Xxx. 00-x
XXXXX XXXXXXXX AGREEMENT
AGREEMENT made this 14th day of September, 2006 between CHINA AOXING
PHARMACEUTICAL COMPANY, INC., a Florida corporation with offices c/o
American Union Securities, Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
U.S.A. 10005 ("CAXG") and ZHENJIANG YUE, with offices at Xx. 0 Xxxxxxxx
Xxxxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxxxx, P.R. China 050700 ("Yue").
WHEREAS, CAXG owns, through Ostar Pharmaceutical, Inc., 60% of the
equity in Hebei Aoxing Pharmaceutical Group ("Aoxing"), and Yue owns 40% of
the equity in Aoxing; and
WHEREAS, CAXG wishes to purchase from Yue a 35% interest in Aoxing,
and Yue is willing to sell same to CAXG on the terms set forth herein.
NOW, THEREFORE, it is agreed:
1. CLOSING DATE. The "Closing Date" will be the date which is four
business days after the Finance Date. The "Finance Date" will be the date
on which the aggregate gross receipts by CAXG from the sale of securities
after August 1, 2006 equals or exceeds Five Million Dollars ($5,000,000).
2. TRANSFER OF EQUITY. On the Closing Date Yue will deliver to CAXG
documents sufficient to vest in CAXG sufficient additional equity in
Aoxing, such that its interest in Aoxing on the Closing Date will be 95% of
all the equity in Aoxing. Included among the documents delivered at
Closing will be all Chinese government filings and approvals necessary to
complete the transfer of equity contemplated by this agreement.
3. PURCHASE PRICE. On the Closing Date CAXG will deliver to Yue by
wire transfer, pursuant to instructions to be delivered by Yue at that
time, the Purchase Price. The "Purchase Price" for the additional equity
will be Three Million Eighty Thousand U.S. Dollars ($3,080,000). The
parties agree that the Purchase Price was determined on the basis of the
price at which CAXG has most recently sold equity in arms length
transactions.
4. LIQUIDATED DAMAGES. Yue acknowledges that CAXG will take action
pending the Closing on the assumption that it will acquire the additional
equity at the Closing, and that CAXG will be seriously damaged if Yue fails
to satisfy his obligations as set forth in this Agreement. Therefore, in
the event that Yue fails to deliver on the Closing Date the documents
required by Section 2 of this Agreement, Yue will be deemed to have
surrendered to CAXG all of the five million shares of CAXG common stock
that are now held in his name. The transfer agent for CAXG common stock is
hereby instructed that upon receipt of a certification by a duly authorized
officer of CAXG to the effect that Yue has defaulted in complying with this
agreement, the transfer agent should place a stop transfer instruction with
respect to the certificates in Yue's name, and should cancel any such
certificate that is delivered to the transfer agent for transfer or
otherwise. The aforesaid cancellation of shares is intended to compensate
CAXG for the damage that it will suffer in the event of a default by Yue
and is not a penalty.
5. TERMINATION. In the event that the Closing Date has not occurred
on or prior to September 14, 2007, then this agreement shall automatically
terminate on that date and have no further force or effect.
CHINA AOXING PHARMACEUTICAL COMPANY, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, Secretary
/s/ Zhenjiang Yue
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ZHENGJIANG YUE
