Capital Increase Agreement
Exhibit 10.2
of
Dalian Wanchunbulin Pharmaceutical Ltd.
July 2019
Page 1 of 12 Pages
This capital increase agreement (hereinafter referred to as the “Agreement”) is entered into by and among following parties on July 3, 2019.
Party A-Ⅰ: Dalian Wanchun Biotechnology Co., Ltd., a limited liability company incorporated and validly existing under the laws of Mainland China
(invested or controlled by natural person), Unified Social Credit Code: 91210213559810637C, Legal Representative: Xxxxx Xxx, Registered Address: Xx. 00, Xxxxxx X0 Xxxxxx, Xxxxxx Xxxxxxxx and Technological Development Zone, Liaoning Province
(hereinafter referred to as “Party A-Ⅰ” or “Dalian Wanchun Company”).
Party A-Ⅱ: Wanchun Biotechnology (Shenzhen) Ltd., a limited liability company incorporated and validly existing under the laws of Mainland China
(wholly-owned by Taiwan, Hong Kong or Macao legal person), Unified Social Credit Code: 91440300329599522L, Legal Representative: Jia Linqing, Registered Address: Xxxx 000, Xxxxxxxx X, Xx.0 xx Xxxxxxx 0xx Road, Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, Shenzhen (located in Shenzhen Qianhai Commercial Secretary Co., Ltd.) (hereinafter referred to as “Party A-Ⅱ” or “Shenzhen
Wanchun Company”).
Party A-Ⅰ and Party A-Ⅱ are collectively referred to as “Party A” or the “Existing Shareholders”.
Party B: Nanjing TEEWIN Investment Partnership (Limited Partnership), a limited partnership incorporated and validly existing under the laws of
Mainland China, Unified Social Credit Code: 914403005615227652, Managing Partner (fund manager): Shenzhen TEEWIN Asset Management Co., Ltd., authorized representative of Managing Partner: Xxxx Xxxxxx, Registered Address: 28th South of Renmin Road, Gucheng Town, Gaochun District, Nanjing (hereinafter referred to as “Party B” or the “investor”).
Party C: Dalian Wanchunbulin Pharmaceuticals Co., Ltd., a limited liability company incorporated and validly existing under the laws of Mainland
China (joint venture of foreign-invested enterprise and domestic enterprise), Unified Social Credit Code: 91210213335834445L, Legal Representative: Xxxxx Xxx, Registered Address: Xx. 00-0 xx Xxxxxx X0 Xxxxxx, Xxxxxx Xxxxxxxx and Technological
Development Zone, Liaoning Province (hereinafter referred to as “Wanchunbulin Company”, the “Target Company” or the “Company”).
Page 2 of 12 Pages
On June 16, 2019, Shenzhen Efung 9th Venture Investment Center (Limited Partnership) signed a Capital Increase Agreement with Part A and Part C,
agreeing to invest XXX 00 million into target company, among which RMB 2.05 million will be credited into the Target Company’s registered capital, and RMB 47.95 million will be credited into the Target Company’s capital reserve. This investment has
not been completed the capital verification and change of business registration formalities of the Target Company.
Whereas Part C has the intention to raising equity investment to meet its future operations, and the Part B (the investor) has the intention to
investment in Part C, the aforesaid parties hereby agree to enter into and abide by following formal clauses of this agreement pursuant to related provisions of Company Law of the People’s Republic of China, Contract Law of the People’s Republic of
China, other laws and regulations as well as articles of association of Wanchunbulin Company through friendly negotiation.
Article 1 Target Company, Existing Shareholders and De Facto Controllers
1.1 Dalian Wanchunbulin
Pharmaceutical Co., Ltd., a limited liability company incorporated and validly existing under the laws of Mainland China (joint venture of foreign-invested enterprise and domestic enterprise), Unified Social Credit Code: 91210213335834445L,
Registered Capital: XXX 00 xxxxxxx. The main scope of business includes R&D of biopharmaceutical technologies, technological services, technological consultation, technology transfers, import and export of goods and technologies. The
company’s registered address is Xx. 00-0 xx Xxxxxx X0 Xxxxxx, Xxxxxx Xxxxxxxx and Technological Development Zone, Liaoning Province, and its Legal Representative is Xxxxx Xxx.
1.2 Existing
Shareholders and shareholdings of Wanchunbulin Company are as dictated in the following table (Unit: RMB 10,000 yuan):
|
No.
|
Name of
Shareholder
|
Subscribed
Capital
|
Paid-in Capital
|
Form of
Contribution
|
Shareholding
Percentage
|
|
|
1
|
Dalian Wanchun Biotechnology Co., Ltd.
|
3280.00
|
3280.00
|
Intellectual
Property
Rights
|
40%
|
|
|
2
|
Wanchun Life Science & Technology (Shenzhen) Co., Ltd.
|
4920.00
|
4815.27
|
Cash
|
60%
|
|
| Total
|
8200.00
|
8095.27
|
100%
|
|||
1.3 As of May 30, 2019,
Xxxxx Xxx and Jia Linqing directly or indirectly held 70.22% of the shares of Wanchunbulin Company, which made them de facto controllers of Wanchunbulin Company (the “De Facto Controllers”). The De Facto Controllers shall be held jointly and
severally liable for the obligation of the Existing Shareholders and the Company to the Investor under this Agreement.
Page 3 of 12 Pages
Article 2 Investor
2.1 Nanjing TEEWIN
Investment Partnership (Limited Partnership), a limited partnership incorporated and validly existing under the laws of Mainland China (PE fund company), Unified Social Credit Code: 914403005615227652, Shenzhen TEEWIN Asset Management Co., Ltd.,
authorized representative of Managing Partner: Xxxx Xxxxxx, Registered Address: 28th South of Renmin Road, Gucheng Town, Gaochun District, Nanjing (hereinafter
referred to as “Party B” or the “investor”).
2.2 Pursuant to
provisions of PRC laws and regulations as well as its partnership agreement and other legal documents, Party B is able and willing to make equity investment in the target company in accordance with clauses of this Agreement.
Article 3 Investment Amount and Form of Investment
3.1 The investment
amount of Party B in Wanchunbulin Company is XXX 00 million, all of which are made in cash as direct equity investment in the Company.
3.2 The parties agree to
the pre-money valuation of the Target Company for calculation of Party B’s investment interests shall be XXX 0 xxxxxxx. XXX 2.05 million out of Party B’s total investment amount of XXX 00 xxxxxxx xxxx xx credited into the Target Company’s
registered capital, RMB 47.95 million will be credited into the Target Company’s capital reserve, and Party B’s shareholding percentage in the Target Company is as below.
|
No.
|
Name of
Shareholder
|
Subscribed
Capital
|
Paid-in Capital
|
Form of
Contribution
|
Shareholding
Percentage
|
|
|
1
|
Dalian Wanchun Biotechnology Co., Ltd.
|
3280.00
|
3280.00
|
Intellectual
Property
Rights
|
38.0952%
|
|
|
2
|
Wanchun Life Science & Technology (Shenzhen) Co., Ltd.
|
4920.00
|
4815.27
|
Cash
|
57.1428%
|
|
|
3
|
Shenzhen Efung 9th Venture Investment Center (Limited Partnership)
|
205.00
|
205.00
|
Cash
|
2.3810%
|
|
|
4
|
Nanjing TEEWIN Investment Partnership (Limited Partnership)
|
205.00
|
205.00
|
Cash
|
2.3810%
|
|
| Total |
8610.00
|
8505.27
|
100%
|
|||
Page 4 of 12 Pages
3.3 Party B shall make a
lump sum payment of the investment amount into the designated bank account of the Target Company within 20 business days upon execution and taking effect of this Agreement as well as satisfaction of all conditions precedents for the investment,
while the Target Company shall complete capital verification and change of business registration formalities within 20 business days upon completion of the investment. Party B shall be deemed as a shareholder of the Target Company as of the date
of its actual payment of investment amount, and shall enjoy the shareholder’s rights and bear the shareholder’s obligations. The bank information of the Target Company for receiving the fund is as below:
Account name: Dalian Wanchunbulin Pharmaceuticals Co., Ltd.
Bank: Bank of China, Dalian Double D Port Branch
Account number: 299969657428
3.4 If the Target Company
fails to conduct the capital verification and change of business registration formalities within the period set forth in Article 3.3 and overdue for more than 10 business days, Party B shall be entitled to unilaterally terminate this Agreement by
written notice, the Target Company shall refund the investment amount paid by Party B within 5 business days upon termination of this Agreement, and the Existing Shareholders shall be held jointly and severally liable for the refund. This Article
3.4 shall not apply to overdue caused by government reasons or force majeure.
Page 5 of 12 Pages
Article 4 Condition Precedents
4.1 The parties
acknowledge Party B’s investment obligations under this Agreement shall be conditioned upon the satisfaction of all conditions below:
（1） during the transitional period from date of execution of the Letter of Intent to the date of Party B’s payment of investment amount under this Agreement, there is no material adverse change in the Target Company’s business, operation, revenue, prospect, asset and
financial status that may affect Party B’s investment intent, which includes but not limited to change in the Target Company’s De Facto Controllers and controlling shareholder, loss of key management personnel and technical personnel, disposal of
material assets, incurrence of major liability or contingent liability to third parties;
（2） the shareholders’ meeting and/or board meeting of the Target Company has made a
resolution to approve the investment plan under this Agreement as well as amendment to the Company’s articles of association pursuant to the articles of this Agreement, and the Existing Shareholders have signed the written waiver of preemptive
rights with respect to this capital increase;
（3） the consent and approval of competent government authorities of this capital
increase transaction (as necessary) has been obtained;
（4） there has been no false or misleading representation or omission on the true
operation status of the Target Company by the Target Company, the Existing Shareholders, De Facto Controllers and senior management in the course of Party B’s due diligence investigations on the Target Company as well as negotiation and execution
of Letter of Intent and this Agreement;
（5） all the covenants and commitments to be performed by Target Company or any Existing
Shareholders on or prior to the closing date of capital increase under this Agreement (if any) have been duly performed;
（6） the Existing Shareholders have paid up all subscribed capital contributions to the
Target Company, which shall be real and legitimate without false capital contribution or withdrawal of paid-in capital.
4.2 In case of failure
of satisfaction of any of the condition precedents prescribed in Article 4.1 of this Agreement before Party B’s payment of investment amount, Party B shall be entitled to unilaterally terminate this Agreement by written notice and exercise its
rights for legal remedies.
Page 6 of 12 Pages
Article 5 Representations and Warranties
5.1 The Target Company
and its Existing Shareholders represent and warrant that:
（1） The company is a limited liability company lawfully incorporated and validly exists
according to PRC laws and regulations.
（2） The Existing Shareholders and the Company each has corresponding civil capabilities
as well as full authorities to enter into and perform this Agreement. This Agreement shall become a legal, valid and binding document to all parties upon execution and approval of the Company’s shareholders’ meeting.
（3） The Company and its Existing Shareholders’ execution and performance of this
Agreement will not violate any binding agreement with any third party entered into by the Company or its Existing Shareholders prior to the execution of this Agreement, the Company’s articles of association or any laws.
（4） Except for the equity pledge and stock incentive plan already disclosed to the
Investor, the Company has not issued or promised to issue to anyone any securities, bonds, warrants, options or other interests of the same or similar nature in any form. Except for the equity pledge already disclosed to the Investor, the
equities of the Company held by Existing Shareholders are free of pledge, court seizure, third party interest or any other encumbrances.
（5） Except for financial information already disclosed to the Investor, the Company does
not have any major liability or claim not disclosed to the Investor. Except as disclosed to the Investor, the Company does not have any guarantee, mortgage, pledge or other forms of security on the Company’s assets.
（6） Except as disclosed to the Investor, there is no material defect or limit of right
in all of the Company’s assets (including properties and rights) not disclosed to the Investor.
（7） Except as disclosed to the Investor, the Company and its Existing Shareholders
warrant that the Company is in possession of necessary licenses, approvals, authorizations and permissions required for its operation upon validation of this Agreement, and there is no known situation that might lead to suspension, alteration or
revocation of aforesaid licenses, approvals, authorizations and permissions by the government authorities. The Company has been carrying out its operations in compliance with the laws and regulations since its establishment, and there is no
violation or potential violation of provisions of laws and regulations.
（8） Except as disclosed to the Investor, the Company has been in compliance with
requirements of relevant laws on payment, deduction, exemption and withholding of taxes, which will not result in material adverse effect. There is no material charges, investigations, recourses and outstanding penalties related to tax matters
on the Company.
Page 7 of 12 Pages
5.2 Investor’s
representations and warranties:
（1） The Investor has corresponding qualifications and civil capabilities as well as full
authorities to enter into and perform this Agreement along with its ancillary capital increase agreement. The Investor’s execution and performance of this Agreement along with its ancillary capital increase agreement will not violate relevant
laws or conflict with other contracts or agreements to which it is a party.
（2） The Investor warrants the investment fund used to subscribe the Company’s
corresponding equities pursuant to this Agreement has legitimate sources, on which it has authentic, full, sole and independent ownership and control right without any other encumbrance.
Article 6 Right of First Refusal and Tag-along Right
6.1 Upon completion of
Party B’s investment in the Target Company, if one or more Existing Shareholders of the Target Company (the “Existing Shareholder Transferor”) intend to transfer equity in the Target Company’s to a third party (the “Transferee”) (the “Transferred
Equity”), Party B shall be entitled to right of first refusal to purchase the Transferred Equity ratably pursuant to its shareholding percentage at the time of such transfer under the same conditions.
6.2 If Party B decides
not to exercise the right of first refusal, Party B has the right to sell its equity to the Transferee ratably pursuant to its shareholding percentage at the time of such transfer under the same conditions. If the Transferee refuses to purchase
equity from Party B, the Existing Shareholder Transferor shall be prohibited from transferring equity to the Transferee. This Article 6 shall not apply to the transfer with Party B’s prior written consent or transfer pursuant to the Target
company’s equity incentives plan to core management personnel and technical personnel.
Article 7 Preemptive Right and Anti-dilution
7.1 Once Party B becomes
a shareholder of the Target Company, in case of the Target Company’s subsequent financing transaction, Party B has the preemptive right to subscribe the Target Company’s new equity capital pursuant to its shareholding percentage at the time of
the transaction. If any other shareholder fails to exercise its preemptive right, Party B has the preemptive right to subscribe equity unsubscribed by such shareholder pursuant to its shareholding percentage at the time of the transaction.
Page 8 of 12 Pages
7.2 If the unit price of
equity denominated in percentage (hereinafter referred to as “New Lower Price”) of subsequent financing transaction of the Target Company is lower than actual unit price of equity denominated in percentage paid by Party B in this round of
financing, Party B has the right to general anti-dilution protection to subscribe equity at the New Lower Price, which allows Party B to acquire certain shares free of charge or at lower price to the extent that its unit price of equity
denominated in percentage equals to the New Lower Price. This Article 7.2 shall not apply to the transaction with Party B’s prior written consent or transaction pursuant to the Target company’s equity incentives plan to core management personnel
and technical personnel.
Article 8 Information Rights
8.1 Once Party B becomes
a shareholder of the Target Company, the Target Company shall provide Party B with following information:
（1） annual financial statements prepared by accounting firm recognized by the parties
pursuant to Chinese Accounting Standards and audited pursuant to China Registered Accountants Auditing Standards Auditing Standards for Certified Public Accountants of China within 120 days after the end of each year;
（2） unaudited quarterly financial statements prepared pursuant to China Accounting
Standards within 45 days after the end of each quarter;
（3） work plan and annual budget for the next year within 30 days after the end of each
year.
8.2 Party B shall be
entitled to conduct financial audit on the Target Company at any time by itself or through its agent, and the Target Company shall actively cooperate and provide necessary conditions and materials to facilitate Party B’s audit investigations.
Article 9 Minimum Service Period and Non-Competition
9.1 The Target Company
shall enter into minimum service period and non-competition agreement with its core employees (including but not limited to directors, supervisors, senior management and core technical personnel) pursuant to this Article, among which minimum
service period shall be no less than 3 years starting from the date Party B becomes a shareholder of the Target Company.
Page 9 of 12 Pages
9.2 Without the written
consent of Party B and the Target Company, Party A which directly or indirectly holds 5% or above of the Target Company’s equity shall not during its shareholding period and within 2 years after it ceases to be a shareholder, and target
company’s core employees (include but not limited to directors, supervisors, executives and core technical personnel) shall not during its employment period and within 2 years after the termination of its employment, engage in or invest in their
own names or through others in businesses that are the same as the company’s businesses and which may be recognized by securities regulators as in horizontal competition with the Company, unless such behaviors are in the interests of the Target
Company and with prior written consent of the Target Company and Party B. If the Target Company changes or adjusts business direction in the future, the scope of competitive businesses shall be adjusted correspondingly as well. Relevant
non-competition agreements executed by the Target Company shall be in line with this Article.
9.3 Whereas Party B and
its affiliates are professional PE funds and fund managers, for the avoidance of doubt, Party B and representatives designated by it to take office in the governance body of the Target Company may engage in or invest in any businesses same as or
compete with that of the Target Company.
Article 10 Liquidation
10.1 So long as Party B’s
holds any equity of the Target Company, if the Target Company initiate company liquidation procedure for any reasons, the Company’s liquidation group shall include at least one personnel designated by Party B.
10.2 During the
liquidation assets allocation to shareholders, Party B shall be prior and in preference to any other shareholders of the Company to receive its initial investment amount and due and unpaid dividend. Other shareholders shall receive their
respective initial investment amount and due and unpaid dividend on a pro rata basis, and anything remaining shall be allocated to all shareholders (including Party B) of the target company on a pro rata basis.
Article 11 Governing Law and Disputes Resolution Procedure
11.1 This Agreement shall
be governed by the laws of Mainland of the People’s Republic of China.
11.2 Disputes arising out
of execution and performance of this Agreement among parties shall be settled in good faith through friendly negotiation based on the principle of honesty and credibility first. If the disputes are not solved through negotiation, such disputes
shall be submitted to court with competent jurisdiction where the Target Company is located.
Page 10 of 12 Pages
Article 12 Confidentiality
12.1 Unless otherwise
provided by applicable laws and regulations, parties to this Agreement shall keep all contents herein confidential, and shall be prohibited to disclose without the consent of all parties, except for disclosures made to the Target Company’s
shareholders, management, directors, supervisors and professional advisors, Party B’s management, Managing Partner and professional advisors and other personnel with legal requirements, and mandatory disclosures compelled by laws.
12.2 The parties to this
Agreement shall keep confidential other parties’ trade secrets and other nonpublic information learned during execution and performance of this Agreement, and be prohibited to disclose such information to any third party or use such information
for any purposes other than the investment contemplated under this Agreement without the consent of obligees of those trade secrets and nonpublic information.
Article 13 Miscellaneous
13.1 Taxes and expenses
related to the investment under this Agreement shall be borne respectively by parties to this transaction pursuant to the laws and regulations, and taxed and expenses not provided by laws and regulations shall be borne by the parties based on
equitable principle.
13.2 This Agreement is a
formal legal document for Party B’s investment in the Target Company, in case of any inconsistency between this Agreement and any understandings, intentions, promises or agreements previously reached by the parties on investment matters
contemplated under this Agreement, this Agreement shall prevail.
13.3 This Agreement can be
executed in one or more originals as needed; each original shall have the same legal effect.
(Remainder of this page is intentionally left blank, and the signature page is attached)
Page 11 of 12 Pages
(This page is signature page of Capital Increase and Accession Agreement)
Party A (Existing Shareholders):
Party A-Ⅰ: Dalian Wanchun Biotechnology Co., Ltd.
Legal Representative: /s/ Xxx Xxxxx
Party A-Ⅱ: Wanchun Biotechnology (Shenzhen) Ltd.
Legal Representative: /s/ Linqing Jia
Party B: Nanjing TEEWIN Investment Partnership (Limited Partnership)
Authorized Signatory: /s/ Xxxxxx Xxxx
Party C (Target Company): Dalian Wanchunbulin Pharmaceutical Co., Ltd.
Legal Representative: /s/ Xxx Xxxxx
Page 12 of 12 Pages
