Loan Agreement By and between The Shareholder of Qingdao Niao Bio-Technology Ltd. and NeoStem (China), Inc.
Exhibit
10.4
By
and between
The
Shareholder of Qingdao Niao Bio-Technology Ltd.
and
NeoStem
(China), Inc.
June
1, 2009
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Confidential
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This Loan
Agreement (this “Agreement”) is executed by and between the following Parties
on June 1, 2009, in Qingdao City, the People’s Republic of China ( the
“PRC”).
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(1)
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Sole Shareholder of Qingdao Niao Bio-Technology
Ltd. (hereinafter as the “Borrower” or “Party A”):
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Name
of Each
Shareholder
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Shareholding
Ratio
(%)
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ID
Card No.
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Contact
Address
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Xxx
Xxxxxxxx
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100
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Room
102, Xxxx 0 Xxxxxxxx 0, Xx.000 Xxxxxxx Xxxx, Xxxxxxx District, Ji’nan
City
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(2)
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NeoStem
(China), Inc. (hereinafter as the “Lender” or “Party
B”)
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Legal
Representative: Xxxxx Xxxxx
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Address
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: Xxxx 0000X,
Xxxxxxxx X, Xx.0 XxxxxXxxxXxxxx Xxxx, Xxxxxx District, Qingdao
City.
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(Party A
and Party B are collectively called “the Parties” and individually
called “each Party” or “a Party” in this Agreement.)
WHEREAS:
(1) The
Borrower (Party A) hold 100% of the equity interests in Qingdao Niao
Bio-Technology Ltd. (the “Company”);
(2) Party
B is a wholly foreign-owned enterprise incorporated under the PRC
laws;
(3) Party
A desires to secure a loan from Party B, for the purpose of increasing the
registered capital of the Company, by pledging its equity in the Company to
Party B as a guaranty of the loan, and Party B agrees to provide the
loan to Party A ;
NOW, THEREFORE, The Parties have
agreed through friendly negotiation to the terms and conditions with
respect to the loan hereunder as follows:
1.
DEFINITION
Except
where provided otherwise, the terms used in this Agreement shall
mean:
1.1
“PRC” refers to the People’s Republic of China, excluding the
Hong Kong Special Administrative Region, Macao Special Administrative
Region and Taiwan Province;
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1.2 “PRC
Laws” refers to all PRC laws, administrative regulations and government rules in
effect;
1.3 “RMB” refers
to the legal currency within the PRC;
1.4
“Loan” refers to the Total Principal to be loaned to the Borrower by the Lender
in accordance with Article 2 hereunder;
1.5 “The
Company” refers to Qingdao Niao Bio-Technology Ltd., a domestic company
which is incorporated and validly existing under PRC Laws; its business license
No. is370212230011070, and its registered address is Room 501, Xxxx 0
Xxxxxxxx 0, Xx.00 XxxXxxxxXxxx Xxxx, Xxxxxxx District, Qingdao
City.;
1.6
“Shareholder” refers to the sole Shareholders of the Company;
1.7
“Equity” or “Equity Interests” refers to the equity interests in the
Company;
1.8
“Equity Transfer” refers to the assignment of Equity Interests in the Company
held by Party A to Party B or its designated third party in accordance with the
provisions of the exclusive purchase option agreement (the “Exclusive
Purchase Option Agreement”) executed on June 1, 2009.
1.9
“Asset Transfer” refers to the assignment of the assets of the Company by the
Company to Party B or its designated third party in accordance with the
provisions of the Exclusive Purchase Option Agreement.
1.10
“Consideration for Equity Transfer” has the meaning set forth in Section 6
of this Agreement.
1.11
“Consideration for Assets Transfer” has the meaning set forth in Section 6 of
this Agreement.
2.
THE TOTAL LOAN AMOUNT
2.1 The
total principal amount of the loan hereunder is RMB
2,100,000.00 Yuan (the “Total Principal”), and the amount and ratio of the
loan to be made to the Shareholder is as set forth in the following
table:
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Name
of the
Shareholder
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Amount
of the Loan
(Yuan)
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Percentage
of Total
Principal（%）
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Xxx
Xxxxxxxx
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2,100,000.00 | 100 | % | |||||
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3. TERM
OF THIS AGREEMENT
3.1
Unless otherwise provided, the term of this Agreement shall begin from the
Effective Date and expire when the loan is completely repaid by the
Borrower in accordance with the provisions of Article 6
hereunder.
4.
LOAN USAGE
4.1 The
full amount of the loan provided hereunder shall be used to increase the
registered capital of the Company, and the Borrower shall in no event change
the usage without the prior written consent of the Lender.
4.2 The
Borrower shall cause the Company to complete the registration of the Company
with the competent Administration Bureau of Industry and Commerce in respect of
the increase in the registered capital of the Company within thirty
(30) business days upon receipt of the Loan hereunder, and such period may be
prolonged upon the consent of the Lender.
5.
LOAN INTEREST
5.1
Except as provided in Section 5.2 hereunder, the Loan hereunder shall be
interest-free.
5.2 If
the Consideration for Equity Transfer or the Consideration for Asset
Transfer, in accordance with Section 6 hereof, is higher than the Total
Principal as a result of the requirements of then applicable law or for any
other reason, the excess shall be deemed to be loan interest/utilizing fees of
the Loan to the largest extent permitted by PRC Laws, and will be paid to Party
B by Party A together with loan principal.
6. LOAN
REPAYMENT
6.1 The
Loan shall be repaid upon receipt of written notice sent by Party B to Party A
(the “Repayment Notice”), which shall instruct Party A to repay the Loan in
accordance with Section 6.3 hereof.
6.2 The
Repayment Notice shall indicate the term of repayment, which shall be adjusted
from time to time by Party B in accordance with the provisions of PRC Laws
regarding equity transfers (the “Repayment Term”).
6.3
Except as provided otherwise by the Repayment Notice, Party A shall make payment
to Party B during the Repayment Term as follows:
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6.3.1
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In
the event of any Equity Transfer by Party A, the after-tax
consideration paid to Party A in exchange for such Equity
Transfer (including the principal and interest of the loan, if
applicable) (hereinafter as the “Consideration for Equity
Transfer”) shall be used by Party A to repay the Loan to Party
B;
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6.3.2
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In
the event that the Company receives consideration for any Asset Transfer,
Party A shall cause the Company to adopt a plan of profit distribution to
transfer all after-tax income of the Company to Party B to the greatest
extent permitted by PRC Laws, in order to repay the loan made by Party B
under this agreement.
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6.4 If
the Consideration for Equity Transfer or Consideration for Asset Transfer is
lower than the total principal under this Agreement, Party A shall be exempted
from the shortfall repayment obligation.
7.
CONDITONS FOR GRANTING OF THE LOAN
7.1 The
loan shall be granted only upon satisfaction of all the following
conditions:
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7.1.1
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Party
A shall approve increasing the registered capital by an amount equal to
the Total Principal.
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7.1.2
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Party
A, or the Company on behalf of Party A, shall execute all documents
necessary for the registration with the competent Administration Bureau of
Industry and Commerce in respect of the increase of registered capital of
the Company.
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7.2 Party
B shall grant the Loan immediately and deposit it in the escrow account as
agreed by Party B for increasing the registered capital of the Company
after it receives written evidence which proves that Party A has
fulfilled all the conditions under Section 7.1 hereof.
8. WARRANTIES
AND UNDERTAKINGS
8.1 Party
A hereby represents and warrants to Party B that, as of the execution date of
this Agreement:
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8.1.1
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Party
A legally holds 100% of the Equity in the
Company;
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8.1.2
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Except
as otherwise provided in the Equity Pledge Agreement and Exclusive
Purchase Option Agreement, there is no pledge or other form of encumbrance
on the Equity;
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8.1.3
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There
are no material debts which will adversely affect the Equity of Party
A;
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8.1.4
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Execution
of this Agreement by Party A shall not constitute a breach of the articles
of association of the
Company.
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8.2 Party
A warrants to Party B that, as of the execution date of this
Agreement:
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8.2.1
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Except
as otherwise provided in the Equity Pledge Agreement and Exclusive
Purchase Option Agreement, without Party B’s prior written consent, Party
A shall not transfer, sell, mortgage or otherwise dispose of assets
or income of the
Company;
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8.2.2
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Without
Party B’s prior written consent, Party A shall not supplement or amend the
articles of association or rules of the Company, nor shall it increase or
decrease the registered capital or change the shareholding structure of
the Company in any manner;
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8.2.3
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Without
Party B’s prior written consent, Party A shall not approve the resolutions
for the Company to dissolve, liquidate or change legal
form;
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8.2.4
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Without
Party B’s prior written consent, Party A shall not approve any Profit
Distribution Proposal, nor shall he accept such a distributed
dividend; and at Party B’s request, Party A shall promptly approve a
Profit Distribution Proposal and accept such a distributed
dividend;
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8.2.5
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At
Party B’s request, Party A shall provide Party B with all information
regarding Party B’s business operations and financial
condition;
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8.2.6
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Without
Party B’s prior written consent, Party A shall not incur or succeed to any
debts or liabilities which may adversely affect its Equity
Interests;
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8.2.7
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Party
A shall appoint, and appoint only, the candidates nominated by Party B to
be the executive director of the Company, and shall not replace such
candidates without Party B’s written
consent;
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8.2.8
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Without
Party B’s prior written consent; Party A shall not approve any acquisition
of, any consolidation with, or any investment in any third
party;
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8.2.9
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Party
A shall promptly notify Party B of any pending or threatened lawsuit,
arbitration or administrative dispute which involves the assets, business
or income of the Company; and shall make every effort to take action to
resolve such lawsuit, arbitration or administrative dispute in order
to safeguard the legal rights and interests of the
Company;
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8.2.10
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Without
Party B’s prior written consent, Party A shall not commit any act or
omission that would materially affect the Company’s assets, business or
liabilities;
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8.2.11
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Party
A shall strictly comply with the provisions of this Agreement, and
effectively perform its obligations hereunder, and shall be prohibited
from committing any act or omission which may affect the validity or
enforceability of
this Agreement.
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8.3 Party A warrants to Party B
that it shall use its best efforts to ensure that the Company:
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8.3.1
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shall
not, without Party B’s prior written consent, supplement or amend the
articles of association or rules of the Company in any manner, nor shall
it increase or decrease the registered capital or change the shareholding
structure of the aforesaid entities in any
manner;
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8.3.2
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shall
prudently and effectively maintain its business operations according to
good financial and business standards so as to maintain or increase the
value of its assets;
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8.3.3
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shall
not transfer, mortgage or otherwise dispose of the lawful rights and
interests to and in its assets or incomes, nor shall it encumber its
assets and income in any way that would affect Party B’s security
interests unless as required for the business operations of the Company or
upon prior written consent by Party
B;
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8.3.4
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shall
not incur or succeed to any debts or liabilities without Party B’s prior
written consent;
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8.3.5
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without
Party B’s prior written consent, shall not enter into or materially amend
any material contract (exceeding RMB 100,000 in value), except for the
routine business contracts;
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8.3.6
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without
Party B’s prior written consent, shall not provide any loans or guaranty
to any third party;
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8.3.7
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at
Party B’s request, shall provide Party B with all information regarding
the Company’s business operation and financial
condition;
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8.3.8
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without
Party B’s prior written consent, shall not acquire or consolidate with any
third party, nor shall it invest in any third
party;
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8.3.9
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shall
promptly notify Party B of any pending or threatened litigation,
arbitration or administrative dispute which involves the assets, business
or income of the Company; and shall make every effort to take action to
resolve such litigation, arbitration or administrative dispute in order to
safeguard the legal rights and interests of the
Company;
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8.3.10
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without
Party B’s prior written consent, shall not distribute any dividends to the
Shareholder in any manner, and, at Party B’s request, shall promptly
distribute all distributable dividends to the
Shareholder;
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8.3.11
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without
Party B’s prior written consent, shall not commit any act or omission that
would materially affect the Company’s assets, business or
liabilities.
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9.
GUARANTY OF THE LOAN
9.1 To
secure the repayment of the debts under this Agreement, Party A agrees to pledge
all his equity in the Company to Party B, and both Parties agree to execute the
Equity Pledge Agreement with respect thereto.
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10.
TAX AND EXPENSE
10.1 The
Parties shall pay their respective taxes and expenses in relation to the
execution and performance hereof in accordance with PRC Laws.
10.2
Party B shall pay taxes and expenses in accordance with Section 6.4 hereof (if
applicable).
11.
ASSIGNMENT OF AGREEMENT
11.1
Party A shall not transfer any or all of its rights and obligations under this
Agreement to any third party without the prior written consent of Party
B.
11.2 The
Parties agree that Party B shall have the right to transfer any or all of its
rights and obligations under this Agreement to any third party upon a six (6)
days’ written notice to Party A without approval by Party A.
12.
LIABILITIES AND INDEMITIES FOR BREACH OF THIS AGREEMENT
12.1 If
Party A uses the Loan other than in compliance with the terms of this
Agreement without Party B’s written consent, Party B shall require Party A
repay the improperly used part promptly.
12.2 If
Party A breaches the warranties and undertakings as provided in Article 8
hereof or other provisions under this Agreement and fails to redress such
breach within sixty (60) days upon receipt of written notice from Party B,
Party B shall be entitled to require Party A to repay the granted Loan
promptly.
12.3 If
Party A fails to duly repay the Loan in accordance with the provisions
hereunder, then Party A shall pay the liquidated damage per day equal to 0.03%
of the unpaid Consideration which falls due; if any delay of payment amounts to
sixty (60) days, then Party B shall be entitled to exercise the right of pledge
under the Equity Pledge Agreement.
13.
EFFECTIVENESS, MODIFICATION AND CANCELLATION
13.1 This
Agreement shall take effect on the date of execution hereof by Party A and the
duly authorized representative of Party B.
13.2 The
modification of this Agreement shall not be effective without written agreement
through negotiation. If the Parties do not reach an agreement as to
modification, this Agreement remains effective.
13.3 This
Agreement shall not be discharged or canceled without written agreement through
negotiation, provided that Party B may, by giving thirty (30) days’ prior
notice to Party A, terminate this Agreement.
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13.4
Unless Party B fails to grant the Loan as required hereunder after the
satisfaction of all conditions as set forth in Section 7.1 hereof by Party A,
Party A shall in no event unilaterally terminate this Agreement.
13.5 If
Party B fails to provide the Loan in accordance with the terms hereof, this
Agreement shall be automatically terminated.
14.
CONFIDENTIALITY
14.1 Any
information, documents, data and all other materials (herein “confidential
information”) arising out of the negotiation, signing, and implementing of this
Agreement shall be kept in strict confidence by the Parties. Without the written
approval of the other Parties, no Party shall disclose to any third party
any relevant materials, but the following circumstances shall be
excluded:
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(1)
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Material
that is known by the Public (but not including material disclosed by each
Party receiving the
materials);
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(2)
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Material
required to be disclosed subject to the applicable laws or the rules or
provisions of a stock exchange;
or
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(3)
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Material
disclosed by each Party to its legal or financial consultant
relating to the transaction of this Agreement, and this legal or
financial consultant shall comply with the confidentiality set forth in
this Section. The disclosure of confidential material by staff or a
consignee of any Party shall be deemed to be disclosure of such materials
by such Party, and such Party shall bear the liabilities for breaching the
contract.
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14.2 This
Clause shall survive whether this Agreement is invalid, amended, revoked,
terminated or incapable of implementation for any reason.
15. FORCE
MAJEURE
15.1
“Force Majeure” refers that any event that could not be foreseen, and could not
be avoided and overcome, which includes among other things, but without
limitation, acts of nature (such as earthquakes, flood or fire), government
acts, strikes or riots.
15.2 If
an event of force majeure occurs, any of the Parties that is prevented from
performing its obligations under this Agreement by an event of force majeure
shall notify the other Party without delay and within fifteen (15) days of the
event provide detailed information about and notarized documents evidencing the
event, shall take appropriate means to minimize or remove the negative
effects of force majeure on the other Party and shall not assume the liabilities
for breaching this Agreement. The Parties shall continue performing
this Agreement after the event of force majeure disappears.
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16. GOVERNING
LAW AND DISPUTE RESOLUTION
16.1 The
effectiveness, interpretation, implementation and dispute-resolution related to
this Agreement shall be governed under PRC Laws.
16.2 Any
dispute arising out of this Agreement shall be resolved by both Parties through
mutual negotiation. If both parties cannot reach an agreement within thirty (30)
days from the date on which the dispute is brought forward, either Party
may submit the dispute to the Qingdao Arbitration Commission for arbitration
under its applicable rules. The arbitration award shall be final and binding
upon both Parties.
16.3
During the process of dispute-resolution, both parties shall continue to perform
other terms under this Agreement, except for the provisions subject to the
dispute resolution.
17. MISCELLANEOUS
17.1 The
Parties acknowledge that this Agreement constitutes the entire agreement of the
Parties with respect to the subject matters herein and supersedes and replaces
all prior or contemporaneous oral or written agreements and
understandings.
17.2 This
Agreement shall bind and benefit the successor of each Party and
any transferee permitted hereunder with the same rights and obligations as
if such successor or transferee were an original party hereto.
17.3 Any
notice required to be given or delivered to the Parties hereunder
shall be in writing and delivered to the address as indicated below or such
other address or as such party may designate, in writing, from time to time. All
notices shall be delivered by personal delivery, fax or registered mail. It
shall be deemed to be delivered upon: (1) registered air mail: 5 business days
after deposit in the mail; (2) personal delivery: the next business day after
transmission. If the notice is delivered by fax, it should be confirmed by
original through registered air mail or personal delivery:
Party
A:
Contact
person: Xxx Xxxxxxxx
Address:
Xxxx 000, Xxxx 0 Building 0, Xx.000 Xxxxxxx Xxxx, Xxxxxxx Xxxxxxxx, Ji’nan
City
Tel: Fax:
Party
B:
Contact
person: Xxxxx Xxxxx
Address:
Tel: Fax:
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17.4 This
Agreement is executed in two (2) originals with each of the person for
signing this Agreement holding one original, and each of originals shall be
equally valid and authentic.
17.5
Whenever the consent of Party B is required under this Agreement, such consent
shall not be effective unless such consent is also provided by either the sole
shareholder, or the Executive Director, of Party B.
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IN WITNESS THEREFORE, the
parties hereto have caused this Agreement to be executed and delivered as of the
date first above written.
For
and on behalf of
Party A The Shareholder of
Qingdao Niao Bio-Technology Ltd.
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Name
of the Shareholder
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Signature
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Xxx
Xxxxxxxx
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/s/
Xxx
Xxxxxxxx
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Party B NeoStem (China), Inc.
(Seal)
Legal
Representative (or Authorized Representative): Xxxxx Xxxxx
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/s/ Xxxxx
Xxxxx
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