Equity Ownership Transfer Agreement
Exhibit
10.1
This
Agreement is entered into by and between the following parties the 26th day of
October 2009:
Party A:
Guangzhou Konzern Pharmaceuticals Co., Ltd. (hereinafter referred to as
“Party A”), a wholly foreign-owned enterprise registered and legally existing in
PRC under PRC law, having its address at Room 702, Guangri Mansion, Xx.0 Xxxxx
Xxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxxxx, with its legal representative being Xx.
Xxxxxxx Xxxx, and with China Medicine Corporation (an enterprise duly
incorporated and established under the laws of the Nevada State of USA and
listed on OTCBB in USA) being the sole shareholder of it; and
Party B:
SINOFORM LIMITED (hereinafter referred to as “Party B”), a company registered
and legally exiting under the laws of British Virgin Islands, having its address
at 0xx Xxxxx, Xxxx Xxxxx Xxxxxxxx Xxxxxxxx Xxxx Po Box362 Road Town, Tortol a
British Virgin Islands and with its executive director being Xx. Xxxxxxxxx
Xxx.
Whereas:
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1.
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Guangzhou
LifeTech Pharmaceuticals Co., Ltd. (hereinafter referred to as “LifeTech
Pharmaceuticals”) is a wholly foreign-owned enterprise approved
by Bureau of Foreign Trade and Economic Cooperation of Conghua
Municipality and is legally exiting, whose business license indicates:
Registration Number: Qi Xx Xxx Xxx Xxxx Xx Xx.000000; Registered Capital:
RMB34,000,000.00; Term of Operation to expire on 21 August
2036;
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2.
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Party
B is the sole shareholder of LifeTech Pharmaceuticals, legally holding
100% equity interests in LifeTech Pharmaceuticals;
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3.
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Party
A intends to purchase all the equity interests in LifeTech Pharmaceuticals
held by Party B, and Party B intends to sell to Party A all the equity
interests in LifeTech Pharmaceuticals held by it (hereinafter referred to
as “This Transaction”). Upon completion of such equity acquisition,
LifeTech Pharmaceuticals will be changed to a wholly-owned subsidiary of
Party A in accordance with law; and
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4.
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In
the principles of equality, voluntariness, fairness and good faith and
upon adequate consultations, the Parties have entered into this Agreement
with the following terms and
conditions.
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Article
1 Equity Transfer
1.1
Party B agrees to in accordance with the provisions of this Agreement sell to
Party A its 100% equity interests in LifeTech Pharmaceuticals; and Party A
agrees to purchase such equity interests.
1.2
The Parties agree that the price for this equity transfer is RMB57,000,000.00.
Such transaction price is determined by the Parties through consultations on the
basis of the appraisal result of the auditing and appraisal of LifeTech
Pharmaceuticals carried out by the intermediary retained by Party A with the
base date being 30 August 2009.
Article
2 Terms of Payment
2.1
Party A shall pay Party B the equity transfer price in the form of
currency.
2.2
Party A shall within three (3) working days after the execution of this
Agreement pay Party B RMB3,750,000.00 of the equity transfer price; before 30
March 2010 and after obtaining the approval on This Transaction from the Bureau
of Foreign Trade and Economic Cooperation of Conghua Municipality,
RMB25,000,000.00 of the equity transfer price shall be paid to Party B; within
three (3) working days after the passing of the equity interests in LifeTech
Pharmaceuticals to Party A, RMB3,250,000.00 of the equity transfer price shall
be paid to Party B; the residue RMB25,000,000.00 of the equity transfer price
shall be paid to Party B before 30 June 2010.
Article
3 Passing of Equity Interests
3.1
Within three (3) working days after the execution by the Parties of this Equity
Transfer Agreement, Party B shall cause LifeTech Pharmaceuticals to apply to the
Bureau of Foreign Trade and Economic Cooperation of Conghua Municipality for
approval on change of shareholder and amendment of articles of association and,
after obtaining the approval from the Bureau of Foreign Trade and Economic
Cooperation of Conghua Municipality, to attend the change of shareholder
registration formalities with the AIC authority.
3.2
For the purpose of attending the formalities under 3.1, Party A and Party B
undertake to execute and issue to LifeTech Pharmaceuticals all necessary
documents in a timely manner.
3.3
The closing of equity transfer shall complete upon the passing of the equity
interests in LifeTech Pharmaceuticals to Party A.
Article
4 Taxations
4.1
Party A and Party B will use their best efforts to jointly reduce transaction
costs and shall bear their respective costs incurred by the documentation work
and the retaining of professionals for the purpose of execution of this
Agreement and transacting the business hereunder.
4.2
Party A and Party B agree to bear the taxations payable by them respectively
under applicable law. Where no applicable law is in place in respect of the
obligor to bear certain taxation(s), such taxation(s) shall be borne by the
Parties equally.
Article
5 Special Covenants on Debts of LifeTech Pharmaceuticals
5.1
The Parties confirm: on 30 August 2009 (the base date), the receivables and
payables between LifeTech Pharmaceuticals and the affiliate(s) of Party B have
been checked over, and the amount of the receivables equals the amount of the
payables from LifeTech Pharmaceuticals to the affiliate(s) of Party
B.
5.2
The Parties confirm: on 30 August 2009 (the base date), the receivables and
payables occurred in the course of the production and operation of LifeTech
Pharmaceuticals (except those between LifeTech Pharmaceuticals and the
affiliate(s) of Party B) have been checked
over, and the total amount of such receivables and the inventories equals the
total amount of payables from LifeTech Pharmaceuticals to others.
5.3
The Parties confirm: on 30 August 2009 (the base date), the balance of the bank
loans of LifeTech Pharmaceuticals was RMB89,800,000.00. Such bank loans shall be
repaid by Party A.
5.4
The Parties confirm: as to the bank loans under 5.3, Party A shall within three
(3) days after the execution of this Agreement pay RMB20,000,000.00 to Guangzhou
Rural Credit Union on behalf of LifeTech Pharmaceuticals and shall within three
(3) days after the execution of this Agreement pay RMB30,000,000.00 to Guangzhou
Rural Credit Union on behalf of LifeTech Pharmaceuticals; with respect to the
residue of such bank loans, Party B is to coordinate the lender bank to perform
the current loan agreement(s).
Article
6 Special Covenant on the Land Use Right in the Assets to Be
Transferred
Party B
has made disclosure and Party A has had knowledge of: as to all the land use
right currently used by LifeTech Pharmaceuticals at Xx.00 Xxxxxxxxx Xxxx,
Xxxxxxx Xxxxxxxx and Technological Development Zone, read from the books,
LifeTech Pharmaceuticals still owes land grant premium to Conghua District
Government (or Land Administration Authority); however, on the basis of the
privity reached and followed by LifeTech Pharmaceuticals and Conghua District
Government for many years, such land premium can actually be paid through
deduction by the part of taxations paid to Conghua District Government, which
can be retained by it and returned to LifeTech Pharmaceuticals. The
Parties hereto agree: such land premium shall continue to be paid by LifeTech
Pharmaceuticals through deduction by the part of the taxations paid to Conghua
District Government; where any change occurs to the policy and the government
demands payment of the land premium for such land lot and other amounts in
relation thereto, Party B shall be liable to make the payment.
Article
7 Placement of Employees of LifeTech Pharmaceuticals
Party A
agrees that, after the acquisition, LifeTech Pharmaceuticals shall continue to
perform the labor Agreements with the current employees. Party A
undertakes: the LifeTech Pharmaceuticals taken over by it will not illegally
dismiss any employee with an annual salary lower than RMB100,000, nor will it
cut the remuneration or other treatments of the employees; after the completion
of the closing, any performance, rescission, extension, dispute or compensation
issues in relation to the labor Agreements with the employees will be handled by
LifeTech Pharmaceuticals in accordance with the PRC Labor Agreement
Law.
Article
8 Handing-over
8.1
The Parties agree: on the second day after Party A’s repayment of the
RMB20,000,000.00 of bank loan of LifeTech Pharmaceuticals in accordance with 5.4
and the payment of the first installment of equity transfer price in an amount
of RMB3,750,000.00 in accordance with 2.2 (“Handing-over Date”), the
handing-over of the assets of LifeTech Pharmaceuticals shall start.
8.2
On the day prior to the Handing-over Date, the Parties shall deliver to each
other the Power of Attorneys duly signed by the legal representatives in favor
of the authorized representatives so as to facilitate the particular
handing-over issues.
8.3
Handing-over Methods
8.3.1
As to inventories (including finished products <with a residue life time of
more than half a year>, raw materials, trademarks, semi-finished products and
other movable properties in connection with the business and production of
LifeTech Pharmaceuticals) (Party B is to provide a temporal inventory statement
as of 30 August 2009 for reference and the factual inventories shall be as
indicated by the actual counting on the Handing-over date), receivables,
payables, machinery and office equipments, if no discrepancy is discovered in
the course of the counting by the authorized representatives of the Parties, the
handing-over shall be deemed as having been completed upon signing on the
handing-over list by the representatives of the Parties jointly.
8.3.2
Handing-over of Land and House Title Certificates of LifeTech
Pharmaceuticals
Since the
land and house title certificates of LifeTech Pharmaceuticals have been
deposited with Conghua Real Estate Administration Bureau for the purpose of
obtaining bank loans by it, the Parties agree: the handing-over shall be deemed
as having been completed upon Party B obtaining the photocopies of such land and
house title certificates from Conghua Real Estate Administration Bureau and
providing the same to Party A.
8.3.3
Handing-over of Intellectual Properties of LifeTech Pharmaceuticals
As to the
intellectual properties currently owned by LifeTech Pharmaceuticals, Party B is
to provide Party A with the photocopies of the relevant title certificates or
approval documents of the same, for which a receipt shall be signed by the
authorized representative of Party A; within two (2) working days after Party
A’s payment of the third installment of the transfer price (RMB3,250,000.00) in
accordance with 2.2 and Party A’s repayment of the RMB50,000,000.00 of the bank
loans of LifeTech Pharmaceuticals in accordance with 5.4, Party B shall provide
Party A with the originals of the relevant title certificates or approval
documents of such intellectual properties.
Party B
shall disclose to Party A the relevant product outsourcing Agreement(s) and
shall give a brief introduction to the performance status of such Agreements in
the mean time.
8.3.4
Handing-over of Other Assets
The
handing-over of other assets (if any) shall be deemed as having been completed
upon signing on the handing-over list by the representatives of Party A and
Party B.
8.4
Any debts and liabilities incurred by the operation and management of LifeTech
Pharmaceuticals before the Handing-over Date and not disclosed by Party B shall
be borne by Party B; where LifeTech Pharmaceuticals has made any payment in
respect of such debts or liabilities, Party B shall indemnify in full LifeTech
Pharmaceuticals the payment(s) made by it. Any and all costs,
expenses, legal liabilities, operation and management liabilities in relation to
the operation of LifeTech Pharmaceuticals incurred after the Handing-over Date
shall be borne by Party A and the LifeTech Pharmaceuticals after the
Handing-over Date.
Article
9 Transitional Period Arrangement
9.1
Party A and Party B agree: the time period from the Handing-over Date to the
closing date shall be the transitional period.
9.2
During the transitional period, Party A, Party B and the LifeTech
Pharmaceuticals taken over by Party A shall not dispose of the land, houses,
machinery equipments, office equipments and other intangible assets of LifeTech
Pharmaceuticals, shall not increase the bank debts of LifeTech Pharmaceuticals,
and shall not provide security for loans in favor of other enterprises in the
name or with the assets of LifeTech Pharmaceuticals.
9.3
The company chop of LifeTech Pharmaceuticals shall be kept under joint custody
of Party A and Party B. Within three (3) working days after Party B’s receipt of
the third installment of the equity transfer price (RMB3,250,000.00) paid by
Party A, the Parties shall attend the formalities of destroying such company
chop with the competent public security authority. After the old company chop is
destroyed, LifeTech Pharmaceuticals shall start to use a new company
chop.
9.4
The Parties agree: during the period from the Handing-over Date to the
completion of the closing of this equity transfer, the profits and losses of
LifeTech Pharmaceuticals shall be enjoyed and borne by Party A and no adjustment
is to be made by the Parties to the transfer price.
Article
10 Special Covenant on Transfer of Equity Interests in Guangzhou LifeTech
Medicine Technologies Co., Ltd.
MCWALTS
INVESTMENT HOLDINGS LTD., an affiliate of Party B, is holding 100% of the equity
interests in Guangzhou LifeTech Medicine Technologies Co., Ltd.; and Party A
intends to purchase such equity interests. Party B agrees to cause MCWALTS
INVESTMENT HOLDINGS LTD. to sell to Party A the 100% equity interests held by it
in Guangzhou LifeTech Medicine Technologies Co., Ltd., with the terms and
conditions to be agreed upon by Party A and MCWALTS INVESTMENT HOLDINGS LTD. in
a separate equity transfer agreement.
Article
11 Party A’s Representations and
Warranties
11.1
Party A is an enterprise legal person legally established and existing, which
has obtained all necessary authorizations and approvals to enter into this
Agreement.
11.2
The conclusion and performance of this Agreement are not in breach of any
Agreement binding on it or any other legal instrument; otherwise, all the
relevant legal liabilities shall be borne by Party A.
11.3
Party A is of adequate capacity to perform its obligations under this
Agreement.
11.4
Party A undertakes: to actively cooperate with Party B in attending the relevant
handing-over issues and to, as per the reasonable requirements of Party B,
provide in a timely manner the true and complete documents in relation to this
equity transfer.
11.5
Party A undertakes to actively cooperate with Party B in attending the
examination and approval formalities (if necessary) with the competent foreign
exchange administration authority in relation to Party B’s repatriation overseas
of the proceeds from the equity transfer, and to, as per the reasonable
requirements of Party B, provide in a timely manner the true and complete
documents in relation to this equity transfer.
11.6
Except where the business license of LifeTech Pharmaceuticals is revoked in
accordance with law, Party A will not rescind or terminate this Agreement for
any reason.
Article
12 Party B’s Representations and
Warranties
12.1
Party B is an enterprise legal person legally established and existing, which
has obtained all necessary authorizations and approvals to enter into this
Agreement.
12.2
The conclusion and performance of this Agreement are not in breach of any
Agreement binding on it or any other legal instrument; otherwise, all the
relevant legal liabilities shall be borne by Party B.
12.3
Party B legally owns 100% of the equity interests in LifeTech Pharmaceuticals;
furthermore, there exists no pledge, mortgage or any other right alleged by a
third party in relation to such equity interests, nor any other circumstance
restricting the transfer thereof.
12.4
Party B undertakes: there exists no long-term equity investment made by LifeTech
Pharmaceuticals in other enterprises, nor any commitment to make any long-term
equity investment in other enterprises.
12.5
Party B undertakes: the materials, Agreements and documents in all the respects
of the assets, debts, business, financial status, certificates and licenses of
LifeTech Pharmaceuticals provided by Party B to Party A for the purpose of this
transaction are true, accurate, complete, fully reflecting the assets, rights,
obligations, business, liabilities and other relevant information of LifeTech
Pharmaceuticals, and without material (to incur losses to LifeTech
Pharmaceuticals in an amount over RMB1,000,000.00) concealing, omission,
exaggeration or misleading; as to any such material concealing, omission,
exaggeration or misleading in disclosure, Party B shall bear compensation
liabilities.
12.6
Party B undertakes: LifeTech Pharmaceuticals has all necessary qualifications,
authorizations and approvals to carry out its current business.
12.7
Party B undertakes: as of the date of execution of this Agreement, LifeTech
Pharmaceuticals is not involved in any undisclosed material (to incur losses to
LifeTech Pharmaceuticals in an amount over RMB1,000,000.00) litigation,
arbitration or administrative penalty or any material economic
dispute.
12.8
During the period from the date of execution of this Agreement to the
Handing-over Date, Party B undertakes: to maintain the ordinary production and
operation of LifeTech Pharmaceuticals, to assure the capital of LifeTech
Pharmaceuticals not to be unreasonably transferred, to assure the assets of
LifeTech Pharmaceuticals not to be disposed of without consent from the Parties,
and to assure the bank debts of LifeTech Pharmaceuticals not to increase;
otherwise, Party B shall compensate the LifeTech Pharmaceuticals taken over by
Party A or Party A the losses incurred thereby.
12.9
Except where the business license of LifeTech Pharmaceuticals is revoked in
accordance with law, Party B will not rescind or terminate this Agreement for
any reason.
Article
13 Confidentiality
Obligation
The
Parties hereto agree: the content of this Agreement and any document, materials
and information obtained from the other Party under any provision of this
Agreement (“Confidential Information”) shall be kept in confidentiality by the
Parties and shall not be disclosed to a third party without consent from the
providing Party, except the disclosure by either Party as per the requirement of
applicable law, government authority or stock exchange. The Parties
shall procure the professionals retained by them to comply with this provision
and shall bear the liabilities in relation to the obligations of such
professionals to comply with this provision.
Article
14 Breach of Agreement
Liabilities
14.1
Party A undertakes: where any false statement, material omission or material
misunderstanding exists in the representations, undertakings or warranties made
by Party A, Party A fails to perform its obligations under this Agreement
properly and adequately, or Party A breaches its confidentiality obligations,
Party A shall compensate LifeTech Pharmaceuticals and Party B all the direct and
indirect losses incurred thereby (including litigation, legal proceedings,
arbitration, claims, evaluation and expenses).
14.2
Party B undertakes: where any false statement, material omission or material
misunderstanding exists in the representations, undertakings or warranties made
by Party B, Party B fails to perform its obligations under this Agreement
properly and adequately, or Party B breaches its confidentiality obligations,
Party B shall compensate Party A all the direct and indirect losses incurred
thereby (including litigation, legal proceedings, arbitration, claims,
evaluation and expenses).
14.3
Where either of the Parties unilaterally terminates this Agreement without a
legitimate reason, such Party shall pay the other Party breach of Agreement
damages in an amount of RMB20,000,000.
14.4
Where Party A fails to perform its obligations under 5.4 to repay the bank loans
of LifeTech Pharmaceuticals, breach of Agreement damages shall be paid to Party
B by Party A at a rate of 0.05% of the amount due and payable for each day in
default, which is to be computed till Party A ‘s repayment in full of such bank
loans.
14.5
Any amendment to or rescission of this Agreement shall not affect the right of
the non-defaulting Party to pursue the breach of Agreement liabilities of the
defaulting Party under this Agreement.
14.6
Any Party’s failure or delay to exercise any of its rights to pursue the breach
of Agreement liabilities of the defaulting Party shall not constitute a waiver
of such right; any Party’s partial exercise of its rights to pursue the breach
of Agreement liabilities of the defaulting Party shall not affect its exercise
of other rights.
Article
15 Force Majeure
15.1
Force Majeure means earthquake, war, riot, natural disasters like plague and
other exempting events agreed by the Parties hereto.
15.2
Where this Agreement is rendered unable to be performed or unable to be fully
performed, the Party suffering such force majeure event shall notify the other
Party such force majeure event and shall within five (5) working days after the
end of the force majeure event provide a description of the event together with
an effective certificate showing the reasons that this Agreement is unable to be
performed or unable to be fully performed or that the performance of this
Agreement needs to be postponed. Party A and Party B shall on the
basis of the extent of affection on the performance of this Agreement
decide through consultations whether to terminate this Agreement, to partially
exempt the performance of this Agreement, or to postpone the performance of this
Agreement.
15.3
Under the premise that neither of the Parties is at fault, the inability to
perform all or part of the obligations under this Agreement shall not be deemed
as a breach, provided that all necessary measures shall be taken to reduce or
eliminate the losses caused by the force majeure event to the extent
possible.
15.4
Neither of the Parties shall bear responsibilities in relation to the losses
suffered by or expenses increased to the other Party due to the force majeure
event.
Article
16 Effect, Amendment and Termination
of Agreement
16.1
Upon being signed by the legal representative(s) or authorized representative(s)
of the Parties and being approved by the Bureau of Foreign Trade and Economic
Cooperation of Conghua Municipality, this Agreement shall take effect and be
legally binding on the Parties, which shall terminate automatically upon being
duly performed.
16.2
Upon this Agreement taking effect, unless otherwise agreed by the Parties in
consensus, neither of the Parties may amend the same unilaterally; any amendment
to or modification of this Agreement shall take effect only after being
confirmed by the Parties in written form.
Article
17 Applicable Law
17.1
The
conclusion, performance and interpretation of this Agreement shall be governed
by PRC law.
17.2
Where any provision of this Agreement is in conflict with any law or regulation
currently effective, such provision shall be void. The voidance of any provision
shall not affect the effect of other provisions or this Agreement as a
whole. The Parties hereto shall agree on a new provision to supercede
such void provision.
Article
18 Dispute Resolution
The
Parties shall consciously and faithfully perform this Agreement. In
the event of any dispute, it shall be resolved through consultations; where such
consultations fail, either of the Parties may refer the dispute to China
International Economic and Trade Arbitration Commission South China
Sub-Commission for arbitration held in accordance with the arbitration rules
currently effective. The arbitration shall be held in
Shenzhen. The arbitral award shall be final and binding on the
Parties.
Article
19 Miscellaneous
19.1
The Schedules hereto are an integral part of this Agreement, which together with
the text hereof constitute the entirety of this Agreement.
19.2
In the event of any issue not provided for herein, the Parties shall settle the
same through amiable consultations.
19.3
This Agreement is made in both Chinese and English languages; in the event of
any discrepancy between the two versions, the Chinese version shall
prevail.
19.4
This Agreement is made in six (6) copies; either of the Parties shall hold one
(1) with the rest to be submitted to competent authorities for the purposes of
examination and approval or registration; each of the original copies shall be
of the same legal effect.
(No text
is contained on the remainder of this page.)
(This
signature page of the Equity Transfer Agreement contains no text.)
Party
A: Guangzhou Konzern Pharmaceutical Co., Ltd. (Chop)
Legal or
Authorized Representative (Signature):
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/s/
SanShan Yang
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Mr.
SanShan Yang
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Chairman
& CEO
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Party
B: SINOFORM LIMITED (Chop)
Legal or
Authorized Representative (Signature):
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/s/
Daoming Mo
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Mr.
Daoming Mo
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Chairman
& CEO
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