English Summary of Securities Purchase Agreement dated February 24, 2010 Securities Purchase Agreement
English
Summary of Securities Purchase Agreement dated February 24, 2010
Seller: Glorysun
Holdings Group Limited
Buyer: China
Stem Cells (East) Company Limited
This
agreement is entered on February 24, 2010 between the following
parties.
Seller:
Glorysun Holdings Group Limited (“GH”), a validly existing limited company
registered and established in British Virgin Islands and incorporated in
accordance with British Virgin Islands law; its legal registered address is:
Palm Xxxxx Xxxxx, X.X. Xxx 000, Xxxx Xxxx, Xxxxxxx, XXX; its principal
representative and authorized agent is Ms. XXXX Xx, whose position is chairman
of the board.
Buyer:
China Stem Cells (East) Company Limited (“CSC”), a limited company established
in Hong Kong Special Administrative Region (“Hong Kong”) in accordance with the
laws of Hong Kong ; its legal registered address is 48th Floor,
Bank of China Tower, 0 Xxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx; its principal
representative and authorized agent is Xx. XXXXX Ting, whose position is
chairman of the board.
Whereas:
1. GH as
the currently controlling shareholder of Favorable Fort Limited, holding 100% of
Favorable Fort Limited’s shares; Favorable Fort Limited, through its wholly
owned Jinan Baoman Sci&Tech Dev Co. Ltd (“Baoman S&T”, a wholly owned
foreign enterprise incorporated and registered in China, its registered address
is Yinfeng Building, 11th Floor,
6 Liyang Avenue, Shizhong District, Jinan, its principal representative is Xx.
XXXX Xxxx, who is the chairman of the board)legally and effectively hold 24% of
shares of Shandong Province Qilu Stem Cell Engineering Co. Ltd (“Qilu Stem Cell”
is a limited liability company incorporated and registered in China, its
registered address is 000 Xxxx Xxxxxx Xxxx, Xxxxxx Development District, Jinan,
its principal representative and authorized agent is Xx. XXXXX Dewei, who is
chairman of the board) Qilu Stem Cell is mainly engaged in the business of
storing umbilical cord blood stem cells in mainland China and has the management
right and all the property rights of Shandong Province Umbilical
Blood-Generating Stem Cell Bank (“Shandong Blood Cell
Bank”). Shandong Blood Cell Bank has obtained “Blood Bank Operation
Permit” ( permit number No.1 [2009])issued by Shandong Province Health Bureau,
thus is authorized to engage in the collection, preparation, storage
and clinical application and technological development of umbilical cord blood
Stem Cells in Shandong province.
2. CSC is
mainly engaged in the equity investment in the storage businesses of
umbilical cord blood stem cells in mainland China.
3. CSC
desires to purchase 83% of all the issued and outstanding shares of Favorable
Fort Limited and desires to acquire and beneficially hold the corresponding
equity interest of Baoman S&T in order to acquire and beneficially hold
19.92% effective interest in Qilu Stem Cell through Baoman S&T
; GH agrees to transfer to CSC 83% of all the issued and outstanding
shares of Favorable Fort Limited.
Agreement
Provisions
1 Definitions
In this
Agreement, unless otherwise provided, the following terms have the definitions
as follows:
a) “Seller” is
GH.
b) “Buyer” is
CSC.
c) “Qilu Stem Cell” is
Shandong Qilu Stem Cell Engineering Co. Ltd
d) “Shandong Blood Cell
Bank” is Shandong Province Umbilical Blood-Generating Stem Cell
Bank whose management right and all the property rights are owned
by Qilu Stem Cell.
e) “Shares to be
Transferred” refers to 83% of all the issued and outstanding shares of Favorable
Fort Limited and all of their corresponding interests (including but not limited
to: profit that has not been distributed, surplus funds and contributed surplus,
etc) that the Seller beneficially owns and that are to be transferred
to the Buyer pursuant to this Agreement.
f) “Transaction Price” is
the aggregate amount equaling HK$ 159,360,000 to the Seller (or the Seller’s
Designee) , to be paid by the Buyer, directly or through a third party pursuant
to this Agreement, in order for the Buyer to complete the transaction
contemplated in this Agreement and realize and acquire the rights, interests and
Shares to be Transferred along with all the corresponding interests granted
under this Agreement.
g) “Delivery Day” is the
date provided by 2.5.3 herein.
h) “Undisclosed Debts” is
all the debts other than those specifically disclosed by the Seller to the Buyer
in written and itemized forms, delineating the actual circumstances of such
debts such as the amount(s), debt due date(s), structure process,
creditor(s) and nature, including but not limited to debts that are due, debts
that are not yet due, actual debts or potential debts.
i) “Business Day” is any day
on which Hong Kong banks open for business and provide general banking services,
excluding Saturdays and any days on which the tropical cyclone warning
signal number 8 or above or black rainstorm warning signal is hoisted
anytime in the period from 9:00 am to 5:00 pm (Hong Kong time).
j) “China” refers to PRC,
excluding, as far as this Agreement is concerned, Hong Kong, PRC Macao Special
Administration Region and Taiwan Province of PRC.
k) “Hong Kong” is Hong Kong
Special Administration Region of the PRC.
l) “Hong Kong Currency” is
the current legal currency in Hong Kong.
m) “Latest Practicable Date”
refers to any specified date on which, so far as any obligation or stipulated
action under this Agreement is concerned, it can be predicted that, judging by
the actual circumstances of the time point, based on general and reasonable
knowledge, such obligation or stipulated action is in the situation to be or can
probably be performed, executed or realized.
2 Transfer
of Shares
2.1 Transaction
Background and Summary
2.11 Transaction
Background:
(1) On the execution date of this
Agreement, Favorable Fort Limited (“Favorable Fort Limited”)is a validly
existing limited company registered and established in Hong Kong in accordance
with the laws of Hong Kong; it does not have any real business or debt and is
solely engaged in the investment in, and the holding of, Jinan Baoman
Sci&Tech Dev Co. Ltd (“Baoman S&T”), with all of its issued shares owned
by GH.
(2) On the execution date of this
Agreement, Shandong Qilu Stem Cell Engineering Co. Ltd (“Qilu Stem
Cell”) is a limited liability company registered and established in mainland
China in accordance with the laws of China; its registered capital is RMB
50,000,000 and it is mainly engaged domestically in the storage business of cord
blood stem cells and owns the management right and all the property rights of
Shandong Province Umbilical Cord Blood-generating Stem Cell Bank (“Shandong
Blood Cell Bank”). “Shandong Blood Cell Bank” has obtained “Blood Bank Operation
Permit” (Permit number No.1 [2009]) issued by Shandong Province Health Bureau,
thus is authorized to engage in the collection, preparation, storage
and clinical application and technological development of umbilical cord blood
stem cells in Shandong province.
(3) On the execution date of this
Agreement, Baoman S&T is a validly existing wholly owned foreign enterprise
with “Business Legal Person Operation Permit”(license number: 370100000030271)),
“Certificate of Approval for Establishment of Enterprise with Foreign
Investment” issued by Shandong Commerce and Business Bureau and “Foreign
Currency Registration Certificate”. On the execution date of this
Agreement, all of Baoman S&T’s registered capital has been paid in full and
has been verified according to law by the certified capital verification agency,
and all of Baoman S&T’s equity is owned by Favorable Fort Limited and Baoman
S&T does not have any debts or obligations prior to the Delivery
Day.
(4) On the execution date of this
Agreement, Baoman S&T owns 24% of Qilu Stem Cell’s equity; Shandong Yinfeng
Investment Group Co. Ltd (a validly existing limited liability company
registered and established in mainland China, its address is 0 Xxxxxx Xxx,
Xxxxxxxx Xxxxxxxx, Xxxxx, Xxxxxxxx Xxxxxxxx) (“Yinfeng Investment”) owns 54% of
Qilu Stem Cell’s equity. Up to the date of execution of this Agreement, Yinfeng
Investment is the controlling shareholder of Qilu Stem Cell and the leader for
its operations.
(5) Pursuant to the terms and
conditions of this Agreement, the Buyer will purchase the 83% of the shares of
Favorable Fort Limited’s stock and all of the corresponding rights owned by GH,
in order to acquire and beneficially hold 19.92% effective interest in Qilu Stem
Cell’s registered capital (all of the equity is the paid-in-full and actually
received equity), and directly and indirectly acquire the corresponding
ownership right of Shandong Blood Cell Bank.
(6) On the execution date of this
Agreement, CSC’s incorporation and registration are valid and effective, and all
the relevant incorporation and registration fees due have been paid; CSC has
obtained and continuously hold all the permits, approvals, certificates,
authorizations, exemptions, consents and recognitions required for its
business.
2.1.2 Objective
of the Transaction
The Buyer
desires, through the Transaction under the terms and conditions of this
Agreement, to acquire and beneficially own an amount of shares which
is equivalent to 19.92% effective in Qilu Stem Cell’s registered capital, and
directly and indirectly acquire the corresponding ownership right of Shandong
Blood Cell Bank; and to obtain assurance and lawful guarantee issued by Yinfeng
Investment (as the controlling shareholder of Qilu Stem Cell) to the other
shareholders and the Buyer of Qilu Stem Cell with regard to shareholder income
from Qilu Stem Cell and its umbilical blood stem cell commercial storage
business.
2.1.3 Transaction
Summary
Based on
the terms and conditions under this Agreement, the Seller as the beneficial
owner of the Shares to be Transferred, agrees to sell and transfer to the Buyer,
and the Buyer, based on the statements, representations, undertakings and
warranties made and given under this Agreement, agrees to purchase, and receive
the transfer of, the Shares to be Transferred and pay to the Seller the
Transaction Price. The Seller further agrees to and
accept the holding of the Shares to be Transferred by the Buyer or
its designee. The Seller guarantees and undertakes that the Shares to
be Transferred (and all of the domestic equity of the object of transaction) (i)
are wholly and beneficially owned by the Seller, (ii) do not have any mortgage,
pledge, disposition right, property guarantee or any other form of interests or
subject to rights or claims owned by any third party, and (iii) carry, from the
date of execution of this Agreement, all the existing rights or rights
attached thereafter or additional rights, including but not limited to all the
undistributed profits, all kind of public reserve funds and funds, regardless
whether such profits are generated before or after the execution of this
Agreement.
2.2 Notwithstanding
the forgoing, upon execution of this Agreement, the Seller shall not, until all
provisions of the Agreement have been carried out or come to an end, through any
action or omission, reduce the value of the Shares to be Transferred,
the equity of Baoman S&T and the equity of Qilu Stem Cell (including
Shandong Blood Cell Bank) and the value of Qilu Stem Cell’s business
operation.
2.3 All
parties unanimously agree that each party will carry out the delivery after all
of the following conditions have been satisfied or completed:
Yinfeng
Investment has issued, to other shareholders of Qilu Stem Cell, written
undertaking, guaranteeing to the Buyer (through Favorable Fort Limited and
Baoman S&T) that the actual dividend derived from Qilu Stem Cell, during the
year 2010 (“Profit Commitment Period”) shall be no less than RMB 8,520,000.00
(approximately HK$9,680,000.00). The Seller states and commits to the
Buyer in the provisions under this Agreement: Yinfeng Investment has issued
consent in written form to complement the difference, to Baoman S&T, between
the aforementioned guaranteed minimum profit and actual dividend derived from
the profit distribution by Qilu Stem Cell; in the event that Yinfeng Investment
fails to complement the difference in full, the Seller shall complement the
difference.)
2.4 Consummation
of Transaction
2.4.1
The Seller agrees to sell to the Buyer its holding of Shares To Be
Transferred.
2.4.2 The
Seller must, on the Delivery Day, carry out the delivery at 48th Floor,
Bank of China Tower, 0 Xxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx(xx at an alternative
address agreed upon by all parties). On the Delivery
Day, the Seller of Shares to Be Transferred the following documents
and certificates and transfer the Shares to be Transferred under this Agreement
in accordance with the “Company Rules” to the Buyer and register Shares to be
Transferred under the Buyer’s name:
(1) [English
summary is omitted]
(2) [English
summary is omitted]
(3) [English
summary is omitted]
(4) [English
summary is omitted]
(5) [English
summary is omitted]
(6) [English
summary is omitted]
(7) [English
summary is omitted]
(8) [English
summary is omitted]
(9) [English
summary is omitted]
(10) [English
summary is omitted]
(11) [English
summary is omitted]
2.5 Transaction
Price
2.5.1 The
Transaction Price under this Agreement is HK$159,360,000.00.
2.5.2 The
Buyer shall pay to the Seller HK$80,000,000.00 within 10 Business Days upon the
effectuation of this Agreement, and shall pay to the Seller the balance of
HK$79,360,000.00 within 30 Business Days upon the effectuation of this
Agreement.
2.5.3 The
Seller shall complete the delivery stipulated in section 2.4.2 of this Agreement
within 60 business days upon receiving all of the Transaction
Price.
3. Debt
Obligations
The Seller has obligation to bear and
pay all and any part of the undisclosed debts of Favorable Fort
Limited, Baoman S&T and Qilu Stem Cell (including Shandong Blood Cell Bank),
regardless whether such undisclosed debts are discovered before or after the
delivery; GH shall make full compensation for any loss suffered by Qilu Stem
Cell and for any settlement, payment or compensation that Qilu Stem Cell has to
make as a result of the undisclosed debts in order to ensure that the Buyer,
beneficial equity representative, Favorable Fort Limited, Baoman S&T and
Qilu Stem Cell (including Shandong Blood Cell Bank) will not actually bear such
loss, damage, debts, risk and obligations.
4. The
Seller’s Statements, Representations and Warranties
4.1 Based
on the Buyer’s commitment to execute this Agreement, the Seller thereby states,
represents and warrants to the Buyer as follows:
4.1.1 All
the matters stated in this Agreement are correct and accurate;
4.1.2 The
information and materials provided by the Seller to the Buyer during the due
diligence, discussion and negotiation in connection with the execution of this
Agreement are true, complete and accurate;
4.1.3 The
Seller states, represents and warrants as follows:
(1) The
Seller is the sole beneficial owner, and the sole legal holder recognized by the
laws of Hong Kong, of the Shares to be Transferred, has the legal,
complete, valid and absolutely exclusive disposition right on the Shares to be
Transferred, has the necessary power and authorization to
execute and perform this Agreement, and can deliver the Shares to be
Transferred, without additional condition, without reservation, completely,
legally and effectively, to the Buyer;
(2) As
of Delivery Day, other than engagement in the investment in, and the holding of,
Baoman S&T, Favorable Fort Limited has no other actual business and
debts. Favorable Fort Limited is the sole beneficial owner of all of
Baoman S&T’s equity and is the sole legal holder recognized and
protected by PRC law, has the legal, complete, valid and absolutely
exclusive disposition right on all of Baoman S&T’s equity; on Delivery Day,
there is no mortgage, pledge, disposition right, property guarantee or any other
form of interests or rights orclaims by any third party on all or any part of
Baoman S&T’s equity;
(3) The
execution and performance of this Agreement by the Seller will not cause itself
to violate the charter of Favorable Fort Limited and any other law, statutes,
judicial or administrative order, arbitration or judgment by which it is bound,
or any agreement it has executed, or any commitment it has made to any third
party, and will not cause any entity to claim to itself and Favorable Fort
Limited, individually or collectively, that this Agreement is invalid, or claim
any right, award or payment for breach of contract against Favorable Fort
Limited or to attach any right or right restriction to the Shares to be
Transferred;
(4) The
Seller has obtained the resolution of the Board or of the shareholders of
Favorable Fort Limited and other required internal corporate approvals in
connection with the transfer of the Shares to be Transferred;
(5) No
part of Shares to be Transferred has any ownership disputes, and there are no
options right, purchase right, right of first refusal, option, escrow, trust,
mortgage and mortgage payment, pledge, withholding or any rights and right
restrictions in any other form or any other debt obligations, nor is any part of
Shares to be Transferred affected, bound or restricted by any of the
aforementioned rights; currently there are no agreements or
commitments to attach or to add any of the aforementioned rights; currently none
of the aforementioned rights have not been exempted or settled to
lead to a situation in which any person can make a claim.
(6) The
establishment and registration of Favorable Fort Limited and Baoman S&T are
legal and valid, and the fees in connection with the establishment and
registration have been paid, and Favorable Fort Limited and Baoman S&T have
obtained and continuously hold all the permits, approvals, certificates,
authorization, exemptions, consents and recognitions required for
conducting their business legally and effectively in their
current operation form. The operation of Favorable Fort Limited and
Baoman S&T, since their establishments, have been in compliance to the
requirements of the laws and statutes of Hong Kong and of PRC. To the
best of Seller’s knowledge, as of the execution date of this Agreement, there is
no situation indicating that any of Favorable Fort Limited’s and Baoman
S&T’s permits, approvals, certificates, authorization, exemptions, consent
and recognition will be or is likely to be completely or partially revoked or
will not be renewed (irrespective of whether it is the result of this Agreement
or of any other cause);
(7) Favorable
Fort Limited and Baoman S&T have been operating, in each of the material
aspects, in accordance with the company charter and all the applicable laws and
regulations effective from time to time and with the applicable laws
of the country or region in which they are registered and operate. Favorable
Fort Limited and Baoman S&T have not violated or been in conflict
with, any rules, statutes, regulations, orders, judicial orders or judgments
from any courts or government organizations.
(8) Claims
and debt obligations: other than what has been disclosed, prior to the execution
date of this Agreement, to the Buyer in special written letter (the receipt of
which has been acknowledged by the Buyer) or in this Agreement as well as what
is required by the normal operation:
(a) From
the date of establishments of Favorable Fort Limited and Baoman S&T to the
Delivery Day, Favorable Fort Limited and Baoman S&T have not entered into
any bank loan or guarantee agreement;
(b)
As of the Delivery Day, Favorable Fort Limited and Baoman S&T do not have
any outstanding loan, debts or any other debt obligations to any bank,
corporation or other person;
(c) As
of the Delivery Day, Favorable Fort Limited and Baoman S&T have not issued
any guarantee in any form to any person or corporation;
(d) Other
than normal and reasonable amount (any individual item of which does not exceed
RMB 10,000 (or the equivalent thereof), and the total of which does not exceed
RMB 20,000) of advanced business travel expenses, as of the Delivery Day,
Favorable Fort Limited and Baoman S&T have not lent any money to any unit or
individual;
(9) On
the Delivery Day, Favorable Fort Limited and Baoman S&T do not owe any
debts, or potential debt, unsettled debt obligation or liability (actual or
potential) to the Seller, any director of Favorable Fort Limited or Baoman
S&T or any company affiliated with the Seller or any of its directors or any
independent third party (except for the Buyer and its affiliates); nor does any
of aforementioned person or company owe any debt to Favorable Fort Limited and
Baoman S&T;
(10) Favorable
Fort Limited and Baoman S&T have not been involved in any major lawsuits,
arbitration or disputes; the facts that the Seller are aware of will not
possibly cause any lawsuits, arbitrations or disputes or any payment obligations
(with the exception of payments incurred in day-to-day
operations). Currently, there are no pending judgments or court
orders against Favorable Fort Limited or Baoman S&T that will result in
Favorable Fort Limited or Baoman S&T being the losing party or that will
have substantial adverse impact on Favorable Fort Limited or Baoman
S&T being a going concern. Favorable Fort Limited and
Baoman S&T have not committed, or been suspected of, any criminal acts, have
not breached any contracts or any legal obligations, nor have they committed any
tortious act or any illegal act or any unauthorized act, such that such act will
cause, or potentially will cause, the reduction of value of Favorable
Fort Limited’s and Baoman S&T’s
assets;
(11) The
Seller agrees to cause and to ensure that , during the period from the execution
date of this Agreement to the Delivery Day, there will be no distribution of
profit, issuance of dividends, self-beneficial and exclusive withdrawal from
excess capital reserve or profit reserve, or transfer of equity through profit,
excess public reserve or capital reserve. The Seller also agrees to
ensure that Favorable Fort Limited is entitled to all of Baoman S&T’s the
undistributed profit, excess public reserve and capital reserve as
of the execution date of this Agreement and prior to the Delivery Day
respectively; Baoman S&T is entitled to all of Qilu Stem Cell’s the
undistributed profit, excess public reserve and capital reserve as
of the execution date of this Agreement and prior to the Delivery Day
respectively;
(12) The
company charters of Favorable Fort Limited, Baoman S&T and Qilu Stem Cell
and the legal documents by which the Seller, Favorable Fort Limited, Baoman
S&T and Qilu Stem Cell are bound do not contain provisions, arrangements,
contents or situations that restrict, exclude, dilute, deprive or may restrict
or may exclude or may dilute or may deprive the Buyer or beneficial equity
representatives of the shareholder rights, power or interests (including but not
limited to: right to the distribution of profit according to the ratio of their
shareholdings, voting right, right to the remaining assets, right to nominate
directors, right to nominate senior management officers, or the rights of first
refusal with regard to receiving the company’s shares and with regard to the
increase of the company’s shares/capital) to which the Buyer or beneficial
equity representatives are entitled.
(13) There
has been, and will have, no material adverse change, during the period from the
execution date of this Agreement up to one year thereafter, to the due
diligence investigation and verification result, situations and
circumstances with regard to the financial situations (including
subsequent matters as of the Latest Practicable Date) of Favorable Fort Limited,
Baoman S&T and Qilu Stem Cell (including Shandong Blood Cell Bank) as of
December 31, 2009 and with regard to the legal matters (“Legal and Financial
Verification”) as of Latest Practicable Date;
(14) There
has been no person taking any action against the Seller to liquidate the Seller,
declare the Seller bankrupt or insolvent or to appoint liquidation committee
regarding its assets or business, or to launch, or threaten to launch, any legal
proceedings for the above purposes.
4.1.4 Baoman
S&T has already registered its 24% equity of Qilu Stem Cell with Shandong
Province Industry and Commerce Administration Bureau; on the Delivery Day, no
part of the equity of Qilu Stem Cell under the transaction has any mortgage,
pledge, disposition right, property guarantee or any other form of interests or
rights or claims owned by any third party;
(1) The
part of the equity of Qilu Stem Cell under the transaction has been issued in
accordance with Qilu Stem Cell’s charter and with all the applicable laws and
has been paid in full. No part of the equity of Qilu Stem Cell under
the transaction has any options rights, purchase right, right of first refusal,
option, escrow, trust, mortgage and mortgage payment, pledge, withholding or any
rights and right restrictions in any other form or any other debt obligations,
nor is any part of part of the equity of Qilu Stem Cell under the transaction
affected by any of the aforementioned rights; currently there are no agreements
or commitments to attach or to add any of the aforementioned rights; Qilu Stem
Cell does not have any unfulfilled options agreement or any other agreements
providing for the issuance of, or for the authorization to issue, any shares of
Qilu Stem Cell’s capital, capital, security or debt, or providing for
authorization or approval for anyone to attach any mortgage payment, pledge,
disposition right or any other property guarantee to any of Qilu Stem
Cell’s shares, capital or interest (including Qilu Stem Cell’s equity under the
transaction);
(2) Baoman
S&T’s ownership of the equity of Qilu Stem Cell under the
transaction has obtained approval, verification, filing receipts,
registration, exemption and authorization from the competent Chinese government
organizations;
(3) On
and prior to the Delivery Day, Qilu Stem Cell always and absolutely has had
legal and effective ownership of all of Shandong Blood Cell Bank’s
management rights and property rights;
(4) On
and prior to the Delivery Day, Qilu Stem Cell has legally and effectively
obtained ownership right to all the allogeneic umbilical blood-generating stem
cells currently in actual storage with Shandong Blood Cell Bank and all the
contractual interest under the storage contract by which Qilu Stem Cell’s legal
representative entrusted the storage of the aforementioned allogeneic umbilical
blood-generating stem cells, including but not limited to: charging storage
fees, examination fee and other interests under the provisions of the contract,
and have received, and have at its disposal, all the amount that has already
been collected under the provisions of the storage contract; and completely have
sufficient and reasonable justification to believe and project that, after the
Delivery Day, Qilu Stem Cell will continue as an operator of the commercial
business of storing allogeneic umbilical blood-generating stem cells, develop
such business, and enter into and carry out storage contracts with more owners
of allogeneic umbilical blood-generating stem cells and charge, among others,
storage fees and examination fees;
(5) Qilu
Stem Cell (including Shandong Blood Cell Bank) has obtained and continuously
hold all the permits, approvals, certificates, authorization, exemptions,
consent and recognition required for operating effectively its business at its
business location in its current form of operation. There is no
situation indicating that any of Qilu Stem Cell (including Shandong Blood Cell
Bank)’s permits, approvals, certificates, authorization, exemptions, consent and
recognition (including “Business Legal Person Operation Permit”, “Blood Bank
Operation Permit” and “Tax Registration Certificate”) will be or is likely to be
completely or partially revoked or will not be renewed (irrespective of whether
it is the result of this Agreement or of any other cause);
(6) Qilu
Stem Cell has been in compliance with the company charter and all the applicable
laws and regulations, and with the applicable laws of the country or
region in which they are registered and operate. Qilu Stem Cell have
not violated or been in conflict with, any rules, statutes, regulations, orders,
judicial orders or judgments from any courts or government
organizations;
(7) Qilu
Stem Cell and Shandong Blood Cell Bank, in their course of conducting business,
have not posed an threat or potential threat, or any risk or potential risk, to
the safety, completeness, effective and actual application value of the object
under storage (including but not limited to: umbilical blood and
blood-generating stem cell) or to the life and health of the transplant
recipient or the person with the ownership right; will not harm the life,
health, safety, ownership right or other interests of the persons with ownership
right to umbilical blood, entrustors, clinical medical organizations, patients
or their close family members; will not cause any claims, rights demand, rights
claims or any liabilities for compensations, breach of contract or
burden of obligation according to law from any organization or any individual
that will result in Qilu Stem Cell being the losing party in a judgment or in
consequences suffered by Qilu Stem Cell that will have substantial
adverse impact on its being a going concern, its continuing ability to generate
profit and to hold operation permit, its current balance sheet or its operating
income.
(8) The
statutory financial books and accounts and other records set up and maintained
by Qilu Stem Cell in accordance with applicable Chinese law have been updated
from time to time and have been in compliance with Chinese legal and accounting
practices: (i) have been kept in the appropriate manner; and (ii) contain
complete and accurate records of matters that must be processed, and Qilu Stem
Cell has not received any notices or claims regarding the inaccuracy of such
records and the need for rectification. The financial books provided
by the Seller to the Buyer are formulated according to Chinese generally
accepted accounting practices and rules, including applicable accounting
practice standards. Such records, on the day of their being made by
Qilu Stem Cell, have accounted for the adequate reserves allocated for all the
relevant actual and undetermined debts and have been in compliance with
applicable provisions of Chinese legislation. There has been no
material change to Qilu Stem Cell’s financial situation from the day of its
obtaining “Blood Bank Operation Permit” to the time of execution of this
Agreement (and the Delivery Day).
(9) Qilu
Stem Cell have not been involved in any major lawsuits, arbitration or disputes
or been under any payment obligation caused by the aforementioned major
lawsuits, arbitration or disputes; currently there are no major pending
judgments or court orders against Qilu Stem Cell. Qilu Stem Cell have
not committed, or been suspected of, any criminal acts, have not breached any
contracts or any legal obligations, nor have they committed any act of copy
right violation or illegality or any unauthorized act, such that such act will
cause, or potentially will cause, the reduction of the net value
of Qilu Stem Cell ‘s assets;
(10) Since the execution of this
Agreement to the Delivery Day (including the Delivery Date), neither Qilu Stem
Cell, Baoman S&T nor Favorable Fort Limited has issued, in any form, to its
registered shareholders or any other entity other than its registered
shareholders, any new shares, replenishment, offering or issued any convertible
debenture.
4.2 The
guarantee stated in each and every provision in this section shall be considered
reiterated on the Delivery Day and the Effective Day. Each and every
guarantee stated in this section is true and accurate on during the period
covered by this Agreement, on the Delivery Day and on Effective
Day.
5. Certain
Undertakings and Warranties
5.1 The
Seller undertakes and warrants to the Buyer: prior to the execution date of this
Agreement, Qilu Stem Cell’s controlling shareholder—Yinfeng Investment has
issued to Baoman S&T written undertakings and warranties, whereas, the Qilu
Stem Cell’s operation is controlled and directed by Yinfeng Investment; whereas,
the equity of Qilu Stem Cell held by Qilu Stem Cell and its shareholders
(including Baoman S&T) is completely based on the faith in the undertaking,
made by its controlling shareholder--Yinfeng Investment, for investment return
and growth rate and for the high rate of development and abundance of
profit. Therefore, Yinfeng Investment promises that the actual
dividend received by Baoman S&T from Qilu Stem Cell for year 2010 (“Profit
Guarantee Period”) will be not be less than RMB 8,520,000.00 (approximately HK$
9,680,000.00); Yinfeng Investment has issued consent and undertaking in written
form to supplement Baoman S&T in full for any difference (if any) between
the minimum profit promised by Yinfeng Investment and the actual dividend
received from Qilu Stem Cell. Furthermore, the Seller hereby
undertake, in the event that Yinfeng Investment fails to fulfill the
aforementioned undertaking regarding the minimum profit, to pay to the Buyer the
full amount corresponding to the difference between the minimum profit under the
aforementioned undertaking and the actual dividend received by Baoman
S&T from Qilu Stem Cell.
5.2 The
Seller undertakes and warrants to the Buyer: prior to the execution date of this
Agreement, Qilu Stem Cell’s controlling shareholder—Yinfeng Investment has
issued to Baoman S&T written undertaking and warranty that, at the time of
the transfer of equity by any of Qilu Stem Cell’s shareholders, Baoman S&T
has the right of first refusal and that only when Baoman S&T waives its
right of first refusal can Yinfeng Investment exercise its preferred right of
transferee.
6. GH’s
Warranty Obligation Under This Agreement
GH agrees
and undertakes that it bears joint liability for and guarantees all the
obligations to carry out and/or fulfill the terms, promises and all legal
responsibilities under this Agreement and under other documents with Qilu Stem
Cell (including Shandong Blood Cell Bank).
7. Liability
for Breach of Contract
7.1 If
for any reason not attributable to the Buyer, the Seller unilaterally decides to
terminate or dissolve this Agreement, or refuses to carry out the obligation to
transfer and deliver the Shares to be Transferred, the Seller shall compensate
the Buyer for any resulting loss.
7.2 If
for any reason not attributable to the Seller, the Buyer unilaterally decides to
terminate or dissolve this Agreement, or refuses to carry out the obligation to
make payment for the Transaction Price, the Buyer shall compensate the Seller
for any resulting loss.
7.3 If
this Agreement is terminated or dissolved for reasons set forth in provisions
7.1 and 7.2, the two parties to this Agreement agree to respectively reinstate
the equity and shareholding status prior to the execution of this Agreement
within 60 business days and to each bear the tax expenses incurred; the two
parties and the equity representatives designated by the Buyer cannot pursue the
other party for any reason for liability for breach of contract and cannot
submit any arbitration or legal proceedings against the other
party.
7.4 If
for any reason on the Buyer’s part causing the Buyer to delay the payment for
the Transaction Price, for each day delayed, the Buyer shall pay to the
Seller 0.021% of the amount of payment delayed as damages; if the
payment for the amount is delayed for more than 90 days, the Seller has the
right to terminate this Agreement and the Buyer shall bear the obligation for
reparation. The Buyer shall return all the actual
profit received from distribution prior to the termination of this
Agreement to the Seller. If the Seller terminates this Agreement
pursuant to the aforementioned provision, the Buyer shall, in addition to
returning the Shares to be Transferred already received, make an additional
payment of HK$ 3,000,000.00 to the Seller as damages for actual breach of
contract. After receiving in full all of the damages, the Seller
shall return to the Buyer all of the amount of Transaction Price already
received.
7.5 If
for any reason on the Seller’s part causing the Seller to delay the completion
of delivery, for each day delayed, the Seller shall pay to the
Buyer 0.021% of the total of the Transaction Price as breach
penalty; if the completion of the delivery is delayed for more than
90 days, the Buyer has the right to terminate this Agreement and the Seller
shall bear the obligation for reparation. All the profit received by
the Buyer prior to the termination of this Agreement shall belong to the
Buyer. If the Buyer terminates this Agreement pursuant to the
aforementioned provision, the Seller shall, in addition to returning all the
amount of the Transaction Price already received, make an additional payment of
HK$ 3,000,000.00 to the Buyer as damages for actual breach of
contract.
7.6 If
Yinfeng Investment fails to carry out its obligation to Baoman S&T for
guaranteeing minimum profit and the Seller also fails to carry out
its obligation under this Agreement to make up for the shortfall of the minimum
profit, the Buyer has the right to terminate this Agreement and the Seller shall
bear the obligation for reparation. All the profit received by the
Buyer prior to the termination of this Agreement shall belong to the
Buyer. If the Buyer terminates this Agreement pursuant to the
aforementioned provision, the Seller shall, in addition to returning all the
amount of the Transaction Price already received, make an additional payment of
HK$ 3,000,000.00 to the Buyer as damages for actual breach of
contract. After receiving in full all of the damages, the Buyer shall
return to the Seller all of the Shares to be Transferred already
received.
7.7 Both
the Buyer and the Seller undertake: on the execution day of this Agreement, each
has complete knowledge of all the applicable laws, statutes and policies, and
each will not claim breach of liability against the other for invalidation,
termination and dissolution of this Agreement caused by probable conflicts
between this Agreement and any laws, statutes and policies.
8. Confidentiality
[English
summary of Confidentiality provisions is omitted]
9. Force Majeure
[English
summary of Force Majeure provisions is omitted]
10. Other
Warranty
The
Seller agrees to execute, fulfill and cause, when necessary, any third party to
execute and fulfill all other agreements and contracts, documents, warranties,
actions and matters required for the effectuation of this Agreement in order for
the Buyer to receive all the equity under the provisions of this Agreement
(including Shares to be Transferred) unencumbered by any adverse conditions such
as withholding, mortgage, option rights and asset right
liabilities.
11. The
Agreement
[English
summary of The Agreement provisions is omitted]
12. Waiver
of Rights
[English
summary of Waiver of Rights provisions is omitted]
13. Complete
Understanding
[English
summary of Complete Understanding provisions is omitted]
14. Sending
Notices
All the
notices or demand for payment or any other correspondence regarding the
provisions of this Agreement shall be issued in written form in Chinese and must
be delivered to the recipients at the addresses set forth as below or to any
other recipients at addresses designated pursuant to the provisions of this
Agreement:
[English
summary of Sending Notices provisions is omitted]
15. Receipt
[English
summary of the Receipt provisions is omitted]
16. Applicable
Laws and Jurisdiction
16.1 This
Agreement and the rights and obligations of the parties hereto provided herein
are subject to legal jurisdiction of Hong Kong and are to be interpreted
according to the laws of Hong Kong.
16.2 The
parties to this Agreement irrevocably and unconditionally agree to follow
non-exclusive jurisdiction of Hong Kong courts and appellate
courts. The parties hereto agree to waive the opposition rights with
regard to declaring inconvenience of the manner of pursuing legal actions in the
aforementioned courts or to declaring that such courts have no
jurisdiction; the parties hereto also agree that any judgment with
regard to the aforementioned legal actions from such courts is final and cannot
be overturned and can be forcefully enforced in other
jurisdictions, and agree that the notarized copies, or other valid
copies produced in other manners, of the aforementioned judgment are to be
regarded as the decisive proof with respect to the matters contained
therein.
[English
summary of other Applicable Laws and Jurisdiction provisions is
omitted]
This
Agreement has been executed by each of the parties hereto or by their duly
authorized representative(s).
By:
Representing:
Glorysun
Holdings Group Limited
Signature
and Seal
Witness’s
Signature:
Witness’s
Name:
By:
Representing:
China
Stem Cells (East) Company Limited
Signature
and Seal
Witness’s
Signature:
Witness’s
Name:
