Equity Transfer Agreement Between Sunstone Pharma (Tangshan City) and Beijing Enhao Technology Development Co, Ltd., on Transfer of Equity in Zhangjiakou Shengda Pharmaceutical Co., Ltd. Date: December 19, 2008
Exhibit 10.1
Note: English Translation of Final Form of Chinese Language Agreement
Equity Transfer Agreement Between Sunstone Pharma (Tangshan City) and Beijing Enhao Technology
Development Co, Ltd., on Transfer of Equity in Zhangjiakou Shengda Pharmaceutical Co., Ltd.
Development Co, Ltd., on Transfer of Equity in Zhangjiakou Shengda Pharmaceutical Co., Ltd.
Date: December 19, 2008
Contents
Article One
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Definitions | |
Article Two
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Transfer of Equity | |
Article Three
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Statement and Warranty of Assignor | |
Article Four
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Statement and Warranty of Assignee | |
Article Five
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Effectiveness and Liability for Breach of this Agreement | |
Article Six
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Settlement of Disputes | |
Article Seven
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Non-transferability | |
Article Eight
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Notification | |
Article Nine
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Entry into Effect and Miscellaneous Provisions | |
Article Ten
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Text of Agreement |
Agreement on Equity Transfer
This agreement is hereby made and entered into by and between the following two parties on
December 19, 2008 in Tangshan City, Hebei Province.
Assignee: Sunstone Pharma (Tangshan)
Registration Address: Xx. 000, Xxxxx Xxxx, Xxxx-Xxxx Xxxxxxxxxxx Xxxx
Legal Representative: Xxx Xxxxxxxx
Fax: 0000 0000000
Telephone: 0000 0000000
Registration Address: Xx. 000, Xxxxx Xxxx, Xxxx-Xxxx Xxxxxxxxxxx Xxxx
Legal Representative: Xxx Xxxxxxxx
Fax: 0000 0000000
Telephone: 0000 0000000
Assignor: Beijing Enhao Technology Development Co, Ltd.,
Registration Address:
Legal Representative
Fax:
Telephone:
Registration Address:
Legal Representative
Fax:
Telephone:
Beijing Enhao Technology Development Co, Ltd., (hereinafter referred to as Enhao) hereby
agrees to transfer part of its equity in Zhangjiakou Shengda Pharmaceutical Co., Ltd. (hereinafter
referred to as Shengda). Sunstone Pharma (Tangshan) (hereinafter referred to as Sunstone) intends
to receive and accept the said equity. In accordance with the relevant laws and rules of the
People’s Republic of China, the both parties hereby, through amicable negotiation and based on the
mutual equity and benefit, agree to the following terms and conditions for mutual fulfillment and
compliance:
Article One Definitions
Unless otherwise specified in the agreement, the following terms in this agreement shall be
deemed as:
This Agreement:
|
Referring to this Equity Transfer Agreement made and entered into by the Assignor and Assignee on , 2008 in Tangshan City, Hebei Province. | |
Assignee:
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Referring to Sunstone Pharma (Tangshan) | |
Assignor:
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Referring to Beijing Enhao Technology Development Co, Ltd., | |
Shengda:
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Referring to Zhangjiakou Shengda Pharmaceutical Co., Ltd. | |
Transfer:
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Referring to the Assignor transferring part of its legal share rights in Shengda to the Assignee | |
Equity transfer:
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Referring to 50% of Shengda’s registered capital held by the Assignor | |
Both Parties:
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Referring to the Assignor and Assignee | |
Signing Date:
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Referring to the date on which both parties sign this agreement | |
Effective Date
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Referring to the date on which this agreement is approved by Zhang Jiakou Bureau of Commerce | |
Accounting Statement:
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Referring to Shengda’s Balance Sheet, Income Statement, Statement of Cash Flow | |
Normal Commercial Activities: |
Referring to the following activities: (l) the activities that are in consistence with the past ones and occurring in normal daily affairs 2 the activities that do not require the confirmation by the board of directors. |
Article Two Equity Transfer
2.1 Transfer Object
2.1.1 The General Introduction to Shengda
Shengda was founded on August 15, 2002 with the approval of Zhang Jiakou Foreign Economy and
Trade Cooperation Bureau which issued No. 20 Foreign Economy and Trade Document (the number of the
Approval Certificate of Enterprises With Foreign Investment is JIZHANGZI[2002]00006). The company
has obtained Corporate business license from Zhang Jiakou Administration of Industry and Commerce.
Located in Xx. 00, Xxxxxxx Xxxx, Xxxxx Xxxxxx Xxxx, Xxxxxxx is a Sino-foreign joint venture
corporation with a contract period of 30 years, registered capital of US$1,200,000 and total
investment of US$1,700,000.
Presently Shengda has three shareholders and their respective names, investments
and share proportions are:
Beijing Enhao Technology Development Co, Ltd., investing US$600,000 and holding 50% of total
capitalization;
Zhang Jiakou Pharmaceutical Co., investing US$300,000 and holding 25% of total capitalization;
High-Land Co., investing US$300,000 and holding 25% of total capitalization.
2.1.2 Proportion of Equity Transfer
In accordance with the terms stipulated in this agreement, 50% of Shengda’s shares
held by the Assignor as well as the pertinent rights and interests shall be transferred to the
Assignee on the account day.
2.2 Transfer Price and Payment
2.2.1 The price of the equity to be transferred hereunder is determined at XXX 00,000,000.(Xxxxxx Xxxxxxx XXX Yuan)
2.2.2 Payment
2.2.2.1 Within15 working days upon the signing of this agreement by both parties hereto,
the Assignee shall make payment to the Assignor 30% of this transfer price as stipulated herein,
which shall be RMB 6,000,000 to the account designated by the Assignor.
Within15 working days upon the signing of this agreement by both parties hereto, the both
parties shall apply with the commercial authorities and industry & commerce administration for
equity transfer approval and required formalities concerning share rights transfer.
2.2.2.2 Within 10 months upon the completion of this equity transfer, the Assignee shall
make full payment of the rest RMB 14,000,000 to the Assignor in five equal installments (which
shall be carried out every two months with RMB 2,800,000 each time and provided the expiry date
coincides with the national holiday, it shall be extended to the next working day).
After the completion of this transfer, no matter for what reason the Assignee fails to pay off
the rest equity transfer payment within designated period, the Assignee shall bear the liability of
breaching contract as stipulated in clause 5.3 of the fifth article, and the Assignor shall have
the right to require the Assignee to transfer the transferred equity back to the Assignor. With 15
working days upon the re-transfer, after deducing the relevant liquidated damages, the Assignor
shall return to the Assignee all of the transfer payment paid by the Assignee.
2.3 Account Day
Both parties hereto shall finish the required formalities required for this equity transfer
with Administration of Industry and Commerce after receiving the approval of the relevant
authorities (including but not limited to the commerce authorities in Zhang Jiakou City and Hebei
Province). The day finishing this equity transfer shall be deemed as the account day for this
equity transfer.
2.4 The Obligations of Document Provision
2.4.1 The Assignor’s Obligations
The Assignor shall provide the Assignee with the photocopies of the following documents which
are included but not limited to the items mentioned hereunder (the original documents shall be
checked by the Assignee) before the Assignee pays the down-payment:
2.4.1.1 Share rights document Capital Contribution Certificate ; company’s constitution; the
relative documents like Joint Venture Contract, Legal Representative Certificate, License, Drug
Manufacturing Certificate, Tax Registration Certificate, Document of Drug Approval Number, GMP
Certificate, etc.,;
2.4.1.2 The Assignee shall produce as the share holder of Shengda undertaking for furnishing
truthful, accurate, and complete information for all of the relevant documents provided;
Prior to both parties going through the transfer formalities with the Administrative of
Industry and Commerce, the Assignor shall provide the Assignee with the following documents which
are included but not limited to the items mentioned hereunder:
2.4.1.3 The government authorities’ approvals concerning this equity
transfer and the resolutions approving this equity transfer made by the both parties’ share
holders’ meetings and boards of directors;
2.4.1.4 The agreements on associate business signed by the Assignor and
Shengda which are being executed presently;
2.4.1.5 Shengda’s former three fiscal years’ financial statements which
have been audited by the independent auditory institutions, this fiscal year’s financial statements
from January to October, the relevant operation planning, the Future Three Years’ Planning (or
similar documents);
2.4.1.6 Shengda’s Organization Structure Map, employee list, all the
regulations, patents granted, trade marks, real estate certificate, land use certificate, major
contracts, statements of the external guaranty and pawn, statements of major lawsuits, arbitrations
or penalties by government authorities, government documents concerning tax preferential policies,
statements of tax arrears;
2.4.1.7 All of the documents concerning this equity transfer required by
Administration of Industry and Commerce;
2.4.1.8 Other legal and financial documents regarding this transfer.
2.4.2 The Assignee’s Obligations
The Assignee shall provide promptly at the Assignor’s demands the documents hereunder listed:
2.4.2.1 Confidentiality Warranty;
2.4.2.2 The documents concerning the application for approval and transfer of the equity
which have been stipulated by the commerce authority and administration of industry and commerce
to be provided by the Assignee;
2.4.2.3 The resolutions approving this equity transfer made by the Assignee’s
board of directors
2.5 Amendments
Any possible amendments hereby shall be deemed as the amendments which are made to the
relevant articles in this agreement in case of arising during the period between the signing day
and account day any major events which are inconsistent with the situation when this agreement is
signed.
Article Three The Statements and Guarantees by Assignor
3.1 Legality
3.1.1 The Assignor shall be a legal equity holder and controlling share holder of the equity
to be transferred, an independent legal person established legally and having rights to engage in
transactions concerning this transfer. The Assignor shall be fully entitled to signing and
executing this agreement.
3.1.2 As of the date of signing this agreement, all of the approvals, agreements,
authorizations and permissions that are required by laws and rules for manufacturing and operation
shall have been obtained and be sustained effective by Shengda. The Assignor, as the company’s
controlling share holder, shall be fully aware that the Shengda is free from involvement in no
major activities illegal or activities against the rules.
3.2 Obtainment of Financial and Taxation Information
Provided that the Assignee has produced confidentiality warranty and the action is in
consistence with the relevant laws and rules, the Assignor shall assist and support the Assignee in
obtaining from Shengda the detailed relevant financial statements and records concerning this
fiscal year, taxation information, the past three years’ tax inspection documents and duty paid
certificates. However, the Assignee shall undertake not to put the above mentioned materials in
self-using to get any illegal benefits.
3.3 The Rights of the Third Party
As of the date of signing this agreement, the equity in Shengda held by the Assignor shall
not have any defects in terms of rights, shall not be mortgaged, guaranteed, frozen or involved
in any other forms of the third party rights or relevant obligations; Shengda shall have no
unreleased potential debts or debts. Otherwise, any losses that may incur to the Assignee due to
the above mentioned causes shall be borne by the Assignor
3.4 During the period between this agreement’s signing day and account day, except for
Shengda’s normal commercial activities, the Assignor shall undertake as the company’s controlling
share holder that the following events shall not occur unless having secured the Assignee’s
written consent. Otherwise, the Assignee shall have the rights to terminate unilaterally this
agreement as well as to demand compensation from the Assignor:
3.4.1 The major changes in Shengda’s share rights structure
3.4.2 The changes in Shengda’s corporation constitutions (except the normal changes in
Industry and Commerce Registration items)
3.4.3 Donation and property transfer without compensation; intentional or negligent
concealing, removing, damaging or losing Shengda’s capital and/or assets, signing contracts or
contractive documents that abandon or damage Shengda’s rights;
In order to secure Shengda’s normal operation during the transfer period, the Assignor shall
undertake that within 7 days upon signing this agreement, the Assignor shall entrust as shareholder
Shengda’s directors to hold meeting and approve the personnel nominated by the Assignee to
participate in Shengda’s management. Besides adhering to the normal procedures, Shengda shall also
secure the signature or written consent from the personnel designated by the Assignee prior to
using the official seal, financial seal or legal representative’s seal, to signing contract and to
approving daily expenditures. The Assignee shall have the rights to deduct after auditing the
correspondent amount from the payment which has been made to the Assignor for any loss incurred in
the said activities without the designated personnel’s approval.
3.4.4 Changing Shengda’s accounting system and financial statement presentation (except
otherwise that the changes are made in consistence with the relevant rules by Ministry of Finance);
Shengda’s profit allocation or dividend payment without the Assignee’s written consent.
3.4.5 Shengda providing guarantee, mortgage or the third party rights for the third party
debts besides the company’s existing debts, the existing third party rights and normal debts
incurred upon signing this agreement.
3.4.6 Existence of issues concerning Shengda which have not been revealed to the Assignee and
whose revelation may generate enough influence in the Assignee’s decision to sign this agreement.
3.4.7 The Assignor’s share rights being frozen. Provided that this event happens, the
Assignor shall bear the obligations to remove the freezing prior to day the first installment of
transfer payment is made by the Assignee.
3.5 Warranty of Truthful Guarantee
The Assignor shall not make in this agreement any statements or guarantees that intentionally
mislead or deceive the Assignee. The Assignor shall undertake to bear any loss incurred to the
Assignee due to the inconsistence between the promised items and true situation.
3.6 Application and Approval
Upon signing this agreement, the Assignor and Assignee shall work together to apply with the
government authorities of Zhang Jiakou City for all the relative formalities concerning this equity
transfer.
3.7 Relevant Taxation and Fees
The payment of relevant expenses concerning the application, transfer, alternation in
registration of this equity transfer shall be paid in accordance with the country’s rules. In case
of absence of such relevant rules, the payment shall be settled through friendly consultations by
both parties.
3.8 Exclusive Negotiation
Throughout the period from the day signing this agreement to the day equity being
transferred, the Assignor shall undertake that except with the Assignee it shall not involve in
any negotiation with any other party on the issues concerning this equity transfer.
3.9 Special Undertake: the Assignor agrees that the Assignee shall have the rights to entrust
independent auditory institution to audit Shengda’s finance situation. Provided that the
substantial difference arises between the audited statistics and Shengda’s financial statements
provided by the entrusting party, both parties hereto shall agree to re-determine the
transfer price.
Article Four Statement and Warranty of Assignee
4.1 Legality
4.1.1 The Assignee shall be a legally registered and operating independent legal entity and
hereby shall willingly sign this agreement with the Assignor with full awareness of its legal
liability.
4.1.2 The Assignee shall have the legal qualifications as the subject receiving and accepting
the equity transferred. Provided a legal transfer of the equity to the Assignee can not be carried
out due to the Assignee’s faults, the Assignee shall bear the compensation liability for any
losses incurred to the Assignor.
4.1.3 The Assignee’s capital to receive and accept the equity transferred shall be legally
self-owned capital which shall be transacted on its own will and be free from any revealed or
unrevealed agreements or arrangements and the payment can be made to the Assignor at the appointed
time as stipulated herein.
4.2 Procuring Approval
4.2.1 Assisting the Assignor in finishing relevant applications;
4.2.2 Assisting the Assignor in procuring relevant approvals for this equity transfer.
Article Five Effectiveness and Liability for Breach of this Agreement
5.1 Binding Force
5.1.1 Once formally entered into, this agreement shall have binding force for both parties
hereto. The articles in this agreement shall be fully performed by both parties hereto except
otherwise such failure is resulted from failure in procuring the government approvals or Force
Majeure. Either party shall be held as constituting a breaching of this agreement if it fails to
perform this agreement or fails to observe the terms stipulated herein and the breaching party
shall be held liable for indemnification in a proper manner against any direct economic loss that
may cause to the observing party. The observing party shall be entitled to request the breaching
party to fulfill this agreement in a continuous manner.
5.1.2 Any action by either party hereto which impedes this agreement from coming into effect
shall constitute a breaching of this Agreement,
5.2 The Assignor’s Penalty Fees
5.2.1 Provided that the Assignor fails to carry out its equity transfer obligations as
stipulated herein upon securing government’s approvals, it shall pay back to the Assignee within
ten days since the occurrence of breach all of the payment that has been made by the Assignee and
the amount of 20% of the payment that has been made by the Assignee shall be paid as the penalty
fees. Provided that the payment is made over 10 days since the occurrence of breach, the penalty
fees for each day overdue which shall be three times of the bank’s interest levied on one year loan
shall be paid by the Assignor starting from the 11th day.
5.2.2 Provided that the failure of transfer stems from failure to procure approvals from the
Provincial Government of Hebei and/or its relevant departments, and/or the City Government of Zhang
Jiakou and/or its relevant departments, the Assignor shall be exempted from any breach
liabilities. The Assignor shall return fully the payment made by the Assignee within 10 days.
Provided that it returns the payment after 10 days, the Assignor shall pay the penalty fees for
each day overdue starting from the 11th day which shall be three times of the bank’s
interest levied on one year loan.
5.2.3 This agreement shall be terminated if this equity transfer has not be approved prior to
December 31, 2008 (the accurate date shall be determined through negotiation) and the Assignor
shall return the payment that has been made within 7 days upon both parties signing the termination
agreement. Provided that it returns the payment after 7 days, the Assignor shall pay the penalty
fees for each day overdue starting from the 8th day which shall be three times of the
bank’s interest levied on one year loan. If they determine to extend, the both parties hereto shall
negotiate to solve the issue.
5.3 The Assignee’s Penalty Fees
Provided that it fails to make payments as stipulated in this agreement over 7 days, an
amount of 0.03% shall be paid as the penalty fees for each day overdue to the Assignor by the
Assignee. If the overdue time exceeds 20 days, the Assignor shall have the rights to request the
Assignee to pay an overdue penalty fee which equals to 20% of total payment.
Article Six Settlement of Disputes
All the disputes arising from or in connection with the fulfillment of this agreement shall be
settled through amicable consultations by both parties hereto. In case no settlement through
consultation can be reached within 30 days, the disputes shall be submitted to the People’s Court
that has the jurisdiction over the issue.
Article Seven Non-transferability
Unless the both parties hereto provide written consents, the Assignor and the Assignee shall
not allocate or transfer any rights and/or obligations in this agreement.
Article Eight Notification
8.1 In case that any events that may conflict or lead to conflict with this agreement, either
party shall notify the other party as soon as possible and submit the written documents to the
other party as soon as possible.
Herein this agreement, the effective confirmations of notification include the written
materials such as Letter of Confirmation, Introduction of Events, Memo, Meeting Report, etc.,
8.2 The written notification, whether in forms of registered letter, EMS or delivery by
assigned personnel, shall be confirmed after signing for receipt.
8.3 Except the above mentioned approaches, telephone conversation, fax or any other
communication approaches shall not be recognized as legally effective notification approaches.
Article Nine Entry into Effect and Miscellaneous Provisions
9.1 Entry into Effect
This agreement shall be signed by both parties’ legal representatives or their authorized
representatives and affixed with official seals. This agreement shall enter into effect as of the
date of approval of this equity transfer by Commerce Bureau of Zhang Jiakou City.
9.2 Open Information Revealing
Any information concerning this transfer shall be deemed as confidential commercial
information and all parties participating in this agreement shall be required to keep confidential
of any information involved herein. Any revealing of information shall be conducted in accordance
with relevant laws and rules. Either party shall not openly reveal any information concerning this
transfer without the other party’s consent (the Assignor undertakes that Shengda shall bear the
obligations stipulated in this article).
9.3 Total Agreement and Amendments
This agreement shall be governed and construed by the relevant laws and rules of People’s
Republic of China and shall not be not be limited or restricted by any other factors. Any
alternation to this agreement shall be made effective only with the confirmation by and between
both parties hereto
9.4 Conflict with Laws
If any terms stipulated in this agreement conflicts with country’s laws and rules or the
regulations stipulated by the relevant departments like Ministry of Commerce, State Food and Drug
Administration, Ministry of Finance, these terms shall be governed and construed by the relevant
laws, rules and regulations.
Article Ten Text and Supplementary Agreement
This agreement has been made out in sextuplicate. Each Party shall hold two copies of the text
and two copies of the text shall be submitted to the relevant government authorities (when
required). After signing the agreement, both parties are entitled to signing the supplementary
agreement which shall have the same legal effect.
Assignee: Sunstone Pharma (Tangshan)
Legal Representative (or authorized representative):
Date:
Assignor: Beijing Enhao Technology Development Co, Ltd.,
Legal Representative (or authorized representative):
Date:
