AMENDED AND RESTATED ENTRUSTED MANAGEMENT AGREEMENT AMONG THE FOURTEEN PERSONS INCLUDING WANG RONGHUA SHAANXI AOXING PHARMACEUTICAL CO., LTD AND SHAANXI BIOSTAR BIOTECH LTD May 6, 2008 XIANYANG, CHINA
AMENDED
AND RESTATED ENTRUSTED MANAGEMENT AGREEMENT
AMONG
THE
FOURTEEN PERSONS INCLUDING ▇▇▇▇ ▇▇▇▇▇▇▇
SHAANXI
AOXING PHARMACEUTICAL CO., LTD
AND
SHAANXI
BIOSTAR BIOTECH LTD
May
6, 2008
XIANYANG,
CHINA
This
Amended
and Restated Entrusted Management Agreement (the “Agreement”) is entered into on
May 6, 2008 in
Xianyang, China by:
Party
A:
1. ▇▇▇▇
▇▇▇▇▇▇▇, a citizen of PRC with ID Card number【61040219550901129x】,
owns
45.13% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
2.
▇▇▇▇
▇▇▇,
a citizen of PRC with ID Card number 【610402198705207517】,
owns
5.83% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
3.
▇▇▇▇
▇▇▇▇▇▇, a citizen of PRC with ID Card number 【▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇】,
owns
5.83% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
4.
Wang
Rangmei, a citizen of PRC with ID Card number 【610125196005042220】,
owns
5.83% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
5.
▇▇▇
▇▇▇▇▇▇, a citizen of PRC with ID Card number 【239005196007133130】,
owns
5.18% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
6.
▇▇▇▇
▇▇▇▇▇▇, a citizen of PRC with ID Card number 【610104195707052654】,
owns
4.85% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
7.
An
Xiaoru, a citizen of PRC with ID Card number 【220104196406234421】,
owns
4.85% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
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8.
Ao
Quanfang, a citizen of PRC with ID Card number 【61040219570504122x】,
owns
4.69% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
9.
▇▇▇▇
▇▇▇▇▇▇▇, a citizen of PRC with ID Card number 【61010219431016356x】,
owns
3.24% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
10.
Qin
Hongxia, a citizen of PRC with ID Card number 【610103196601022420】,
owns
3.24% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
11.
▇▇
▇▇▇▇, a citizen of PRC with ID Card number 【610402196512265236】,
owns
3.07% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
12.
▇▇
▇▇▇▇▇▇▇, a citizen of PRC with ID Card number 【610403198202050067】,
owns
2.91% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
13.
Bai
Rong, a citizen of PRC with ID Card number 【62050319790316422x】,
owns
2.91% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
14.
▇▇
▇▇▇, a citizen of PRC with ID Card number 【▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇】,
owns
2.27% shares of Shaanxi Aoxing Pharmaceutical Co., Ltd.,
15.
Shaanxi Aoxing Pharmaceutical Co., Ltd. is an enterprise incorporated and
existing within the territory of China in accordance with the law of the
People’s Republic of China, the registration number of its legal and valid
Business License is ▇▇▇▇▇▇▇▇▇▇▇▇▇
and the
legal registered address is Chenyangzhai, Xianyang.
and
Party
B: Shaanxi
Biostar Biotech Ltd is a wholly-foreign owned enterprise registered in Xianyang,
PRC, and the registration number of its legal and valid Business License is
Qi
Du ▇▇▇▇▇ Xian Zong Zi No. 000177.
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Whereas:
1. Party
A
constitutes Shaanxi Aoxing Pharmaceutical Co., Ltd. (hereinafter referred to
as
“Shaanxi Aoxing”) and all of its shareholders holding all issued and outstanding
shares of Shaanxi Aoxing. Under this Agreement, Shaanxi Aoxing and The Fourteen
Persons including ▇▇▇▇ ▇▇▇▇▇▇▇ have acted collectively as one party to this
Agreement;
2.
Shaanxi
Biostar Biotech Ltd. (hereinafter referred to as “Party B”) is a wholly-foreign
owned enterprise incorporated and existing within the territory of China in
accordance with the law of the People’s Republic of China, the registration
number of its legal and valid Business License is Qi
Du
▇▇▇▇▇ Xian Zong Zi No. 000177,
and the
legal registered address is 3rd floor, backyard of Industrial and Business
Bureau, Shiji Avenue, Xianyang.
3.
Party
A
desires to entrust Party B to manage and operate Shaanxi Aoxing;
4.
Party
B
agrees to accept such entrustment and to manage Shaanxi Aoxing on behalf of
Party A.
Therefore,
in accordance with laws and regulations of the People’s Republic of China, the
Parties agree as follows after friendly consultation based on the principle
of
equality and mutual benefit.
Article
1
Entrusted Management
1.1
Party
A
agrees to entrust the management of Shaanxi Aoxing to Party B pursuant to the
terms and conditions of this Agreement. Party B agrees to manage Shaanxi Aoxing
in accordance with the terms and conditions of this Agreement.
1.2
The
term
of this Entrusted Management Agreement shall be from the effective date of
this
Agreement to the earlier of the following:
(1)
the
termination of business operations of Shaanxi Aoxing or any successor company
thereto thereto (the “Entrusted Period”), or
(2)
(3)
the
date on which Party B completes the acquisition of Shaanxi Aoxing.
1.3
During
the Entrusted Period, Party B shall be fully responsible for the management
of
Shaanxi Aoxing. The management service includes without limitation the
following:
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| (1) |
Party
B shall be fully responsible for the operation of Shaanxi Aoxing,
which
includes the right to appoint and terminate members of Board of Directors
and the right to hire managerial and administrative personnel etc.
Party A
or its voting proxy shall make a shareholder’s resolution and a Board of
Directors’ resolution based on the decision of Party B’s Board of
Directors.
|
| (2) |
Party
B has the right to manage and control all assets of Party A. Shaanxi
Aoxing shall open an entrusted account or designate an existing account
as
an entrusted account. Party B has the full right to decide the use
of the
funds in the entrusted account. The signer of the account shall be
appointed or confirmed by Party B. All of the funds of Shaanxi Aoxing
y
shall be kept in this account, including but not limited to its existing
working capital and purchase price received from selling its production
equipment, inventory, raw materials and accounts receivable to Party
B,
all payments of funds shall be disbursed through this entrusted account,
including but not limited to the payment of all existing accounts
payable
and operating expenses, payment of employees salaries and purchase
of
assets, and all revenues from its operation shall be kept in this
account.
|
| (3) |
Party
B shall have the full right to control and administrate the financial
affairs and daily operation of Shaanxi Aoxing, such as entering into
and
performance of contracts, and payment of taxes
etc.
|
| (4) |
If
Shaanxi Aoxing requires additional funds to maintain its operations,
Party
B shall provide such additional funds through a bank loan or other
resources and Party A shall provide necessary assistance in obtaining
these funds.
|
1.4
As
consideration for the services provided by Party B hereunder, Party A shall
pay
an entrusted management fee to Party B which shall be equal to the earnings
before tax (if any) of Shaaxi Aoxing. The entrusted management fee shall be
as
follows: during the term of this agreement, the entrusted management fee shall
equal to Shaaxi Aoxing’s estimated earnings before tax, being the monthly
revenues after deduction of operating costs, expenses and taxes other than
income tax. If the earnings before tax is zero, Shaanxi Aoxing is not required
to pay the entrusted management fee; if Shaanxi Aoxing sustains losses, all
such
losses will be carried over to next month and deducted from next month’s
entrusted management fee. Both Parties shall calculate, and Party A shall pay,
the monthly entrusted management fee within 20 days of the following month.
The
above monthly payment shall be adjusted after the end of each quarter but before
the filing of tax return for such quarter (the “Quarterly Adjustment”), so as to
make the after-tax profit of Shaanxi Aoxing of that quarter is zero. In
addition, the above monthly payment shall be adjusted after the end of each
fiscal year but before the filing for the yearly tax return (the “Annual
Adjustment”), so as to make the after-tax profit Shaanxi Aoxing of that fiscal
year is zero.
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1.5
Party
B
shall assume all operation risks out of the entrusted management of Shaanxi
Aoxing and bear all losses of Shaanxi Aoxing. If Shaanxi Aoxing has no
sufficient funds to repay its debts, Party B is responsible for paying off
these
debts on behalf of Shaanxi Aoxing; if Shaanxi Aoxing’s net assets are lower than
its registered capital, Party B is responsible for funding the deficit.
Article
2 Rights
and Obligations of the Parties
2.1
During
the term of this Agreement, Party A’s rights and obligations include:
| (1) |
to
hand over Shaanxi Aoxing to Party B for entrusted management as of
the
effectiveness date of this Agreement and to hand over all of business
materials together with Business License and corporate seal of Shaanxi
Aoxing to Party B;
|
|
(2)
|
Party
A has no right to make any decision regarding Shaanxi Aoxing’s operations
without the consent of Party B;
|
|
(3)
|
to
have the right to know the business conditions of Shaanxi Aoxing
at any
time and provide proposals;
|
|
(4)
|
to
assist Party B in carrying out the entrusted management according
to Party
B’s requirement;
|
|
(5)
|
to
perform its obligations pursuant to the Shareholders’ Voting Rights Proxy
Agreement by and between the Parties, and not to violate the said
agreement;
|
|
(6)
|
not
to intervene Party B’s management over Shaanxi Aoxing in any form by
making use of shareholder’s power;
|
|
(7)
|
not
to entrust or grant their shareholders’ rights in Shaanxi Aoxing to a
third party other than Party B without Party B’s consent;
|
|
(8)
|
not
to otherwise entrust other third party other than Party B to manage
Shaanxi Aoxing in any form without Party B’s consent;
|
| (9) |
not
to terminate this Agreement unilaterally with any reason; or
|
| (10) |
to
enjoy other rights and perform other obligations under the Agreement.
|
2.2
During
the term of this Agreement, Party B’s rights and obligations include:
| (1) |
to
enjoy independent and full right to manage Shaanxi Aoxing;
|
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| (2) |
to
enjoy the right to dispose of all assets of Shaanxi Aoxing;
|
|
(3)
|
to
enjoy profits and bear losses arising from Shaanxi Aoxing’s operations
during the period of entrusted
management;
|
| (4) |
to
appoint all directors of Shaanxi Aoxing;
|
|
(5)
|
to
appoint general manager, deputy general manager, financial manager
and
other senior managerial personnel of Shaanxi Aoxing;
|
|
(6)
|
to
convene shareholders’ meetings of Shaanxi Aoxing in accordance with the
Shareholders’ Voting Rights Proxy Agreement and sign resolutions of
shareholders’ meetings; and
|
| (7) |
to
enjoy other rights and perform other obligations under the Agreement.
|
Article
3 Representations
and Warranties
The
Parties hereto hereby make the following representations and warranties to
each
other as of the date of this Agreement that:
| (1) |
has
the right to enter into the Agreement and the ability to perform
the
same;
|
| (2) |
the
execution and delivery of this Agreement by each party have been
duly
authorized by all necessary corporate
action;
|
| (3) |
the
execution of this Agreement by the officer or representative of each
party
has been duly authorized;
|
| (4) |
each
party has no other reasons that will prevent this Agreement from
becoming
a binding and effective agreement between both parties after
execution;
|
|
(5)
|
the
execution and performance of the obligations under this Agreement
will
not:
|
(a) violate
any provision of the business license, articles of association or other similar
documents of its own;
(b) violate
any provision of the laws and regulations of PRC or other governmental or
regulatory authority or approval;
(c) violate
or result in a breach of any contract or agreement to which the party is a
party
or by which it is bound.
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Article
4 Effectiveness
This
Agreement shall take effect after it is duly executed by the authorized
representatives of the parties hereto with seals affixed.
Article
5
Liability for Breach of Agreement
During
the term of this Agreement, any violation of any provisions herein by either
party constitutes breach of contract and the breaching party shall compensate
the non-breaching party for the loss incurred as a result of this
breach.
Article
6 Force Majeure
The
failure of either party to perform all or part of the obligations under the
Agreement due to force majeure shall not be deemed as breach of contract. The
affected party shall present promptly valid evidence of such force majeure,
and
the failure of performance shall be settled through consultations between the
parties hereto.
Article
7 Governing Law
The
conclusion, validity, interpretation, and performance of this Agreement and
the
settlement of any disputes arising out of this Agreement shall be governed
by
the laws and regulations of the People’s Republic of China.
Article
8 Settlement of Dispute
Any
disputes under the Agreement shall be settled at first through friendly
consultation between the parties hereto. In case no settlement can be reached
through consultation, each party shall have the right to submit such disputes
to
China International Economic and Trade Arbitration Commission in Beijing. The
Place of arbitration is Beijing. The arbitration award shall be final and
binding on both parties.
Article
9 Confidentiality
9.1
The
parties hereto agree to cause its employees or representatives who has access
to
and knowledge of the terms and conditions of this Agreement to keep strict
confidentiality and not to disclose any of these terms and conditions to any
third party without the expressive requirements under law or request from
judicial authorities or governmental departments or the consent of the other
party, otherwise such party or personnel shall assume corresponding legal
liabilities.
9.2
The
obligations of confidentiality under Section 1 of this Article shall survive
after the termination of this Agreement.
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Article
10 Severability
10.1 Any
provision of this Agreement that is invalid or unenforceable due to the laws
and
regulations shall be ineffective without affecting in any way the remaining
provisions hereof.
10.2. In
the
event of the foregoing paragraph, the parties hereto shall prepare supplemental
agreement as soon as possible to replace the invalid provision through friendly
consultation.
Article
11 Non-waiver of Rights
11.1
Any
failure or delay by any party in exercising its rights under this Agreement
shall not constitute a waiver of such right.
11.2
Any
failure of any party to demand the other party to perform its obligations under
this Agreement shall not be deemed as a waiver of its right to demand the other
party to perform such obligations later.
11.3
If a
party excuses the non-performance by other party of certain provisions under
this Agreement, such excuse shall not be deemed to excuse any future
non-performance by the other party of the same provision.
Article
12 Non-transferability
Unless
otherwise specified under this Agreement, no party can assign or delegate any
of
the rights or obligations under this Agreement to any third party nor can it
provide any guarantee to such third party or carry out other similar activities
without the prior written from the other party.
Article
13 Miscellaneous
13.1
Any
and
all taxes arising from execution and performance of this Agreement and during
the course of the entrusted management and operation shall be borne by the
Parties respectively pursuant to the provisions of laws and regulations.
13.2 Any
amendment entered into by the parties hereto after the effectiveness of this
Agreement shall be an integral part of this Agreement and have the same legal
effect as part of this Agreement. In case of any discrepancy between the
amendment and this Agreement, the amendment shall prevail. In case of several
amendments, the amendment with the latest date shall prevail.
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13.3
This
Agreement is executed by Chinese and English in duplicate, and in case of any
conflict the Chinese version shall prevail. Each of the original Chinese and
English versions of this Agreement shall be executed in 4 copies. Each party
shall hold two original of each version, and the rest shall be used for
governmental registration or other necessary approval purposes.
13.4
In
witness hereof, the Agreement is duly executed by the parties hereto on the
date
first written above.
13.5
This
Agreement amends and restates the Entrusted Management Agreement between the
parties hereto dated November 1, 2007.
(REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK)
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(Page
of
signature only)
Party
A:
▇▇▇▇
▇▇▇▇▇▇▇(signature):
/s/
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇(signature):
/s/
▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇(signature):
/s/
▇▇▇▇▇▇ ▇▇▇▇
Wang
Rangmei(signature):
/s/
Rangmei Wang
▇▇▇
▇▇▇▇▇▇(signature):
/s/
▇. ▇▇▇
▇▇▇▇
▇▇▇▇▇▇(signature):
/s/
▇. ▇▇▇▇
An
Xiaoru(signature):
/s/
An Xiaoru
Ao
Quanfang(signature):
/s/
Ao Quanfang
▇▇▇▇
▇▇▇▇▇▇▇(signature):
/s/
▇▇▇▇▇▇▇ ▇▇▇▇
Qin
Hongxia(signature):
/s/
▇▇▇▇▇▇▇ ▇▇▇
▇▇
▇▇▇▇(signature):
/s/
▇▇▇▇ ▇▇
▇▇
▇▇▇▇▇▇▇(signature):
/s/
▇▇ ▇▇▇▇▇▇▇
Bai
Rong(signature):
/s/
Bai ▇▇▇▇
▇▇
Jin(signature):
/s/
▇▇ ▇▇▇
Shaanxi
Aoxing
Pharmaceutical Co., Ltd
(official
seal)
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Authorized
representative:
(signature)
Party
B:
Shaanxi
Biostar Biotech Ltd
(official
seal)
Authorized
representative:
(signature)
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