EXHIBIT 10.5
EXECUTION VERSION
SHARE TRANSFER AGREEMENT
This SHARE TRANSFER AGREEMENT (this "AGREEMENT") is made on December 15, 2004 by
and between:
(1) WEN XIN (the "TRANSFEROR"), whose ID number is 110105580421183;
nationality is Chinese;
(2) BEIJING MED-PHARM COPORATION ("BMP" or the "TRANSFEREE"), a corporation
organized under the State of Delaware, the United States, with its
domicile at 0000 Xxxx Xxxxxx, Xxxxxxxx, XX 00000, whose legal
representative being Xxxxxxxx Xxx (Title: Chief Executive Officer and
President; Nationality: USA).
The Transferor and the Transferee hereinafter individually referred to as a
"PARTY" and collectively referred to as the "PARTIES".
RECITALS
(1) WHEREAS, Beijing Wanwei Pharmaceutical Co., Ltd. (the "COMPANY") is a
limited liability company established under the laws of the People's
Republic of China (the "PRC"), with its registered capital being RMB
5,880,000. Beijing Wanhui Pharmaceutical Group ("WANHUI GROUP") holds 80%
of its equity interests, and the Transferor holds the remaining 20%;
(2) WHEREAS, the Transferor agrees to transfer its equity interests in the
Company to the Transferee and the Transferee agrees to acquire such equity
interests as per the terms and conditions of this Agreement;
(3) WHEREAS, BMP has entered into a Share Transfer and Debt Restructuring
Agreement with Wanhui Group on the date hereof to acquire Wanhui Group's
equity interests in the Company;
(4) WHEREAS, The Transferor and Wanhui Group agree to increase the registered
capital of the Company from the current RMB5,880,000.00 yuan to US$
1,750,000, and the amount of increased capital US$1,039,000 shall be fully
subscribed by BMP; and
(5) WHEREAS, both Parties acknowledge that the contemplated share transfer and
capital increase shall be completed in compliance with the requirements of
the relevant laws and regulations of the PRC and the provisions of the
Articles of Association of the Company.
NOW, THEREFORE Both Parties hereby agree as follows:
ARTICLE 1. SHARE TRANSFER
1.1 The Transferor agrees to transfer to BMP and BMP agrees to acquire from
the Transferor the 20% equity interest (the "TRANSFERRED SHARES") held by
The Transferor in the Company on the terms and conditions of this
Agreement.
The Transferor agrees that BMP shall fully subscribe the amount of the
increased capital of the Company (the "AMOUNT OF INCREASED CAPITAL"),
x.x.XX$1,039,000. BMP shall contribute such Amount of Increased Capital to
the Company in accordance with the revised Articles of Association of the
Company.
1.2 Both Parties agree that from the date when all of the following conditions
precedent have been satisfied (the "DATE OF TRANSFER"), BMP shall be the
owner of the Transferred Shares and become the shareholder of the Company:
(a) Beijing Drug Administration Bureau has renewed the Pharmaceutical
Distribution License of the Company for an additional five years and
has approved the change of legal representative and other issues (if
any) thereon;
(b) The share transfer contemplated under this Agreement, the share
transfer contemplated under the Share Transfer and Debt
Restructuring Agreement and the revised Articles of Association of
the Company have been approved by the Ministry of Commerce or its
authorized authority (the "EXAMINATION AND APPROVAL AUTHORITY") and
the Company has been issued with an Approval Certificate of Foreign
Investment Enterprise;
(c) The amendment registration in respect of the share transfer
contemplated hereunder, the share transfer contemplated under the
Share Transfer and Debt Restructuring Agreement between BMP and
Beijing Wanhui Pharmaceutical Group, and the revised Articles of
Association of the Company has been effected with Beijing
Administration for Industry and Commerce ("REGISTRATION AUTHORITY");
and
(d) There shall have been no material adverse change in the financial
condition, operations or business prospects of the Company during
the Transition Period, as such terms are defined in Article 3.1,
with the exception of any such material adverse change resulting
from an action or inaction taken by the Company with the approval of
the Supervision Committee as such terms are defined in Article 3.1.
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Upon the completion of the share transfer hereunder and the share transfer
as contemplated under the share transfer agreement between BMP and Wanhui
Group, BMP shall become the sole shareholder of the Company, and the
Company shall be converted into a wholly foreign owned enterprise pursuant
to PRC law.
1.3 The Transferor confirms that, prior to the execution of this Agreement,
the shareholders' meeting of the Company has adopted a valid resolution
approving the transfer of the Transferred Shares to BMP from the
Transferor, the subscription by BMP of the Amount of Increased Capital and
the corresponding amendments to the Articles of Association of the
Company.
1.4 The Transferor confirms that Wanhui Group has waived its first right of
refusal with respect to the Transferred Shares prior to the execution of
this Agreement. Its consent letter is attached herein as Schedule 1.
1.5 No later than three (3) months after the date hereof, both parties shall
cause the Company to submit this Agreement, the revised Articles of
Association of the Company and an original copy of the duly signed
resolution referred to in Article 1.3 above together with other necessary
application documents to the Examination and Approval Authority.
1.6 Both Parties shall take their best endeavour to obtain the approval from
the Examination and Approval Authority, to assist the Company in going
through the amendment registration formalities with the Registration
Authority.
ARTICLE 2. CONSIDERATRION FOR THE SHARE TRANSFER
2.1 As consideration for transferring the Transferred Shares by the Transferor
to BMP, BMP agrees to pay the Transferor US$ 1.00 ("TRANSFER VALUE").
2.2 Both Parties agree that the Transfer Value shall be paid in cash in US
dollar within 10 working days after the Date of Transfer. The Transferor
shall issue written receipt after receiving the Transfer Value.
ARTICLE 3. ARRANGEMENTS DURING TRANSITION PERIOD
3.1 Both Parties shall take all necessary measures to ensure the proper
operation and smooth transmission of the Company between the date hereof
and the Date of Transfer ("TRANSITION PERIOD"). Both parties agree that
BMP, Wanhui Group and the Transferor shall appoint respective delegates to
establish a supervision committee. Such committee shall be composed of
seven members, with BMP appointing three, Wanhui Group appointing three,
the Transferor appointing one. The Transferor hereby authorizes BMP to
nominate such member for and on behalf of itself. The chairman of the
supervision committee shall be
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from the delegates appointed by BMP. Any major decisions shall not be
concluded unless approved by half (inclusive) of all the members of the
supervision committee. No major business decision of the Company shall be
made without prior consent of such supervision committee during the
Transition Period.
3.2 During the Transition Period, The Transferor shall not enter into
agreement or document related to the Transferred Shares with any third
party, including but not limited to the transfer of the Transferred Shares
in whatever means, pledge or any kinds of disposal of the Transferred
Shares.
3.3 The Transferor agrees that the Company will not carry out dividend
distribution, in whatever manner, during the Transition Period. BMP shall
be entitled to delegate its financial personnel to supervise the financial
operation of the Company.
ARTICLE 4. REPRESENTATIONS, UNDETAKINGS AND WARRANTIES
4.1 Each Party represents and warrants to the other Party that, on the date
hereof and the Date of Transfer,
(1) It has full power and authorization to execute and perform this
Agreement and its Schedules;
(2) This Agreement shall be legally binding to each Party as of the
Effective Date; the execution and performance of this Agreement does
not violate its Articles of Association or the provisions of any
contracts, agreements or other legal documents to which it is a
party; and
(3) No lawsuit, arbitration or other legal or governmental proceeding is
pending or threatened against it that would affect its ability to
perform its obligations under this Agreement.
4.2 The Transferor hereby represents and warrants to BMP that, on the date
hereof and the Date of Transfer:
(1) The Transferor is the sole legal owner of the Transferred Shares.
The Transferred Shares shall be free of any security interest or any
third party dispute;
(2) Except expressly provided herein, the execution and performance of
this Agreement shall not be subject to any government approval,
verification or filling requirement, not requiring any consent,
permit or approval of other third party.
4.3 Both Parties confirm that the execution and performance of this Agreement
by the parties is
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in reliance on the above representations and warranties. Should any party
find any change with respect to the above prior to the Date of Transfer,
it shall promptly inform the other party. Except otherwise provided
herein, both Parties shall negotiate to find solution.
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ARTICLE 5. EFFECTIVENESS AND TERMINATION
5.1 This Agreement shall be formed upon the signing by both Parties or the
authorized representatives of the Parties and/or being affixed with their
official chops, and it will become effective from the date when it is
approved by the Examination and Approval Authority ("EFFECTIVE DATE").
5.2 Termination
This Agreement may be terminated if any of the following situations
occurs:
(1) If the transfer of the Transferred Shares to BMP has not been
submitted to the Examination and Approval Authority, or the
application has been rejected within three (3) months after the date
hereof; or if the application has not been approved by the
Examination and Approval Authority, or any of the other conditions
precedent listed in Article 1.2 has not been met within six (6)
months after the application has been submitted, either party has
the right to terminate the Agreement upon written notice to the
other party but that it will take the consent of both parties to
extend either of the above periods;
(2) Should either Party breach its representation, warranties and
undertakings herein and fail to cure such breach within 30 days
after the notification of the other Party, the non-breaching Party
shall be entitled to terminate this Agreement; or
(3) Other situations expressly provided herein or agreed by the Parties
ARTICLE 6. FORCE MAJEURE
Neither party shall be held liable in the event this Agreement is suspended, in
part or in whole, due to force majeure. The party such affected shall notify the
other party in writing within seventy-two (72) hours as of the happening of the
force majeure event, and provide the other party relevant evidencing documents
within seven (7) days as of the happening of the force majeure event. Where the
force majeure event has lasted for ninety (90) days, both parties shall
negotiate on the performance of this Agreement, including whether to terminate
this Agreement. For the purpose of this Agreement, any significant adverse
change to the business financial and/or operation of the Company between the
date hereof and the Date of Transfer caused or to be caused by change of law
shall be recognized as one type of force majeure.
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ARTICLE 7. BREACH OF CONTRACT
Subject to other provisions of this Agreement, one Party shall be deemed to have
violated this Agreement if it fails to fulfill any obligations under this
Agreement, or any of its representations and/or warranties under this Agreement
is proved to be untrue or materially incorrect. The breaching Party shall
correct its violation at its own cost in the period required by the other Party
in the breaching notice and within no more than thirty (30) days since it
receives such notice from the other Party. Except for the other remedies
provided in this Agreement, should the violation have not been corrected after
the period requested in the breaching notice or thirty (30) days, the breaching
Party shall compensate the other Party all direct losses incurred from such
violation, including but not limited to all costs arising from the execution of
this Agreement.
ARTICLE 8. DISPUTE RESOLUTION
8.1 Friendly Consultations
In the event of any dispute, controversy or claim (collectively,
"DISPUTE") arising out of or relating to this Agreement, or the breach,
termination or invalidity thereof, the Parties shall attempt in the first
instance to resolve such Dispute through friendly consultations.
8.2 Arbitration
(a) If the Dispute is not resolved by friendly consultations within
thirty (30) days after the commencement of such consultations, then
at any time either party may submit the Dispute to Hong Kong
International Arbitration Center (the "HKIAC") in accordance with
the United Nations Commission on International Trade Law (the
"UNCITRAL") Arbitration Rules presently in force, which rules are
deemed to be incorporated by reference into this clause.
(b) The place of arbitration shall be Hong Kong and the arbitration
shall be conducted in English.
(c) The arbitration award shall be final and binding on both the
parties, and both the parties agree to be bound thereby and to act
accordingly.
(d) The costs of arbitration shall be borne by the Party or Parties as
designated in the arbitration award.
8.3 Continuing Rights and Obligations
When any Dispute occurs and is the subject of friendly consultations,
joint conciliation or arbitration, the parties shall continue to exercise
their remaining respective rights, and
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fulfil their remaining respective obligations, under this Agreement,
except in respect of those matters under Dispute.
ARTICLE 9. GOVERNING LAW
The validity, interpretation and implementation of this Agreement and dispute
resolution shall be governed by the laws of the PRC which are published and
publicly available.
ARTICLE 10. NOTICES
Any notice or written communication in connection with this Agreement by any
Party to the other shall be made in both Chinese and English by courier service
or by facsimile. The date of receipt of a notice or communication hereunder
shall be deemed to be seven (7) working days after the letter is given to the
courier service in the case of a courier service delivered letter and two (2)
working days after dispatch in the case of a facsimile. All notices and
communications shall be sent to the appropriate address set forth below, until
the same is changed by notice given in writing to the other Party:
WEN XIN
Xx. 000, 0xx xxxxxxxx, Xxxx Xxx Xx Xxx Xxx, Chaoyang District, Beijing
BEIJING MED-PHARM CORPORATION
0000 Xxxx Xxxxxx, Xxxxxxxx, XX 00000
Attention: Xxxxx Norse
Facsimile No: 000-000-000-0000
ARTICLE 11. MISCELLANEOUS PROVISIONS
11.1 Neither Party may assign this Agreement without the written consent of the
other Party.
11.2 This Agreement is executed in Chinese and English, each in four (4)
originals. Both language versions shall be equally authentic.
11.3 Unless otherwise provided in this Agreement, this Agreement is severable
in that if any provision hereof is determined to be illegal or
unenforceable, the invalid provisions shall be deemed deleted without
affecting the remaining provisions of this Agreement. The Parties shall
attempt to replace the invalid provisions with valid provisions as closely
aligned with the original intent of the parties as possible.
11.4 This Agreement constitutes the entire agreement between the Parties with
respect to the
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subject matter hereof, supersedes any prior expression of intent or
understanding relating hereto and may only be modified or amended by a
written instrument signed by the authorized representatives of the parties
thereto.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their legal representatives on the date first set forth above.
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SIGNATURE PAGE
WEN XIN BEIJING MED-PHARM CORPORATION
By: By:
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SCHEDULE 1
CONSENT LETTER ON WAIVING OF FIRST REFUSAL RIGHT
To: BEIJING MED-PHARM CORPORATION
RE: THE TRANSFER OF 20% EQUITY INTEREST OF BEIJING WANWEI PHARMACEUTICAL
CO., LTD.
We, owning 80% equity interest of the Beijing Wanwei Pharmaceutical Co., Ltd.
(hereinafter the "COMPANY"), hereby unconditionally:
1. consent Beijing Med-Pharm Corporation ("BMP") to acquire the 20% equity
interest (hereinafter the "TRANSFERRED SHARES") in the Company held by Wen
Xin (the "TRANSFEROR") in accordance with the Share Transfer Agreement
(hereinafter the "SHARE TRANSFER AGREEMENT") it entered into with the
Transferor. This Letter of Consent shall become one appendix to the Share
Transfer Agreement.
2. expressly declare to waive the first refusal right to the Transferred
Shares;
3. promise to provide all assistances necessary to complete the transaction
under the Share Transfer Agreement.
This Letter of Consent shall come into effect upon signing by our duly
authorized reprehensive and affixed with our official seal.
This Letter of Consent shall be executed in both Chinese and English. Both
versions shall be equally authentic.
BEIJING WANHUI PHARMACEUTICAL GROUP
-----------------------------------
Authorized representative
Date: December 15, 2004
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