Document:

f20f0310ex4xiii_djsp.htm

Exhibit 4.13

 

 

DAL GROUP, LLC

TAX INDEMNIFICATION AGREEMENT

 

THIS TAX INDEMNIFICATION AGREEMENT (this “Agreement”), dated as of January 15, 2010, is entered into by and between DAL Group, LLC, a Delaware limited liability company (the “Company”) and Chardan 2008 China Acquisition Corp. (“Chardan”).

 

Recitals

 

WHEREAS, Chardan is to become a member of the Company and enter into the Amended and Restated Limited Liability Company Agreement of DAL Group, LLC dated as of the date hereof (the “LLC Agreement”).

 

WHEREAS,  to induce Chardan to enter into the LLC Agreement the Company has agreed to enter into this Agreement to provide certain tax indemnifications to Chardan.

 

NOW, THEREFORE, the parties agree as follows:

 

1. DEFINITIONS.

 

(a) “Accountant” shall mean McGladrey & Pullen LLP, or other nationally recognized certified public accounting firm mutually agreed to by the parties.

 

(b) “Amended Indemnity Amount” is defined in Section 2(b).

 

(c) “Code” means the United States Internal Revenue Code of 1986, as amended.

 

(d) “Final Determination” means a “determination” within the meaning of Section 1313(a) of the Code, a binding settlement with any taxing authority, or a determination by the Accountant in connection with the filing of a Tax Return for Chardan or the Company.

 

(e) “FlatWorld Participants” means FlatWorld DAL, LLC, Raj Gupta and Jeffrey Valenty.

 

(f)           “FlatWorld Tax Indemnification Agreement” means that certain tax indemnification agreement entered into by and between the FlatWorld Participants and Chardan dated as of the date hereof.

 

(g)           “Indemnified Loss Event” is defined in Section 2(a).

 

(h)           “Indemnity Amount” means, with respect to Chardan, (i) the amount, determined by the Accountant in its reasonable discretion, of the increase in Taxes actually payable by Chardan for the tax year in question, including those Taxes, if any, resulting from the receipt by Chardan of an indemnity payment pursuant to this Agreement; (ii) reasonable fees of accountants and attorneys incurred by Chardan in calculating the increase in Taxes subject to indemnity hereunder or in complying with its obligations, defending any actions, or enforcing any of its rights under this Agreement; (iii) any Indemnification Expenses not payable pursuant to the Tax Indemnification Agreements; and (iv) any indemnification from the Company as to which Chardan is entitled pursuant to the last sentence of Section 3(d) of the Stern Participants Tax Indemnification Agreement and the last sentence of Section 5(d) of the FlatWorld Tax Indemnification Agreement.

 

  

1

  

 

(i)           “Indemnification Expenses” is defined in Section 1(q) of the Stern Participants Tax Indemnification Agreement and Section 1(r) of the FlatWorld Tax Indemnification Agreement.

 

(j)           “Indemnity Payment” is defined in Section 2(a).

 

(k)           “LLC Agreement” is defined in the Recitals.

 

(l)           “Notice Date” is defined in Section 3(a).

 

(m)           “Reverse Indemnity” is defined in Section 2(c).

 

(n)           “Stern Participants” means David J. Stern, the Law Offices of David J. Stern, P.A., Professional Title and Abstract Company of Florida, Inc. and Default Servicing, Inc.

 

(o)           “Stern Participants Tax Indemnification Agreement” means that certain tax indemnification agreement entered into by and between the Stern Participants and Chardan dated as of the date hereof.

 

(p)           “Tax” or “Taxes” shall mean all federal, state and local income taxes, imposed by any U.S. federal, state, local or other government, or any agency or political subdivision thereof, together with any interest, penalties or additions to tax imposed thereon.

 

(q)           “Tax Indemnification Agreements” means the Stern Participants Tax Indemnification Agreement and the FlatWorld Tax Indemnification Agreement.

 

(r)           “Tax Return” includes any return (including any informational return in the case of an entity taxed as a partnership), declaration, report, claim for refund or credit, information return or statement, and any amendment thereto, including any consolidated, combined, unitary or separate return or other document (including any related or supporting information or schedule), required to be filed with any governmental entity in connection with the determination, assessment, collection or payment of Taxes or the administration of any Laws, regulations or administrative requirements relating to Taxes.

 

2. INDEMNITY OBLIGATION.

 

(a) The Company hereby agrees to indemnify, defend and hold harmless Chardan against and to pay to, or on behalf of, Chardan (an “Indemnity Payment”) any Indemnity Amount incurred by Chardan as a result of a Final Determination that the Taxes payable by Chardan, in a taxable year with respect to the income recognized by Chardan as a result of being a Member of the Company, is in excess of the current year tax distributions received by Chardan pursuant to Section 5.4 of the LLC Agreement (an “Indemnified Loss Event’); provided, however, the Company will not be required to make an Indemnity Payment to the extent Chardan recovers an Indemnity Payment for the same Indentified Loss Event from the Stern Participants pursuant to the Stern Participants Tax Indemnification Agreement or the FlatWord Participants pursuant to the FlatWorld Participants Tax Indemnification Agreement.

 

  

2

  

 

(b) If it is determined that the initial determination of an Indemnity Amount was incorrect (including by reason of a subsequent examination by a taxing authority or the filing of an amended tax return) (the “Amended Indemnity Amount”), and the Amended Indemnity Amount is greater than the initial Indemnity Amount, the Company shall make an additional payment to Chardan promptly after such determination in an amount equal to the difference between (i) the payment previously made pursuant to Section 2(a) hereof, and (ii) the payment that would have been paid pursuant to Section 2(a) if had such original determination been correct (but taking into account any additional interest, penalty or addition to Tax as a result of the fact that the payment is made later). In the event the Amended Indemnity Amount is less than the initial Indemnity Amount, subject to the limitations herein, Chardan shall make a payment to the Company in an amount equal to the difference between (i) the payment previously made pursuant to Section 2(a), and (ii) the payment that would have been made if such original determination had been correct. In the event such initial Indemnity Amount (or portion thereof) has previously been paid to a taxing authority, Chardan will be required to make a payment to the Company only following the receipt of any tax refund arising from the Amended Indemnity Amount, including any interest received by Chardan as part of such tax refund; provided, however, that Chardan will not be required to make any payment in excess of the amount of any tax refund (including interest thereon) less any Taxes payable by Chardan in connection with the receipt of such refund. If more than one payment is to be made pursuant to this Section 2(b), the later payments shall take into account the effect of any prior payments.  To the extent that Chardan recovered Indemnity Payments for the Indemnified Loss Event resulting in the Amended Indemnity Amount from the Stern Participants, the FlatWorld Participants and the Company, any amounts to be paid to such parties as a result of an Amended Indemnity Amount shall be shared among the Stern Participants, the FlatWorld Participants and the Company, on a pro rata basis, in accordance with the amount of the original Indemnity Payment made by them with respect to that Indemnified Loss Event

 

(c) If an event that results in an Indemnified Loss Event for which an Indemnity Payment is paid pursuant to Section 2(a) has the effect of actually reducing the federal, state or local income tax liability of Chardan in a future tax year (including if the event results in an increase in tax basis which reduces Chardan’s taxable gain or increases Chardan’s taxable loss on a subsequent sale of its Membership Interests or upon the subsequent sale of the assets of the Company), and if such reduction has not previously been taken into account in computing an Indemnity Amount, then Chardan shall pay to the Company, an amount (a “Reverse Indemnity”) equal to the amount of such actual reduction in Taxes but only to the extent Chardan has received in cash (i) tax distributions pursuant to Section 5.4 of the LLC Agreement in excess of Taxes payable by Chardan in respect of such taxable year or (ii) a tax refund resulting from such actual reduction in Taxes less any Taxes payable by Chardan in connection with the receipt of such tax refund.  Chardan shall not be obligated to make any payment pursuant to this Section 2(c) to the extent that the sum of the amount of the aggregate payments made pursuant to this Section 2(c) is in excess of the aggregate Indemnity Amounts previously paid to Chardan with respect to the Indemnified Loss Event. To the extent that Chardan recovered Indemnity Payments for the Indemnified Loss Event resulting in the Reverse Indemnity from the Stern Participants, the FlatWorld Participants and the Company, any amounts to be paid to such parties as a result of the Reverse Indemnity shall be shared among the Stern Participants, the FlatWorld Participants and the Company, on a pro rata basis, in accordance with the amount of the original Indemnity Payment made by them with respect to that Indemnified Loss Event.

 

  

3

  

 

3. PROCEDURAL MATTERS.

 

(a) Once there has been a Final Determination, board members of Chardan, not nominated by the Stern Participants or FlatWorld Participants, may make a demand on behalf of Chardan for any Indemnity Amount under Section 2(a) by providing written notice to the Company. Such written notice shall be provided to the Company  as soon as practicable after such Final Determination (the “Notice Date”).

 

(b) The Company shall make any required payments to Chardan pursuant to this Agreement no later than twenty (20) days after the Notice Date, but in no event later than the date Chardan is required to make a payment of any additional Taxes as the result of an Indemnified Loss Event. Any such payment shall be treated as an indemnification payment and not as a distribution under Section 5.3 or Section 5.4 of the LLC Agreement.

 

(c) To the extent permitted by law, without the imposition of a penalty under Section 6662 of the Code, Chardan agrees to report any item on such Tax Returns, and to take positions in any other Tax filings, in a manner consistent with the positions taken by the Company on its Tax Returns. Chardan agrees to not take any action independent of the  Tax Matters Partner (as defined in Section 6231(a)(7) of the Code) of the Company in any examination or other proceeding in respect of the Company’s Tax Returns and to cooperate with the Company, or the Tax Matters Partner, in pursuing any contest or other proceeding in respect of Taxes.

 

(d) The Company and Chardan agree to use the Accountant to prepare their respective Tax Returns.

 

4. NOTICES.  All notices or other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if (a) physically delivered, (b) one (1) day after having been delivered to Federal Express or other delivery courier in time and specifying next day delivery, with proof of delivery to the recipient received by the courier in the form of a signature of recipient, (c) three (3) days after having been deposited in the United States mail, as certified mail with return receipt requested and with postage prepaid, or (d) transmitted by electronic mail or similar means, provided that a physical copy is subsequently delivered by means described in (a), (b) or (c) above, addressed to the parties at the addresses listed below.  The addresses and other information so indicated for any party may be changed by a party by written notice to the other parties.

 

  

4

  

 

 

	 	 Notice to the Company:
	 	 
	 	 DAL Group, LLC
	 	 900 South Pine Island Road
	 	 
 Suite 400

	 	 
 Plantation, FL 33324

	 	 Attn:  David J. Stern, Esq.
	 	 Facsimile: (954) 233-8000
	 	 
	 	 with a copy to:

 

	 	
 Chardan Capital, LLC

	 	 474 Three Mile Road
	 	
 Glastonbury, CT 06033

	 	
 Attn:  Dan Beharry

	 	 
 Facsimile: (281) 644-5751

	 	 Email: dbeharry@chardancapital.com
	 	 

 

Notice to Chardan:

 

Chardan 2008 China Acquisition Corp.

c/o Chardan Capital, LLC

474 Three Mile Road

Glastonbury, CT 06033

Attn: Dan Beharry

Facsimile: (281) 644-5751

Email: dbeharry@chardancapital.com

and to:

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

Attn: Mitchell S. Nussbaum

Email: mnussbaum@loeb.com

 

5. AMENDMENTS.  All amendments to this Agreement shall be in writing and shall not be effective unless approved by all parties to this Agreement.

 

6. ENTIRE AGREEMENT.  This Agreement constitutes the entire Agreement between the parties and may be modified only as provided herein.  No representations or oral or implied agreements have been made by any party hereto or its agent, and no party to this Agreement relies upon any representation or agreement not set forth in it.  This Agreement supersedes any and all other agreements, either oral or written, by and among the parties with respect to the subject matter hereof.

 

  

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7. JURISDICTION.  Each party hereby consents to the exclusive jurisdiction of the state and federal courts sitting in Florida in any action on a claim arising out of, under or in connection with this Agreement or the transactions contemplated by this Agreement.  Each Member further agrees that, to the fullest extent permitted by law, personal jurisdiction over him, her or it may be effected by service of process by registered or certified mail addressed as provided in Section 4 of this Agreement, and that when so made will be as if served upon him, her or it personally.  EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR RELATING TO THE COMPANY OR ITS OPERATIONS.

 

8. BINDING EFFECT.  This Agreement shall be binding upon and shall inure to the benefit of the parties, their successors and assigns.  None of the provisions of this Agreement shall be construed as for the benefit of or as enforceable by any creditor of the parties or any other person not a party to this Agreement.

 

9. COUNTERPARTS.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one instrument.

 

10. INTERPRETATION AND CONSTRUCTION.

 

(a) Florida Law to Control.  The validity and interpretation of, and the sufficiency of performance under, this Agreement shall be governed by Florida law, with regard to its conflicts of law rules.

 

(b) Arrangement and Classification.  This Agreement is divided into sections, subsections, paragraphs, subparagraphs and clauses, in that order of subdivision.  The division of this Agreement into subdivisions is for convenience only.  No inference, implication or presumption shall be drawn or made because of the location or grouping of any particular subdivision of this Agreement.

 

(c) Captions.  All captions are for convenience only, do not form a substantive part of this Agreement and shall not restrict or enlarge any substantive provisions of this Agreement.

 

(d) Severability.  The invalidity or unenforceability of any provision of this Agreement in a particular respect shall not affect the validity and enforceability of any other provision of this Agreement or of the same provision in any other respect.

 

(e) Number.  The singular form of any word used in this Agreement shall include the plural and vice versa.

 

(f) Gender.  The use in this Agreement of any word of any gender shall include correlative words of all genders.

 

SIGNATURE PAGE FOLLOWS

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

	  	
DAL GROUP, LLC

	  	  
	  	
By:  FLATWORLD DAL LLC, its Member

	  	  
	  	
By:  NAGINA ENGINEERING INVESTMENT CORP., its Member

	  	  
	  	
By:    ____________________________________

	  	
Name:           Raj K. Gupta

	  	
Title:           President

	  	  
	  	  
	  	
CHARDAN 2008 CHINA ACQUISITION CORP.

	  	  
	  	
By:

	
____________________________________

	  	  	
Kerry Propper

Chief Executive Officer

 

 

7f20f0310ex4xiv_djsp.htm

     

    
      Exhibit
4.14

      STERN
PARTICIPANTS

      TAX
INDEMNIFICATION AGREEMENT

      

      THIS TAX
INDEMNIFICATION AGREEMENT (this “Agreement”), dated as of January 15, 2010, is
entered into by and between David J. Stern (“Stern”), the Law Offices of David
J. Stern, P.A. (“DJS”), Professional Title and Abstract Company of Florida, Inc.
(“PTA”) and Default Servicing, Inc. (“DSI”, and collectively with Stern, DJS and
PTA, the “Stern Participants”),  Chardan 2008 China Acquisition Corp.
(“Chardan”), and DAL Group, LLC (the “Company”).

       

      Recitals

       

      WHEREAS,
DJS, PTA, DSI and Chardan are to become members of the Company and enter into
the Amended and Restated Limited Liability Company Agreement of DAL Group, LLC
dated as of the date hereof (the “LLC Agreement”).

       

      WHEREAS,  to
induce Chardan to enter into the LLC Agreement, the Stern Participants have
agreed to enter into this Agreement to provide certain tax indemnifications to
Chardan.

       

      NOW,
THEREFORE, the parties agree as follows:

       

      1. DEFINITIONS.

       

      (a) “Accountant”
shall mean McGladrey & Pullen LLP, or other nationally recognized certified
public accounting firm mutually agreed to by the parties.

       

      (b) “Adverse
Position” is defined in the definition of Final Determination.

       

      (c) “Amended
Indemnity Payment” is defined in Section 2(c).

       

      (d) “Arbitrating
Accountant” is defined in the definition of Final Determination.

       

      (e) “Arbitrator”
is defined in Section 4.

       

      (f) “Cap
Amount” is defined in Section 2(e).

       

      (g) “Code”
means the United States Internal Revenue Code of 1986, as amended.

       

      (h)  “DAL
Group, LLC Tax Indemnification Agreement” means the tax indemnification
agreement entered into by and between Chardan and the Company.

       

      (i) “DAL
Warrant” has the meaning set forth in the LLC Agreement.

       

      (j) “Deadline”
is defined in the definition of Final Determination.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (k) “Employee
Incentive Units” has the meaning set forth in the LLC Agreement.

       

      (l) “Final
Determination” means a “determination” within the meaning of Section 1313(a) of
the Code, or a binding settlement agreement with any taxing authority or any
determination made by the Accountant or Arbitrating Accountant in accordance
with the procedure below. Prior to filing a Tax Return that will result in an
Indemnified Loss Event (an “Adverse Position”), the Company or Chardan will
provide the Stern Participants with written notice (the “Notice”) of the Adverse
Position and copies of the Tax Returns containing such Adverse Positions for the
Stern Participants to review, at least sixty (60) days prior to the Deadline (as
defined below) or such shorter period of time prior to the Deadline that the
Company or Chardan is aware of the Adverse Position or, in the case of delivery
of such Tax Returns, has a draft of such Tax Returns ready for review by third
parties.  Thereafter, the Company, Chardan, the Stern Participants and
the FlatWorld Participants will mutually agree on another nationally recognized
accounting firm (“Arbitrating Accountant”) to review the Adverse Position
proposed to be taken by the Company or Chardan.  If the parties have
not agreed on the Arbitrating Accountant within five (5) days after their
receipt of the Notice, then the Company and Chardan, on the one hand, and the
Stern Participants and the FlatWorld Participants, on the other hand, shall each
choose a nationally recognized accounting firm, and such two accounting firms
shall choose a third nationally recognized accounting firm to act as the sole
Arbitrating Accountant within ten (10) days after the parties receipt of the
Notice. Within fifteen (15) days following selection, the Arbitrating Accountant
shall advise the parties and the Accountant in writing of its determination and
whether it would be prepared to sign a Tax Return for the Company and Chardan
that contains the tax position advocated by the Stern Participants rather than
the Adverse Position.  If the Arbitrating Accountant is willing to
sign a Tax Return for the Company and Chardan containing the position advocated
by the Stern Participants and if the Accountant does not sign the Company’s or
Chardan’s Tax Return on that basis within five (5) days after the receipt of the
Arbitrating Accountant’s determination, the Arbitrating Accountant shall be
engaged to sign the Company’s and Chardan’s Tax Return on that basis within
eight (8) days after receipt of the Arbitrating Accountant’s determination,
provided the Arbitrating Accountant agrees to sign such Tax Returns no later
than three (3) days prior to the filing deadline (including any automatic
extension whether or not such extension has been sought) for the Tax Return of
the Company or Chardan, as the case may be (the “Deadline”) and provided the
Arbitrating Accountant’s fee for signing the return is not greater than the
amount charged by the Accountant for preparing the return.  In no
event shall the foregoing provision prohibit the Company or Chardan from filing
any Tax Return by the Deadline, even if that requires it to take an Adverse
Position, and if the Arbitrating Accountant has not signed such Tax Return and
delivered such Tax Return for filing no later than three (3) days prior to the
Deadline, such Tax Return shall be filed on the basis of the tax position
advocated by the Accountant, and any position to be taken on such Tax Return
shall be considered a Final Determination no later than three (3) days prior to
the Deadline; provided further that, if the decision of the Arbitrating
Accountant, when rendered, is not consistent with an Adverse Position taken on
the Company’s or Chardan’s filed Tax Return, the Company or Chardan, as the case
may be, will promptly amend such filed Tax Return so as to be consistent with
the decision of the Arbitrating Accountant, with either the Accountant or the
Arbitrating Accountant signing such return on a basis comparable to that
provided above, and in such case, the Company shall promptly refund all amounts
paid by the Stern Participants to Chardan under this Agreement as a result of
filing the original Tax Returns containing the Adverse Position and the Company
shall be entitled to the payment of the amounts otherwise payable to the Stern
Participants from Chardan pursuant to Section 2(c) in respect of such amounts
originally paid by the Stern Participants. The fees and expenses of the
Arbitrating Accountant shall be paid by the party or parties whose position is
not adopted by the Arbitrating Accountant, provided that the Company pays or
provides the required funds to Chardan for its share of any such fees and
expenses. The parties hereto agree to act in good faith and use their reasonable
best efforts to ensure that the Notice and such Tax Returns are provided at
least sixty (60) days prior to the Deadline and that the Arbitrating Accountant
is able to make a determination and sign such Tax Returns no later than three
(3) days prior to the Deadline (including modifying the time frames set forth
above if such Notice and Tax Returns are provided less than sixty (60) days
prior to the Deadline).

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (m) “FlatWorld
Participants” means FlatWorld, Raj Gupta and Jeffery Valenty.

       

      (n) “FlatWorld
Tax Indemnification Agreement” means that certain tax indemnification agreement
entered into by and between the FlatWorld Participants and Chardan dated as of
the date hereof.

       

      (o) “Indemnified
Loss Event” is defined in Section 2(a).

       

      (p) “Indemnity
Amount” means, with respect to Chardan, (i) the amount, determined by the
Accountant in its reasonable discretion, of the increase in Taxes actually
payable by Chardan for the tax year in question incurred as a result of an
Indemnified Loss Event, including those Taxes, if any, resulting from the
receipt by Chardan of an indemnity payment pursuant to this Agreement and (ii)
reasonable fees of accountants and attorneys incurred by Chardan in calculating
the increase in Taxes subject to the indemnity hereunder or in complying with
the obligations, defending any actions, or enforcing any of the rights under
this Agreement (the “Indemnification Expenses”); provided, however, that to the
extent the Indemnification Expenses relate to a situation in which the
Arbitrating Accountant adopts the position of the Stern Participants pursuant to
Section 1(l), then such Indemnification Expenses shall not be payable by the
Stern Participants but shall be payable by the Company pursuant to the DAL
Group, LLC Tax Indemnification Agreement.

       

      (q) “Indemnity
Payment” is defined in Section 2(a).

       

      (r) “LLC
Agreement” is defined in the Recitals.

       

      (s) “Notice
Date” is defined in Section 3(a).

       

      (t) “Reverse
Indemnity” is defined in Section 2(d).

       

      (u) “Stern
Participants” is defined in the Preamble.

       

      (v) “Tax” or
“Taxes” shall mean all federal, state and local income taxes, imposed by any
U.S. federal, state, local or other government, or any agency or political
subdivision thereof, together with any interest, penalties and additions to tax
imposed thereon.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (w) “Tax
Return” includes any return (including any informational return in the case of
an entity taxed as a partnership), declaration, report, claim for refund or
credit, information return or statement, and any amendment thereto, including
any consolidated, combined, unitary or separate return or other document
(including any related or supporting information or schedule), required to be
filed with any governmental entity in connection with the determination,
assessment, collection or payment of Taxes or the administration of any Laws,
regulations or administrative requirements relating to Taxes.

       

      2. INDEMNITY
OBLIGATION.

       

      (a) The Stern
Participants, jointly and severally, hereby agree to indemnify, defend and hold
harmless Chardan against and to pay to, or on behalf of, Chardan (an “Indemnity
Payment”): any Indemnity Amount incurred by Chardan as a result of a Final
Determination that (i) the exercise of a DAL Warrant or receipt of Employee
Incentive Units by Chardan results in additional taxable income being recognized
by Chardan (A) in the year of exercise of a DAL Warrant or receipt of Employee
Incentive Units, or (B) in subsequent years due to a corrective allocation of
income or gain from the Company to Chardan, within the meaning of Proposed
Treasury Regulation §1.704-1(b)(2)(iv)(4)(x), or otherwise; provided that with
respect to clause (A) or (B) under no circumstances shall such income or gain
include any allocation made pursuant to Section 704(c) of the Code, the
principles of Section 704(c) of the Code, or Treasury Regulations promulgated
thereunder, including but not limited to, Treasury Regulation §1.704-3(a)(6);
(ii) the elimination of any Series B Preferred Unit Capital Account or the
redemption of any Series B Preferred Unit pursuant to Section 4.1(c)(5) of the
LLC Agreement results in a taxable capital shift to Chardan or an additional
allocation of income or gain to Chardan; and (iii) the assumption or payment by
the Company of identified expenses of Chardan results in taxable income being
recognized by Chardan (collectively, an “Indemnified Loss Event”).

       

      (b) To the
extent that Chardan is entitled to recover an Indemnity Payment for the same
Indemnified Loss Event from the FlatWorld Participants pursuant to the FlatWorld
Tax Indemnification Agreement, then the recovery from the Stern Participants and
the FlatWorld Participants shall be on a pro rata basis, in accordance with
their relative Cap Amounts (as set forth in the FlatWorld Tax Indemnification
Agreement and this Agreement, as the case may be).

       

      (c) If it is
determined that the initial determination of an Indemnity Payment was incorrect
(including by reason of a subsequent examination by a taxing authority or the
filing of an amended tax return) (the “Amended Indemnity Payment”), and the
Amended Indemnity Payment is greater than the initial Indemnity Payment, subject
to the limitations herein, the Stern Participants shall make an additional
payment to Chardan promptly after such determination in an amount equal to the
difference between (i) the payment previously made pursuant to Section 2(a)
hereof and (ii) the payment that would have been paid pursuant to Section 2(a)
if such original determination had been correct (but taking into account any
additional interest, penalty or addition to tax as a result of the fact that the
payment is made later). In the event the Amended Indemnity Payment is less than
the initial Indemnity Payment, subject to the limitations herein, Chardan shall
make a payment to the Stern Participants in an amount equal to the difference
between (i) the payment previously made pursuant to Section 2(a) hereof and (ii)
the payment that would have been made if such original determination had been

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      correct.  In
the event such initial Indemnity Payment (or any portion thereof) has previously
been paid to a taxing authority, Chardan will be required to make a payment to
the Stern Participants only following the receipt of any tax refund arising from
the Amended Indemnity Payment, including any interest received by Chardan as
part of such tax refund; provided, however, that Chardan will not be required to
make any payment in excess of the amount of any tax refund (including interest
thereon) less any Taxes payable by Chardan in connection with the receipt of
such tax refund.  If more than one payment is to be made pursuant to
this Section 2(c), the later payments shall take into account the effect of any
prior payments.  To the extent that Chardan recovered Indemnity
Payments for the Indemnified Loss Event resulting in the Amended Indemnity
Payment from the Stern Participants, the FlatWorld Participants and the Company,
any amounts to be paid to such parties as a result of an Amended Indemnity
Payment shall be shared among the Stern Participants, the FlatWorld Participants
and the Company, on a pro rata basis, in accordance with the amount of the
original Indemnity Payment made by them with respect to that Indemnified Loss
Event.

       

      (d) If an
event that results in an Indemnified Loss Event for which an Indemnity Payment
is paid pursuant to Section 2(a) has the effect of actually reducing the
federal, state or local income tax liability of Chardan in a future tax year
(including if the event results in an increase in tax basis which reduces
Chardan’s taxable gain or increases Chardan’s taxable loss on a subsequent sale
of its Membership Interests or upon the subsequent sale of the assets of the
Company), and if such reduction has not previously been taken into account in
computing an Indemnity Amount, then Chardan shall pay to the Stern Participants,
an amount (a “Reverse Indemnity”) equal to the amount of such actual reduction
in Taxes, but only to the extent Chardan has received in cash (i) tax
distributions pursuant to Section 5.4 of the LLC Agreement in excess of Taxes
payable by Chardan in respect of such taxable year or (ii) a Tax refund
resulting from such actual reduction in Taxes less any Taxes payable by Chardan
in connection with the receipt of such tax refund. Chardan shall not be
obligated to make any payment pursuant to this Section 2(d) to the extent that
the sum of the amount of the aggregate payments made pursuant to this Section
2(d) is in excess of the aggregate Indemnity Amounts previously paid to Chardan
with respect to the Indemnified Loss Event. To the extent that Chardan recovered
Indemnity Payments for the Indemnified Loss Event resulting in the Reverse
Indemnity from the Stern Participants, the FlatWorld Participants and the
Company, any amounts to be paid to such parties as a result of the Reverse
Indemnity shall be shared among the Stern Participants, the FlatWorld
Participants and the Company, on a pro rata basis, in accordance with the amount
of the original Indemnity Payment made by them with respect to that Indemnified
Loss Event.

       

      (e) In no
event will the Stern Participants be required to make aggregate payments under
the terms of this Agreement in excess of eight million five hundred thousand
dollars ($8,500,000) (“Cap Amount”).  For this purpose, the aggregate
payments made by the Stern Participants are reduced by the aggregate payments
made by Chardan pursuant to Sections 2(c) and 2(d).

       

      (f) Notwithstanding
the foregoing, the amount required to be paid by Chardan pursuant to Section
2(c) or 2(d) shall be reduced by the aggregate of any Indemnity Amount that is
not required to be paid by the Stern Participants by reason of the Cap
Amount.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      3. PROCEDURAL
MATTERS.

       

      (a) Once
there has been a Final Determination, board members of Chardan, not nominated by
the Stern Participants or Flatworld Participants, may make a demand on behalf of
Chardan for any Indemnity Payment under Section 2(a) by providing written notice
to the Stern Participants. Such written notice shall be provided to the Stern
Participants as soon as practicable after the Final Determination (the “Notice
Date”). To the extent demand is made for an Indemnity Payment for an Indemnified
Loss Event the Stern Participants shall also be provided a copy of the notice
required to be provided to the FlatWorld Participants pursuant to the FlatWorld
Participant Tax Indemnification Agreement.

       

      (b) The Stern
Participants shall make any required payments to Chardan pursuant to this
Agreement no later than twenty (20) days after the Notice Date, but in no event
later than the date Chardan is required to make payment of any additional Taxes
as a result of an Indemnified Loss Event.

       

      (c) To the
extent permitted by law without the imposition of a penalty under Section 6662
of the Code, Chardan agrees to report any item on its Tax Returns, and to take
positions in any other Tax filings, in a manner consistent with the positions
taken by the Company on its Tax Returns. Chardan agrees to not take any action
independent of the  Tax Matters Partner (as defined in Section
6231(a)(7) of the Code) of the Company in any examination or other proceeding in
respect of the Company’s Tax Returns and to cooperate with the Company, or the
Tax Matters Partner, in pursuing any contest or other proceeding in respect of
Taxes.  The Stern Participants agree not take any action independent
of the  Tax Matters Partner (as defined in Section 6231(a) (7) of the
Code) of the Company on any examination or other proceeding in respect of the
Company’s Tax Returns and to cooperate with the Company, or the Tax Matters
Partner, in pursuing any contest or other proceeding in respect of
Taxes.

       

      (d) Chardan
and the Company shall promptly notify the Stern Participants in writing if
either of them receive notice from the IRS or any appropriate state or local
authority of an actual or proposed tax liability for which Chardan may be
subject to indemnification under this Agreement, and the Stern Participants
shall, at their expense, direct the conduct of the contest and settlement
relating to any such Indemnified Loss Event.  In the event that both
the Stern Participants and FlatWorld Participants have the obligation to direct
the contest and settlement relating to any such Indemnified Loss Event, they
shall act jointly, with any dispute between them resolved by arbitration as
provided in Section 4.  No decision (procedural or substantive)
relating to any such contest or settlement may be made by Chardan or the Company
without the Stern Participants’ prior written approval which shall not be
unreasonably withheld, delayed or conditioned.  The settlement or
payment of any claim by Chardan that would result in an Indemnity Payment
hereunder prior to a Final Determination shall constitute a waiver of the right
to indemnity under this Agreement, and Chardan shall be entitled to
indemnification therefore  pursuant to the DAL Group, LLC Tax
Indemnification Agreement.

       

      (e) The
parties agree that the Company and Chardan will use the Accountant to prepare
their respective Tax Returns.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      4. ARBITRATION.   Any
dispute under Section 3(d) will be submitted for final and binding resolution to
an independent third party accounting firm (the “Arbitrator”) selected
by the Stern Participants, on one hand, and the FlatWorld Participants on the
other hand, in good faith.  If they cannot agree on an Arbitrator,
they shall each choose a proposed Arbitrator and such two proposed Arbitrators
shall choose a third Arbitrator who shall act as sole Arbitrator.  The
Arbitrator will resolve the matter in accordance with the terms and provisions
of this Agreement.  The Arbitrator will deliver to the Stern
Participants and the FlatWorld Participants as promptly as practicable, a
written report setting forth the resolution of any such dispute determined in
accordance with the terms of this Agreement.  The Arbitrator shall
select as a resolution the position of either the Stern Participants or the
FlatWorld Participants for each issue in dispute and may not impose an
alternative resolution.  The Arbitrator shall make its determination
based exclusively on presentations and supporting material provided by the
parties and not pursuant to any independent review.  The determination
of the Arbitrator shall be final and binding on the Stern Participants and the
FlatWorld Participants.  The fees, expenses and costs of the
Arbitrator shall be paid one-half by each of the Stern Participants and the
FlatWorld Participants.

       

      5. THIRD
PARTY BENEFICIARIES.  The FlatWorld Participants shall be deemed to be
third party beneficiaries of Sections 3(d) and 4 of this Agreement in connection
with Indemnified Loss Events and shall have the right to enforce those
provisions against the Stern Participants as if they were a party to the
Agreement.

       

      6. NOTICES.  All
notices or other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given if (a) physically delivered,
(b) one (1) day after having been delivered to Federal Express or other delivery
courier in time for and specifying next day delivery, with proof of delivery to
the recipient received by the courier in the form of a signature of recipient,
(c) three (3) days after having been deposited in the United States mail, as
certified mail with return receipt requested and with postage prepaid, or (d)
transmitted by electronic mail or similar means, provided that a physical copy
is subsequently delivered by means described in (a), (b) or (c) above, addressed
to the parties at the addresses listed below.  The addresses and other
information so indicated for any party may be changed by a party by written
notice to the other parties.

       

      Notice to
the Company:

       

      Law
Offices of David J. Stern, P.A.

      900 South
Pine Island Road

      Suite
400

      Plantation,
FL 33324

      Attn:  David
J. Stern, Esq.

      Facsimile:
(954) 233-8000

      

      with a
copy to:

       

      Chardan
Capital, LLC

      474 Three
Mile Road

      Glastonbury,
CT 06033

      Attn:  Dan
Beharry

      Facsimile:
(281) 644-5751

      Email:
dbeharry@chardancapital.com

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      Notice to
Chardan:

       

      Chardan
2008 China Acquisition Corp

      c/o
Chardan Capital, LL

      474 Three
Mile Road

      Glastonbury,
CT 06033

      Attn: Dan
Beharr

      Facsimile:
(281) 644-5751

      Email:
dbeharry@chardancapital.com

       

      and
to:

       

      Loeb
& Loeb LLP

      345 Park
Avenue

      New York,
NY 10154

      Attn:
Mitchell S. Nussbaum

      Email:
mnussbaum@loeb.com

       

      Notice to
Stern Participants:

       

      Law
Offices of David J. Stern, P.A.

      900 South
Pine Island Road

      Suite
400

      Plantation,
FL 33324

      Attn:
David J. Stern, Esq.

      Facsimile:
(954) 648-5228

       

      With a
copy (which shall not constitute notice) to:

       

      Dykema
Gossett PLLC

      400
Renaissance Center

      Detroit,
MI 48243

      Attn:
Thomas Vaughn

      Facsimile:
(313) 568-6915

      Email:
tvaughn@dykema.com

      

      7. AMENDMENTS.  All
amendments to this Agreement shall be in writing and shall not be effective
unless approved by all parties to this Agreement.

       

      8. ENTIRE
AGREEMENT.  This Agreement constitutes the entire Agreement between
the parties and may be modified only as provided herein.  No
representations or oral or implied agreements have been made by any party hereto
or its agent, and no party to this Agreement relies upon any representation or
agreement not set forth in it.  This Agreement supersedes any and all
other agreements, either oral or written, by and among the parties with respect
to the subject matter hereof.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      9. JURISDICTION.  Each
party hereby consents to the exclusive jurisdiction of the state and federal
courts sitting in Florida in any action on a claim arising out of, under or in
connection with this Agreement or the transactions contemplated by this
Agreement.  Each Member further agrees that, to the fullest extent
permitted by law, personal jurisdiction over him, her or it may be effected by
service of process by registered or certified mail addressed as provided in
Section 6 of
this Agreement, and that when so made will be as if served upon him, her or it
personally.  EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR RELATING TO THE COMPANY OR ITS
OPERATIONS.

       

      10. BINDING
EFFECT.  This Agreement shall be binding upon and shall inure to the
benefit of the parties, their successors and assigns.  None of the
provisions of this Agreement shall be construed as for the benefit of or as
enforceable by any creditor of the parties or any other person not a party to
this Agreement.

       

      11. COUNTERPARTS.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which shall constitute one
instrument.

       

      12. INTERPRETATION
AND CONSTRUCTION.

       

      (a) Florida Law to
Control.  The validity and interpretation of, and the
sufficiency of performance under, this Agreement shall be governed by Florida
law, with regard to its conflicts of law rules.

       

      (b) Arrangement and
Classification.  This Agreement is divided into sections,
subsections, paragraphs, subparagraphs and clauses, in that order of
subdivision.  The division of this Agreement into subdivisions is for
convenience only.  No inference, implication or presumption shall be
drawn or made because of the location or grouping of any particular subdivision
of this Agreement.

       

      (c) Captions.  All
captions are for convenience only, do not form a substantive part of this
Agreement and shall not restrict or enlarge any substantive provisions of this
Agreement.

       

      (d) Severability.  The
invalidity or unenforceability of any provision of this Agreement in a
particular respect shall not affect the validity and enforceability of any other
provision of this Agreement or of the same provision in any other
respect.

       

      (e) Number.  The
singular form of any word used in this Agreement shall include the plural and
vice versa.

       

      (f) Gender.  The
use in this Agreement of any word of any gender shall include correlative words
of all genders.

       

      SIGNATURE
PAGE FOLLOWS

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.

       

      

      
        	 
      	 
      
	 
      	
                CHARDAN
      2008 CHINA ACQUISITION CORP.

              
	 
      	 
      
	 
      	
                By:

              	                                                               
                  
      
	 
      	 
      	
                Kerry
      Propper

                Chief
      Executive Officer

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                LAW
      OFFICES OF DAVID J. STERN, P.A.

              
	 
      	 
      
	 
      	
                By:

              	                                                                           
        
	 
      	 
      	
                David
      J. Stern, President

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                PROFESSIONAL
      TITLE AND ABSTRACT COMPANY OF FLORIDA, INC.

              
	 
      	 
      
	 
      	
                By:

              	                                                                             
        
	 
      	 
      	
                David
      J. Stern, President

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                DEFAULT
      SERVICING, INC.

              
	 
      	 
      
	 
      	
                By:

              	                                                                               
      
	 
      	 
      	
                David
      J. Stern, President

              
	 
      	 
      	 
      
	 
      	                                                                                             
      
	 
      	
                DAVID
      J. STERN

              
	 
      	 
      
	 
      	
                DAL
      GROUP, LLC

              
	 
      	 
      
	 
      	
                By:  FLATWORLD
      DAL LLC, its Member

              
	 
      	 
      
	 
      	
                By:   NAGINA
      ENGINEERING INVESTMENT CORP.,
      its Member

              
	 
      	 
      
	 
      	
                By:                                                                                        
             

              
	 
      	
                Name: 
      Raj K. Gupta

              
	 
      	
                Title:    President

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