Exhibit 10.2
SHARE OWNERSHIP PURCHASE & TRANSFER AGREEMENT
OF
QINGDAO HAIER PHARMACEUTICAL CO., LTD.
Between:
Haier Group Company
And
Brave Lion (HK) Co., Ltd.
And
Sino Pharmaceuticals Corporation
Date: May 30, 2001
SHARE OWNERSHIP PURCHASE & TRANSFER AGREEMENT
This Agreement is signed between the following parties on the date of May 30,
2001 in the city of Qingdao, PRC:
PARTY A.: Haier Group Company (hereinafter referred to as Party A),
registered in the city of Qingdao in China, and its legal address is at
Haier Industrial Park, Qingdao High Tech Zone China.
PARTY B: Brave Lion (HK) Co., Ltd. (hereinafter referred to as Party
B), registered in HK. Its legal address is at Xxxx 0000, Xxxxxxx
Xxxxxx, 00 Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx.
PARTY C: Sino Pharmaceuticals Corporation (hereinafter referred to as
Party C) registered in USA, with its legal address at 00000 X.X. Xxxxx
Xxxx Xxx, Xxxxxxxx, Xxxxxxxxxx, 00000, X.X.X.
Whereas:
1). Qingdao Haier Pharmaceutical Co., Ltd. (the Company) is a Sino-Foreign Joint
Venture duly incorporated and operated by Haier Group Company and Brave Lion
(HK) Co., Ltd. with legal address of the company at Haier Industrial Park,
Qingdao High Tech Zone, China. 2). Party A and Party B collectively own 100% of
the share ownership of Qingdao Haier Pharmaceutical Co. Ltd. (the Company).
Party A owns 75% of the share ownership and Party B owns 25% of the share
ownership. 3). Party A and Party B agree to sell and to transfer to Party C and
Party C agrees to purchase or acquire from Party A and Party B a total of 70% of
the share ownership of Party A and Party B in accordance with the terms and
conditions of this Agreement. 4). As the current shareowners of the Company,
each of Party A and Party B hereby agrees to waive any preemptive right it may
have regarding each party's transfer of its shares of the Company to Party C.
Therefore: After friendly negotiation, and in accordance with the Law of
People's Republic of China on Joint Ventures using Chinese Foreign Investment
and other relevant Chinese laws and regulations, Party A and B, in accordance
with the principals of equality and mutual benefit, hereby agree to sell to
Party C, and Party C hereby agrees to purchase from Party A and Party B, 70% of
the share ownership in the Company, under the terms and conditions herewith.
Article 1 Definition
The following terms shall have the following definition in this Agreement:
1.1 Share Ownership: Any and all issued and outstanding shares of the Company.
1.2 Share ownership transfer: the transfer of the 70% of the share ownership of
the Company owned by Party A and Party B as well as the rights, interest, claims
and all other rights in connection therewith. 1.3 The assets of the Company
include all those listed in the Schedules attached to the Share Ownership
Purchase & Transfer Agreement (the Agreement) and, particularly, include the
following:
(1) All land, buildings, facilities, manufacturing equipment and other fixed
assets as listed in the Schedule 1; (2) All Intellectual property, including
trade marks, patents, product registrations, sales & distribution network,
manufacturing licenses and approvals, GMP licenses, new drug approvals, product
brands and all existing products as listed in Schedule 2.
(3) The workforce, including its management team, technical team, factory staff,
sales force and marketing team and the sales force distribution system of
Qingdao Haitian Pharmaceutical Plant Medicinal Management Dept as listed in the
Schedule 3; (4) The Company's working capital, including cash, deposit in the
bank, accounts receivable, finished products inventory, raw materials inventory,
packaging materials inventory, prepaid expenses and loans payable, etc. as
listed in the Schedule 4 (5) The name of the Company and the rights to the use
of the Haier Pharmaceutical name, corresponding brand and logo to conduct any
related business. (6) Any and all mid and long terms investment in securities,
equity join venture, share equity of other companies. (7) The term "share" as
used in this Agreement has the same meaning as "share ownership" wherever
appropriate in relations with the context.
Article 2 Share Ownership Transfer
2.1 The current total amount of paid-up capital of the Company is USD$7,560,000
and registered capital is USD$7,560,000. Party A explicitly agrees that, it
shall make an additional investment of USD$4,440,000 to the Company as
registered capital within 60 days from the date of this Agreement, to increase
the registered capital of the Company from USD$7,650,000 to USD$12,000,000.
After the registered capital is increased to USD$12,000,000, Party A's share
ownership in the Company shall be increased from 75% to 84.25% and Party B's
share ownership in the Company shall be decreased from 25% to 15.75% 2.2
Subsequent to the increase of the registered capital as referred to in Article
2.1, Party A and Party B shall transfer to Party C 70% of the share ownership of
the Company respectively. For a greater certainty, Party A shall transfer 64.25%
of its share ownership and Party B shall transfer 5.75% of its share ownership.
Article 3 Decision-making and Management Right
3.1 The highest authority of the Company shall be its Board of Directors and the
Chairman of the Board of Directors is the sole legal representation of the
Company. The Board of Directors shall be composed of 6 directors, of which one
shall be appointed by Party A, one by Party B and four by Party C. The Board of
Directors shall have a Chairman and Vice-Chairman. The Chairman shall be
appointed by Party C and the Vice-Chairman by Party A and B. The term of office
for the directors, Chairman and Vice-Chairman is four years and may be renewed
if continuously appointed by relevant parties. The General Manager and Financial
Manager of the Company shall be appointed by Party C.
Article 4 Price
4.1 The price for the 70% of the total share ownership in the Company as per
Article 2.2 shall be USD$9,000,000, of which USD$8,260,700 shall be paid to
Party A and USD$739,300 shall be paid to Party B. The price of the share
ownership shall be paid in US dollars without being affected by any exchange
fluctuations.
Article 5 Payment
5.1 Upon signing of this Agreement, Party C shall immediately issue two
corporate promissory notes to Party A and B respectively, for a total amount of
USD$9,000,000. Party A shall be issued a promissory note for USD$8,260,700 and
Party B shall be issued a promissory note for USD$739,')00. These promissory
notes shall be dated May 30th, 2001, and shall be due for payment, six months
from the issue date, on November 30, 2001. This shall constitute total payment
for the 70% share ownership, in accordance with Article 4.1.
Article 6 Re-registration
6.1 Immediately upon signing of this Agreement, Party A and Party B shall
officially and legally transfer 70% share ownership of the Company to Party C
and shall further immediately proceed with the relevant government departments
and the Industry & Commerce Administrative Bureau to complete the
re-registration procedures in connection with the business license, registration
of new shareholders or investors, new Board of Directors and other documents of
the Company. Upon completion, Party A or B shall formally inform Party C of the
same and send proof of the same to Party C.
6.1 Party A and Party B shall also immediately complete re-registration
procedures in connection with the new appointments of Chairman of Board of
Directors, the General Manager and other positions.
Article 7 Warranties About the Assets of the Company
7.1 Party A and Party B warrant that pending Party C's taking over of the
management and decision-making of the Company, there shall be no asset transfer,
no massive loan taking, no settlement of receivables at less thank book value
and no waiver of major claims against third party.
Article 8 The Representations and Warranties
The Parties hereby represent and warrant to each other the following:
8.1 Each Party is an entity duly incorporated, valid, subsisting and in good
standing under the laws of the respective jurisdictions in which it is
incorporated. 8.2 The execution, delivery and performance of this Agreement
pursuant hereto are within each Party's powers and have been duly authorized on
its part by all requisite corporate action or procedures. This Agreement will
be, upon execution by each Party, a valid and binding agreement enforceable in
accordance with its terms against each Party.
8.3 Each Party is currently conducting its business in compliance with all
relevant laws and regulations. The execution of this Agreement does not
constitute a default under or a violation of the any law of the respective
jurisdiction in which such Party is incorporated and, or carries on business and
any laws or regulations applicable to this Agreement, any provision in the
articles of association of such Party or any material agreement, judgment
injunction, order, decree or other instrument binding upon such Party. 8.4 There
is no basis for and there is no action, suit or proceeding pending or, to the
knowledge of each Party, threatening against or affecting each Party before or
by any court, or arbitrator or any government body, agency or official in which
there is a reasonable likelihood of an adverse decision that would impair each
Party's ability to perform its obligations under this Agreement.
8.5 Each Party has not knowingly engaged in any activities that infringe any
patents, copyrights, trademarks, or other known intellectual property rights of
any third party. 8.6 Each Party represents and warrants that the funds used by
each such a Party to invest into the Company were lawfully acquired.
8.7 Any Party breaching its representations and warranties herein shall
indemnify any and all losses of the other Parties arising from such breach. In
case such breach is of a material nature, the other Parties shall have right to
claim damages and compensation from he breach Party.
Party A and Party B hereby represent, warrant and covenant to Party C that
before Party C becomes an equity shareowner in the Company: 8.8 The audited
financial statements of the Company for the fiscal period ending prepared by a
Certified Public Accounts firm in the People's Republic of China in accordance
with General Acceptable Accounting Principles applied on a basis consistent with
prior years, are correct in every material respect and present fairly the
financial position of the Company as at the end of, and the results of its
operations for, the period from January 1, 2000 to December 31, 2000. The
unaudited financial statements of the Company for the fiscal period ending April
30, 2001, also attached to this Agreement as Schedule 6, prepared by the Company
in accordance with years, are correct in every material respect and present
fairly the financial position of the Company as at the end of, and the result of
its operation for, the period from January 1, 2001 to April 30, 2001. 8.9 The
Company is entitled to use the land as described in Schedule 7 of this
Agreement. All relevant government approvals, agreement and appraisals
substantiating and in relation with the land use of the land as described in
Schedule 7 are collectively attached as Schedule 8 of this Agreement.
(a) the Company has good and marketable title to and possession of the premises
described in Schedule 9 of this Agreement free and clear of all liens, charges,
security interest or encumbrances except those described in Schedule 10 of this
Agreement. The premises so described in Schedule 9 are in good operating
condition and in a state of good maintenance and repair.
(b) the Company has good and marketable title to and possession of all the
assets referred to in Schedule I of this Agreement free and clear if all liens,
charges, security interest or encumbrances except those described in Schedule II
of this Agreement. All the tangible assets and equipment so referred to in the
Schedule I are in good operating condition and in a state of good maintenance
and repair.
8.10 All tax returns and reports of the Company required by the law of the
People's Republic of China to be filed before the date of this Agreement have
been filed and are true, complete and correct, and all taxes and other
government charges have been paid or accrued in the financial statements
attached as Schedule 6. There are no liabilities, contingent or otherwise, of
the Joint Venture Company which are not disclosed or reflected in Schedule 6
except those incurred in the ordinary course of its business since April 30,
2001 and will be disclosed to Party C prior to the Date of Payment.
8.11 All labour dues, salaries, bonuses, share of profits, pensions or other
benefits are paid and there are no outstanding liabilities in this respect as of
the date of this Agreement; there are no severance pay or separation allowances
between the Company and any of the employees of the Company. 8.12 the Company is
not indebted to either Party A or Party B except as detailed and referred to in
Schedule 12; 8.13 The Company has all necessary and required GMP licenses,
permits and operating authorities, including all those permits in relation to
the Company specified in Schedule 13 as may be required for carrying on its
business in the manner in which it had previously been carried on, the license
of Pharmaceutical Enterprise, which currently expires on June 30, 2001 will be
obtained for an additional period of two years; 8.14 The Company is in good
standing with any and all local & national governments of the People Republic of
China; 8.15 The Company has lawful entitlement to its trademarks and
intellectual property; 8.16 All applicable taxes in relation with land, land use
right and immovable properties which are due prior to April 30, 2001 have been
paid up or accrued in the financial statements attached to as Schedule 6; 8.17
The Company shall not, from the date this Agreement becomes effective, dispose
of at less than market value any of its finished product inventories which have
been finished and stated in the financial statements attached to as Schedule 6
without disclosing to and obtaining consent by Party C; 8.18 The Company shall
not, from the date this Agreement becomes effective, dispose of at less than
market value any of its raw materials inventories which have been acquired and
stated in the financial statements attached to as Schedule 6 without disclosing
to and obtaining consent by Party C. 8.19 The Company shall not, from the date
this Agreement becomes effective, dispose of at less than market value any of
its packaging materials inventories which have been acquired and stated in the
financial statements attached to as Schedule 6 without disclosing to and
obtaining consent by Party C. 8.20 The Company shall maintain its original
production capacities as of April 30, 2001 from the date of this Agreement and
do all necessary repairs and maintenance to the assets of the Company and take
reasonable care to Protect and safeguard those assets; 8.21 The Company shall
maintain its workforce from the date of this Agreement, including its management
team, technician team, factory staffs and sales marketing team
for the use of the Company after the new Board of Directors are appointed
pursuant to this Agreement. 8.22 The Company has issued only one class of share
with full voting rights. 8.23 There are no existing legal cases, lawsuits, or
judgments pending against the Company, except as detailed and referred to in
Schedule 14; 8.24 The salaries of executive and management personnel have been
paid; 8.25 All taxes, salaries, labour insurance, social service fees and dues
should be paid up until the date the new Board of Directors are appointed
pursuant to this Agreement; 8.26 The Company shall maintain sound distribution
system until the date the new Board of Directors are appointed pursuant to this
Agreement.
Article 9 Liability for Breach of Agreement
9.1 In case Party C fails to perform any of its obligations stated in Article
5.1 above. The performing parties shall have right to terminate this Agreement
without prejudicing the performing party's right to claim indemnity. 9.2 In case
Party A and Party B fails to perform any of its obligations stated in Article
6.1 and 6.2 above, the performing parties shall have the right to terminate this
Agreement without prejudicing the performing party's fight to terminate this
Agreement and claim damages.
9.3 Any Party breaching its representations and warranties are specified herein,
particularly, as specified in Article 7 and 8 of this Agreement, shall indemnify
any and all losses of the other Parties arising from such breach. In case breach
is of a material nature, the other Parties shall have the right to claim for
damages.
Article 10 Force Majeure
10.1 Should either of the parties to the Agreement be prevented from executing
the Agreement due to force majeure, such as earthquake, typhoon, flood, fire,
war or acts of government of regulatory organizations or other unforeseen
events, and their occurrence and consequences are unpreventable and unavoidable,
the prevented party shall notify the other parties by telegram or fax without
any delay, and within 15 days thereafter provide detailed information of the
events and a valid document for evidence issued by the relevant public notary
organization explaining the reason of its inability to execute or delay the
execution of all or part of the Agreement. The Parties shall, through
consultations, decide whether to terminate the Agreement or to exempt part of
the obligations for implementation of the Agreement or whether to delay the
execution of the Agreement according to the effects of the events on the
performance of the Agreement.
Article 11 Applicable Laws
11.1 The conclusion, effect, interpretation, implementation and settlement of
dispute in connection with this Agreement shall be governed by relevant laws of
the People's Republic of China.
Article 12 Settlement of Dispute
12.1 Any disputes arising from the execution of, or in connection with the
Agreement shall be settled through friendly consultations between the parties.
In case no settlement can be reached through consultations, the disputes shall
be submitted to China International Economic & Trade Arbitration Commission for
arbitration in Beijing in accordance with its rules of procedure. The arbitral
award is final and binding upon the parties.
Article 13 Effect
13.1 This Agreement shall come into effect upon signing by duly authorized
representatives of the Parties.
Article 14 Miscellaneous
14.1 Any notice herein from one party to another party to this Agreement shall
be in writing and shall be communicated to the other parties by fax, telex or
post. If communicated by fax or telex, notice shall be deemed to be properly
given upon acknowledgement of receipt of transmission by the answerback of the
telex or fax machine of the receiving party. If communicated by post mail,
notice shall be deemed to be properly given 7 working days after the letter is
posted.
14.2 Unless with written consent of the other parties, neither party shall
transfer its rights and obligations hereinunder to an party other than the
parties hereto. 14.3 Any amendments to this Agreement shall need the agreement
of all the parties in writing. Any amendments to this Agreement after being
signed by the Parties shall be submitted for approval to the relevant
authorities or filed with relevant authorities (if necessary), and shall become
effective upon being signed or approved, whichever is later.
14.4 This Agreement is written in the Chinese and English languages and done in
three original copies, each party holding one copy. The two versions have the
same legal force and effect.
In witness whereof, the authorized representatives of the Parties put their
signature on the date at the beginning of this Agreement in Qingdao, PRC.
For and on behalf of Party A: For and on behalf of Party B:
Haier Group Company (China) Brave Lion (HK) Co., Ltd.
For and on behalf of Party C:
Sino Pharmaceuticals Corporation
