
C. The Company and the Indemnitee recognize that the cost of defending against such lawsuits, whether or not meritorious, is typically beyond the financial resources of most officers and directors of the Company;
D. The Company and the Indemnitee recognize that the legal risks and potential liabilities, and the threat thereof, associated with proceedings filed against the officers and directors of the Company bear no reasonable relationship to the amount of compensation received by the Company’s officers and directors;
E. The Company, after reasonable investigation prior to the date hereof, has determined that the liability insurance coverage available to the Company as of the date hereof is inadequate, unreasonably expensive or both. The Company believes, therefore, that the interest of the Company and its current and future stockholders would be best served by a combination of (i) such insurance as the Company may obtain pursuant to the Company’s obligations hereunder and (ii) a contract with its officers and directors, including the Indemnitee, to indemnify them to the fullest extent permitted by law (as in effect on the date hereof, or, to the extent any amendment may expand such permitted indemnification, as hereafter in effect) against personal liability for actions taken in the performance of their duties to the Company;
F. Title 8, Chapter 1, Section 145 of the Delaware General Corporation Law (the "DGCL") generally empowers Delaware corporations to indemnify a director from individual liability to the corporation, its stockholders or creditors for any damages as a result of any act or failure to act, both as to action in his or her official capacity and as to action in another capacity while holding such office;
G. The Company's Bylaws authorize the indemnification of the directors of the Company in accordance with Section 145;
H.
The Board of Directors of the Company has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company to contractually
indemnify its officers and directors, and to assume for itself liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company, and has further
concluded that the failure to provide such contractual indemnification could
result in great harm to the Company and its shareholders;
I.
The Company desires and has requested the Indemnitee to serve or continue to
serve as a director or officer of the Company, free from undue concern for the
risks and potential liabilities associated with such services to the Company;
and
J.
The Indemnitee is willing to serve, or continue to serve, the Company, provided,
and on the expressed condition, that the Indemnitee is furnished with the
indemnification provided for herein.
AGREEMENT
NOW, THEREFORE, the Company and the
Indemnitee agree as follows:
1.
(a) "Expenses" means, for the purposes of this Agreement, all direct and indirect costs of any type or nature whatsoever (including, without limitation, any fees and disbursements of Indemnitee’s counsel, accountants and other experts and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in connection with the investigation, preparation, defense or appeal of a Proceeding; provided, however, that Expenses shall not include judgments, fines, penalties or amounts paid in settlement of a Proceeding.
(b) "Proceeding" means, for the purposes of this Agreement, any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (including an action brought by or in the right of the Company) in which the Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that the Indemnitee is or was a director or officer of the Company, by reason of any action taken by her or of any inaction on his or her part while acting as such director or officer or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director or officer of the foreign or domestic corporation which was a predecessor corporation to the Company or of another enterprise at the request of such predecessor corporation, whether or not the Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement.
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2. Agreement to Serve . The Indemnitee agrees to serve or continue to serve as a director of the Company to the best of his or her abilities at the will of the Company or under separate contract, if such contract exists, for so long as the Indemnitee is duly elected or appointed and qualified or until such time as the Indemnitee tenders his or her resignation in writing. Nothing contained in this Agreement is intended to create in the Indemnitee any right to continued employment.
3. Indemnification .
(A) Third Party Proceedings . The Company shall indemnify the Indemnitee against Expenses, judgments, fines, penalties or amounts paid in settlement (if the settlement is approved in advance by the Company) actually and reasonably incurred by Indemnitee in connection with a Proceeding (other than a Proceeding by or in the right of the Company) if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in the best interests of the Company, or, with respect to any criminal Proceeding, had no reasonable cause to believe that the Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company . To the fullest extent permitted by law, the Company shall indemnify the Indemnitee against Expenses and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection with a Proceeding by or in the right of the Company to procure a judgment in its favor if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company and its stockholders. Notwithstanding the foregoing, no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged liable to the Company in the performance of the Indemnitee's duty to the Company and its stockholders unless and only to the extent that the court in which such action or Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for Expenses and then only to the extent that the court shall determine.
(c) Scope . Notwithstanding any other provision of this Agreement but subject to Section 14(b), the Company shall indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by other provisions of this Agreement, the Company's Articles of Incorporation, the Company's Bylaws or by statute.
4. Limitations on Indemnification . Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Acts . To indemnify the Indemnitee for any acts or omissions or transactions from which a director may not be relieved of liability excepted under Section 145 of the DGCL or other applicable law;
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(b) Excluded Indemnification Payments . To indemnify or advance Expenses in violation of any prohibition or limitation on indemnification under the statutes, regulations or rules promulgated by the State of Delaware or any other state or federal regulatory agency having jurisdiction over the Company;
(c) Claims Initiated by Indemnitee . To indemnify or advance Expenses to the Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit;
(d) Lack of Good Faith . To indemnify the Indemnitee for any Expenses incurred by the Indemnitee with respect to any Proceeding instituted by the Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding was not made in good faith or was frivolous;
(e) Insured Claims . To indemnify the Indemnitee for Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to or on behalf of the Indemnitee by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company or any other policy of insurance maintained by the Company or the Indemnitee; or
(f) Claims Under Section 16(b) . To indemnify the Indemnitee for Expenses and the payment of profits arising from the purchase and sale by the Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.
5. Determination of Right to Indemnification . Upon receipt of a written claim addressed to the Board of Directors for indemnification pursuant to Section 3, the Company shall determine by any of the methods set forth in Section 145 of the DGCL whether the Indemnitee has met the applicable standards of conduct which makes it permissible under applicable law to indemnify the Indemnitee. If a claim under Section 3 is not paid in full by the Company within one hundred and twenty (120) days after such written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, unless such action is dismissed by the court as frivolous or brought in bad faith, the Indemnitee shall be entitled to be paid also the expense of prosecuting such claim. The court in which such action is brought shall determine whether the Indemnitee or the Company shall have the burden of proof concerning whether the Indemnitee has or has not met the applicable standard of conduct.
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6.
7. Partial Indemnification . If the Indemnitee is entitled under any provision of this Agreement to indemnification or advancement by the Company of some or a portion of any Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, penalties, and amounts paid in settlement) incurred by him in the investigation, defense, settlement or appeal of a Proceeding, but is not entitled to indemnification or advancement of the total amount thereof, the Company shall nevertheless indemnify or pay advancements to the Indemnitee for the portion of such Expenses or liabilities to which the Indemnitee is entitled.
8. Notice to Company by Indemnitee . The Indemnitee shall notify the Company in writing of any matter with respect to which the Indemnitee intends to seek indemnification hereunder as soon as reasonably practicable following the receipt by the Indemnitee of written notice thereof; provided, however, that any delay in so notifying the Company shall not constitute a waiver by the Indemnitee of her rights hereunder. The written notification to the Company shall be addressed to the Board of Directors and shall include a description of the nature of the Proceeding and the facts underlying the Proceeding and be accompanied by copies of any documents filed with the court in which the Proceeding is pending. In addition, the Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within the Indemnitee’s power.
9. Maintenance of Liability Insurance .
(a) Subject to Section 4 hereof, the Company hereby agrees that so long as the Indemnitee shall continue to serve as a director of the Company and thereafter so long as the Indemnitee shall be subject to any possible Proceeding, the Company, subject to Section 9(B), shall use reasonable commercial efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (" D&O Insurance ") which provides the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors.
(b) Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or the Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.
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(c) If, at the time of the receipt of a notice of a claim pursuant to Section 8 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
10. Defense of Claim . In the event that the Company shall be obligated under Section 6 hereof to pay the Expenses of any Proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same Proceeding, provided that (i) the Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by the Indemnitee has been previously authorized by the Company, or (B) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at the expense of the Company.
11. Attorneys' Fees . In the event that the Indemnitee or the Company institutes an action to enforce or interpret any terms of this Agreement, the Company shall reimburse the Indemnitee for all of the Indemnitee’s reasonable fees and expenses in bringing and pursuing such action or defense, unless as part of such action or defense, a court of competent jurisdiction determines that the material assertions made by the Indemnitee as a basis for such action or defense were not made in good faith or were frivolous.
12. Continuation of Obligations . All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter so long as the Indemnitee shall be subject to any possible proceeding by reason of the fact that the Indemnitee served in any capacity referred to herein.
13. Successors and Assigns . This Agreement establishes contract rights that shall be binding upon, and shall inure to the benefit of, the successors, assigns, heirs and legal representatives of the parties hereto.
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14.
Non-Exclusivity
.
(a)
The provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed to be exclusive of any other rights that the
Indemnitee may have under any provision of law, the Company’s Articles of
Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested
directors, other agreements or otherwise, both as to action in the Indemnittee’s
official capacity and action in another capacity while occupying the
Indemnitee’s position as a director or officer of the Company.
(b)
In the event of any changes, after the date of this Agreement, in any applicable
law, statute, or rule which expand the right of a Delaware corporation to
indemnify its officers and directors, the Indemnitee’s rights and the Company’s
obligations under this Agreement shall be expanded to the full extent permitted
by such changes. In the event of any changes in any applicable law, statute or
rule, which narrow the right of a Delaware corporation to indemnify a director
or officer, such changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties’ rights and obligations hereunder.
15.
Effectiveness of Agreement
. To the extent that the indemnification
permitted under the terms of certain provisions of this Agreement exceeds the
scope of the indemnification provided for in the Delaware General Corporations
Law, such provisions shall not be effective unless and until the Company’s
Articles of Incorporation authorize such additional rights of indemnification.
In all other respects, the balance of this Agreement shall be effective as of
the date set forth on the first page and may apply to acts of omissions of the
Indemnitee which occurred prior to such date if the Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, at the time such act or
omission occurred.
16.
Severability
. Nothing in this Agreement is intended to require or shall
be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company’s inability, pursuant to court order, to perform
its obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided in
this Section 16. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify the Indemnitee to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated, and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
17.
Governing Law
. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware, without reference to its
conflict of law principals. To the extent permitted by applicable law, the
parties hereby waive any provisions of law which render any provision of this
Agreement unenforceable in any respect.
18.
Notices
. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
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19. Mutual Acknowledgment . Both the Company and the Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. The Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the appropriate state or federal regulatory agency to submit for approval any request for indemnification, and has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify the Indemnitee.
20. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall constitute an original.
21. Amendment and Termination . No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.
[ Signature Page Follows ]
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IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year set forth above.
COMPANY:
INDEMNITEE:
CHINA BIOLOGIC
PRODUCTS, INC.
By:________________________
________________________
Name
Name:
Title
Address:
Address:
No.14 East Hushan Road
Tai’an City, Shandong
People’s Republic of China 271000
| Company Contact: | Investor Relations Contact: |
| Mr. Y. Tristan Kuo | Mr. Crocker Coulson |
| CFO | President |
| China Biologic Products, Inc. | CCG Investor Relations |
| Tel: +86-538- 6202206 | Tel: +1-646-213-1915 (NY office) |
| Email: IR@chinabiologic.com | Email: crocker.coulson@ccgir.com |
| www.chinabiologic.com | www.ccgir.com |
For Immediate Release
China Biologic Products Establishes Audit Committee and Appoints
Three New Independent Directors to Board of Directors
Taian City, Shandong Province, PRC – July 30, 2008 – China Biologic Products, Inc. (CBPO.OB) (“CBP,” or the “Company”), one of the leading plasma-based pharmaceutical companies in the People’s Republic of China (“PRC”), today announced that, effective July 24, 2008, it has appointed Mr. Sean Shao, Dr. Jie Gan, and Dr. Tong-Jun Lin, to serve as independent members of its Board of Directors, and that it has established an Audit Committee comprised of the new directors.
Mr. Chao Ming Zhao and Mr. Guangli Pang resigned as directors of the Company on the same date, to facilitate the appointment of the new independent directors. Mr. Zhao will continue to fulfill his role as CBP’s Chief Executive Officer.
“We are delighted to add Mr. Shao, Dr. Gan and Dr. Lin to our Board of Directors and as members of our Audit Committee, and to have Mr. Shao serve as our Audit Committee Chair,” said Mr. Chao Ming Zhao, the Company’s CEO. “They each bring to CBP a wealth of knowledge, industrial expertise and experience working with leading public companies in both North America and China. Their addition to our Board of Directors is the first step in the implementation of our new corporate governance policy, as we continue to expand our business and pursue our commercial objectives.”
Mr. Sean Shao has been appointed to serve as the Chairman of CBP’s Audit Committee. He brings to CBP over thirteen years of experience in financial and operational management in publicly held and private-owned companies. For the past four years Mr. Shao has served as chief financial officer of Trina Solar Limited, ChinaEdu Corporation, a Chinese educational service provider, and Watchdata Technologies Ltd., a Chinese security software company. Prior to this, Mr. Shao served six years as a senior manager at Deloitte Touche Tohmatsu Beijing and three years with Deloitte & Touche Toronto. Mr. Shao received his master’s degree in health care administration from the University of California at Los Angeles in 1988 and his bachelor’s degree in art from East China Normal University in 1982. Mr. Shao holds a CPA license of American Institute of Certified Public Accountants.
Dr. Jie Gan has been appointed to serve as a member of CBP’s audit committee. She brings to CBP strong financial consulting experiences. She serves as an associate professor with tenure in the Department of Finance at the Hong Kong University of Science and Technology. Her areas of research expertise include pharmaceutical company valuation in the areas of accounting statements, cash flow forecasts, and cost of capital estimations. Dr. Gan received her PhD in Financial Economics from the Massachusetts Institute of Technology and her Bachelor’s degree from Nanjing University in China.
Dr. Tong Jun Lin has been appointed to serve as a member of CBP’s audit committee. He has over 20 years of medical research experience. He is an associate professor with tenure in the Departments of Microbiology and Immunology and Pediatrics at the Dalhousie University. Dr. Lin has been involved in the studies of immunological mechanisms in the host defense against microbial pathogens and allergens. Dr. Lin received his MD (1984) from The First Military Medical University in Guangzhou, China and PhD (1990) degree from the Institute of Materia Medica Chinese Academy of Medical Sciences in Beijing, China. He received his post-doctoral training at the University of Alberta, Duke University and Dalhousie University.
About China Biologic Products, Inc.
Through its indirect majority-owned subsidiary Shandong Taibang Biological Products Co. Ltd., China Biologic Products, Inc. (the “Company”), is principally engaged in the research, development, production and manufacturing and sale of plasma-based biopharmaceutical products to hospitals and other health care facilities in China. The Company’s human albumin products are mainly used to increase blood volume and its immunoglobulin products are used for the treatment and prevention of diseases.
Safe Harbor Statement
This release may contain certain “forward-looking statements” relating to the business of China Biologic Products, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are “forward-looking statements,” including statements regarding: the significance of the Company’s appointment of the new independent directors and the establishment of the Audit Committee; the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
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CHINA BIOLOGIC PRODUCTS, INC.
AUDIT COMMITTEE CHARTER
The Purpose of the Audit Committee
The purpose of the Audit Committee of China Biologic Products, Inc. (the "Company") is to represent and assist the board of directors in its general oversight of the Company’s accounting and financial reporting processes, audits of the financial statements, and internal control and audit functions. Management is responsible for (a) the preparation, presentation and integrity of the Company’s financial statements; (b) accounting and financial reporting principles; and (c) the Company’s internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations. The Company’s independent auditing firm is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards.
The Audit Committee members are not professional accountants or auditors and their functions are not intended to duplicate or to certify the activities of management and the independent auditor. Consequently, it is not the duty of the Audit Committee to conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor. The Audit Committee serves a board level oversight role where it oversees the relationship with the independent auditor, as set forth in this charter, receives information and provides advice, counsel and general direction, as it deems appropriate, to management and the auditors, taking into account the information it receives, discussions with the auditor, and the experience of the Audit Committee’s members in business, financial and accounting matters.
Membership and Structure
The Audit Committee is comprised of at least three directors determined by the board of directors to meet the director and audit committee member independence requirements and financial literacy requirements of The NASDAQ Stock Market, Inc. ("NASDAQ"), the Securities and Exchange Commission or any other applicable requirements. At least one member of the Audit Committee must be financially sophisticated, as determined by the Board, and no Audit Committee member may have participated in the preparation of the financial statements of the Company or any of the Company’s current subsidiaries at any time during the past three years, each as required by NASDAQ listing standards. Appointment to the Audit Committee, including the designation of the Chair of the Audit Committee and the designation of any Audit Committee members as "audit committee financial experts", shall be made on an annual basis by the full Board upon recommendation of the Governance and Nominating Committee. Meetings of the Audit Committee shall be held at such times and places as the Audit Committee shall determine, including by written consent. When necessary, the Audit Committee shall meet in executive session outside of the presence of any senior executive officer of the Company. The Chair of the Audit Committee shall report on activities of the Audit Committee to the full Board. In fulfilling its responsibilities the Audit Committee shall have authority to delegate its authority to subcommittees, in each case to the extent permitted by applicable law.
Operations
The Audit Committee meets at least four times a year, on a
quarterly basis. Additional meetings may occur as the Audit Committee or its
chairperson deems advisable. The Audit Committee shall meet in executive session
privately, with the independent auditor, without the chief internal auditor and
management present, not less frequently than quarterly. The Audit Committee will
cause adequate minutes of all its proceedings to be kept, and will report on its
actions and activities at the next quarterly meeting of the board of directors
of the Company. Audit Committee members will be furnished with copies of the
minutes of each meeting and any action taken by unanimous consent. The Audit
Committee is governed by the same rules regarding meetings (including meetings
by conference telephone or similar communications equipment), action without
meetings, notice, waiver of notice, and quorum and voting requirements as are
applicable to the board of directors of the Company. The Audit Committee is
authorized to adopt its own rules of procedure not inconsistent with (a) any
provision of this Charter, (b) any provision of the Bylaws of the Company, or
(c) the laws of the State of Delaware.
The Chairman of the Audit Committee is to be contacted
directly by the chief internal auditor or the independent auditor (1) to review
items of a sensitive nature that can impact the accuracy of financial reporting
or (2) to discuss significant issues relative to the overall Board
responsibility that have been communicated to management but, in their judgment,
may warrant follow-up by the Audit Committee.
Authority
The Audit Committee will have the resources and authority
necessary to discharge its duties and responsibilities. The Audit Committee
shall have the authority to engage independent legal, accounting and other
advisers, as it determines necessary to carry out its duties. The Audit
Committee shall have sole authority to approve related fees and retention terms.
Any communications between the Audit Committee and legal counsel in the course
of obtaining legal advice will be considered privileged communications of the
Company and the Audit Committee will take all necessary steps to preserve the
privileged nature of those communications.
The Audit Committee may form and delegate authority to subcommittees and may
delegate authority to one or more designated members of the Audit Committee.
Responsibilities
The Audit Committee:
1. is
directly responsible for the appointment, compensation, retention and oversight
of the work of the independent auditor (including resolution of disagreements
between management and the auditors regarding financial reporting), who shall
report directly to the Audit Committee;
2. obtains
and reviews annually a report by the independent auditor describing the firm’s
internal quality-control procedures, any material issues raised by the most
recent internal quality-control review or peer review or by any inquiry or
investigation by governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried out by the firm,
and any steps taken to deal with any such issues;
3. reviews
and discusses with the independent auditor the written statement from the
independent auditor concerning any relationship between the auditor and the
Company or any other relationships that may adversely affect the independence of
the auditor, and, based on such review, assesses the independence of the
auditor;
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4.
establishes policies and procedures for the review and pre-approval by the Audit
Committee of all auditing services and permissible non-audit services (including
the fees and terms thereof) to be performed by the independent auditor;
5. reviews
and discusses with the independent auditor (a) its audit plans, and audit
procedures, including the general audit approach, scope, staffing, fees and
timing of the audit, (b) the results of the annual audit examination and
accompanying management letters, and (c) the results of the independent
auditor’s procedures with respect to interim periods;
6. reviews
and discusses reports from the independent auditor on (a) all critical
accounting policies and practices used by the Company, (b) alternative
accounting treatments within GAAP related to material items that have been
discussed with management, including the ramifications of the use of the
alternative treatments and the treatment preferred by the independent auditor,
and (c) other material written communications between the independent auditor
and management;
7. reviews
and discusses with the independent auditor the independent auditor’s judgments
as to the quality, not just the acceptability, of the Company’s accounting
principles and such further matters as the independent auditors present the
Audit Committee under generally accepted auditing standards;
8. discusses
with management and the independent auditor quarterly earnings press releases,
including the interim financial information and business discussion included
therein, reviews and discusses with management and independent auditor the
unaudited quarterly or interim financial statements and the management
discussion and analysis in the quarterly report or the annual report, the
year-end audited financial statements and "Management’s Discussion and Analysis
of Financial Condition and Results of Operations" and, if deemed appropriate,
recommends to the board of directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year;
9. reviews
and discusses with management and the independent auditor various topics and
events that may have significant financial impact on the Company or that are the
subject of discussions between management and the independent auditors;
10. reviews and
discusses with management the Company’s major financial risk exposures and the
steps management has taken to monitor and control such exposures;
11. reviews and
approves related-party transactions (as defined in the relevant NASDAQ
requirements);
12. reviews and
discusses with management, the independent auditor, and the Company’s chief
internal auditor (a) the adequacy and effectiveness of the Company’s internal
controls (including any significant deficiencies, material weaknesses and
significant changes in internal controls reported to the Audit Committee by the
independent auditor or management), (b) the Company’s internal audit procedures,
and (c) the adequacy and effectiveness of the Company’s disclosure controls and
procedures, and management reports thereon;
13. reviews
annually with the chief internal auditor the scope of the internal audit
program, and reviews annually the performance of both the internal audit group
and the independent auditor in executing their plans and meeting their
objectives;
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14. reviews and
concurs in the appointment, replacement, reassignment, or dismissal of any chief
internal auditor of the Company;
15. reviews the use
of auditors other than the independent auditor in cases such as management’s
request for second opinions;
16. reviews matters
related to the corporate compliance activities of the Company;
17. establishes
procedures for the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls, or auditing
matters, and the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters;
18. establishes
policies for the hiring of employees and former employees of the independent
auditor;
19. publishes the
report of the Audit Committee required by the rules of the Securities and
Exchange Commission to be included in the Company’s annual proxy statement;
20. periodically
reviews with the Company’s in-house and independent counsel any legal matters
that could have a significant impact on the Company’s financial statements, the
Company’s compliance with applicable laws and regulations, and any material
reports or inquiries received from regulators or governmental agencies;
21. obtains timely
reports from management and the Company’s senior internal auditing executive and
counsel that the Company and its subsidiaries are in conformity with applicable
legal requirements and the Company’s Code of Ethics, including disclosures of
insider and affiliated party transactions;
22. advises the
Board of Directors with respect to the Company’s policies and procedures
regarding compliance with applicable laws and regulations and with the Company’s
Code of Ethics;
23. reviews and
approves the Company’s Code of Ethics, as it may be amended and updated from
time to time, and ensures that management has implemented a compliance program
to enforce such Code (which shall include reporting of violations of such Code
to the Audit Committee);
24. reviews
reported violations of the Company’s Code of Ethics;
25. reviews and
approves (a) any change or waiver in the Company’s Code of Ethics for principal
executives and senior financial officers and (b) any disclosures made on Form
8-K regarding such change or waiver;
26. when
appropriate, designates one or more of its members to perform certain of its
duties on its behalf, subject to such reporting to or ratification by the Audit
Committee as the Audit Committee shall direct; and
27. will engage in
an annual self-assessment with the goal of continuing improvement, and will
annually review and reassess the adequacy of its charter, and recommends any
changes to the full Board.
The Audit Committee shall consult with management but may not delegate these
responsibilities, except as specifically provided for above.
Adopted by the Board of Directors on, July ___, 2008
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