EXHIBIT 99.3
OWNERSHIP AGREEMENT
AMONG CERTAIN SHAREHOLDERS OF
DRAGON PHARMACEUTICAL, INC.
OWNERSHIP AGREEMENT
THIS AGREEMENT is made as of October 17, 2003 among certain shareholders (the
"Shareholders") of DRAGON PHARMACEUTICAL, INC. (the "Corporation") whose names
and shareholdings are set out in Schedule A attached hereto.
WHEREAS:
A. Each of the Shareholders holds the number of shares in the capital of
the Corporation set out in Schedule A attached hereto; and
B. Each of the Shareholders have agreed to enter into this Agreement and a
shareholders agreement of even date (the "Shareholders' Agreement") as
being in their respective best interests and for the purpose of
providing for mutual commitment and cooperation among the Shareholders
in respect of their shareholdings in the Corporation in order to
facilitate the growth and development of the Corporation and its
business.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the premises
and the mutual covenants and agreements herein contained the parties hereto
agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
(a) "Act" means Florida Business Corporation Act;
(b) "Affiliate" means:
(i) with respect to any person, any other person which is
directly or indirectly controlled by it; and
(ii) if the person is a corporation, it means, in addition
to the foregoing, any person which controls it or is
under common control with the first person;
(c) "Agreement" means this agreement and all Schedules attached
hereto and all amendments made hereto and thereto by written
agreement between the Shareholders;
(d) "Business Day" means a day other than a Saturday, Sunday or
statutory holiday in British Columbia;
(e) "Common Shares" means shares of common stock of the
Corporation;
(f) "Communication" has the meaning set out in section 4.7;
(g) "Committee" means the committee of Shareholders formed from
time to time pursuant to the Shareholders' Agreement;
(h) "Committee's view" or "Committee's decision" means the view or
decision of a Committee as evidenced by resolutions passed
pursuant to the Shareholders' Agreement;
(i) "Control" of:
(i) a body corporate by a Person only occurs if:
(A) securities of the Person to which are
attached more than 50% of the votes that may
be cast to elect directors of the body
corporate are held, other than by way of
security or pledge only, by or for the
benefit of that Person; and
(B) the votes attached to those securities would
otherwise be sufficient, if exercised, to
elect a majority of the directors of the
body corporate; or
(ii) any Person (other than a body corporate) by another
Person only occurs if that other Person possesses,
directly or indirectly, the power to direct or cause
the direction of the management policies of such
first Person;
(j) "Corporation" means Dragon Pharmaceutical, Inc., a corporation
incorporated under the Act;
(k) "Equity Securities" means:
(i) shares or any other security of the Corporation that
carries the residual right to participate in the
earnings of the Corporation and, on liquidation,
dissolution or winding-up, in the assets of the
Corporation, whether or not the security carries
voting rights;
(ii) any warrants, options or rights entitling the holders
thereof to purchase or acquire any such securities;
or
(iii) any securities issued by the Corporation which are
convertible or exchangeable into such securities;
(l) "Person" means any individual, partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or
without share capital, trust,
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trustee, executor, administrator, or other legal personal
representatives, regulatory body or agency, government or
governmental agency, authority or entity howsoever designated
or constituted;
(m) "Shareholders" means each of the shareholders named in
Schedule A attached hereto, together with such other persons
as may beneficially own Common Shares and become parties to
this Agreement, collectively, and "Shareholder" means any one
of such persons individually;
(n) "Shareholders Group" means Shareholders Group A, B, C, D, E or
F specified in Schedule A and "Shareholders Groups" means all
of them; and
(o) "Transfer" includes any sale, exchange, assignment, gift,
bequest, disposition, mortgage, charge, pledge, encumbrance,
grant of a security interest or other arrangement by which
possession, legal title or beneficial ownership passes from
one Person to another, or to the same Person in a different
capacity, whether or not voluntarily and whether or not for
value, and any agreement to effect any of the foregoing; and
the words "Transferred", "Transferring" and similar words have
corresponding meanings.
1.2 SECTIONS AND HEADINGS
The division of this Agreement into Articles and sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms "this Agreement",
"hereof", "hereunder" and similar expressions refer to this Agreement and not to
any particular Article, section or other portion hereof and include any
agreement or instrument supplemental or ancillary hereto. Unless something in
the subject matter or context is inconsistent therewith, references herein to
Articles and sections are to Articles and sections of this Agreement.
1.3 NUMBER
Words importing the singular include the plural and vice versa, words importing
one gender shall include all genders and words importing persons shall include
corporations, individuals, partnerships, associations, trusts, unincorporated
organizations or other entities.
1.4 SCHEDULES
The following are the Schedules to this Agreement, which Schedules form a part
hereof:
Schedule A - Names of Shareholders who are party to this
Agreement
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ARTICLE 2 - DEALING WITH COMMON SHARES
2.1 NO TRANSFER OF COMMON SHARES
Except as expressly approved by a Committee's decision, the Shareholders shall
not Transfer their Equity Securities or their rights under this Agreement.
2.2 ELIGIBLE TRANSFEREES
(a) Notwithstanding any other term of this Agreement, a
Shareholder (a "TRANSFERRING SHAREHOLDER") may, at any time
and from time to time, transfer any or all of its Equity
Securities to a Person that is its Affiliate ("Eligible
Transferee") of that Shareholder provided that, at or prior to
the time of such Transfer:
(i) such Eligible Transferee shall agree to become bound
by the terms hereof as if such Eligible Transferee
had entered into this Agreement in the place and
stead of the Transferring Shareholder to the extent
of the Equity Securities so transferred to such
Eligible Transferee; and
(ii) such Transferring Shareholder and such Eligible
Transferee shall agree that at all times, while such
Eligible Transferee is a shareholder of the
Corporation, the Eligible Transferee shall remain an
Affiliate of the Transferring Shareholder.
ARTICLE 3 - FUTURE FINANCING
3.1 NO OBLIGATION TO FUND CORPORATION
Nothing contained herein shall be read or construed so as to require any of the
Shareholders to:
(a) contribute additional capital to the Corporation by way of a
subscription for securities, a loan or otherwise; or
(b) otherwise provide financial assistance to the Corporation.
3.2 PROHIBITION ON ADDITIONAL PURCHASE
The Shareholders agree that each of them will not subscribe for or purchase any
additional Common Shares from the Corporation or otherwise unless:
(a) prior to such subscription or purchase, such subscription or
purchase is approved by a Committee's decision; and
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(b) such additional Common Shares (whether from treasury or
otherwise) are offered to all Shareholders in proportion pro
rata to their existing shareholding of Common Shares.
Provided that if a Shareholder acquires any additional Common Shares in breach
of this provision, those Common Shares shall be deemed to be governed and
restricted by the provisions of this Agreement and the Shareholders' Agreement
but the number of votes specified in the Shareholders' Agreement for which the
member of the Committee appointed by that Shareholder is entitled to exercise
shall remain unchanged. In the event that any of the Shareholders purchases or
subscribes for additional Common Shares in compliance with the provisions of
this Agreement, the Shareholders shall agree on a new voting structure for the
members of the Committee reflecting the proportional shareholding of the
Shareholders after the acquisition of the Common Shares and shall promptly amend
the Shareholders' Agreement to reflect the same.
ARTICLE 4 - GENERAL
4.1 SUPERSEDING OTHER AGREEMENT
The Shareholders hereby agree that the provisions in this Agreement under
Articles 2 and 3 shall supersede all previous and other agreement between the
parties in relation to the subject matter thereof and all previous or other
provisions in other agreements between the parties to the extent that they deal
with the same subject matter as in Articles 2 and 3 shall be deemed to be
deleted in their entirety from such other agreements and shall be of no effect.
4.2 AMENDMENTS AND WAIVERS
No amendment to this Agreement shall be valid or binding unless set forth in
writing and duly executed by all parties hereto. No waiver of any breach of any
provision of this Agreement shall be effective or binding unless made in writing
and signed by the party purporting to give the same and, unless otherwise
provided in the written waiver, shall be limited to the specific breach waived.
4.3 ASSIGNMENT
Except as otherwise provided herein, none of the parties hereto may assign such
party's rights or obligations under this Agreement without the prior written
consent of all of the other parties hereto.
4.4 TERMINATION
This Agreement shall terminate upon:
(a) the written agreement of all of the Shareholders;
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(b) the dissolution or bankruptcy of the Corporation or the making
by the Corporation of an assignment under the provisions of
the Bankruptcy and Insolvency Act (Canada); or
(c) the date which is upon the expiry of 24 months from the date
of this Agreement.
4.5 SEVERABILITY
If any provision of this Agreement is determined to be invalid or unenforceable
in whole or in part, such invalidity or unenforceability shall attach only to
such provision or part thereof and the remaining part of such provision and all
other provisions hereof shall continue in full force and effect and the parties
will use their best efforts to substitute for any provision that is invalid,
illegal or unenforceable in any jurisdiction a valid and enforceable provision
which achieves to the greatest possible the economic, legal and commercial
objectives of such invalid, illegal or unenforceable provision of this Agreement
and, failing agreement of the parties on such a substitution within 30 days
after the finding of the court, arbitrator or Governmental Authority, any party
may refer the matter for dispute in the Court.
4.6 EQUITABLE REMEDIES
Each party to this Agreement consents to the granting of specific performance
and injunctive or other equitable relief to each other party to this Agreement
in respect of any actual or threatened breach of this Agreement, without proof
of actual damages.
4.7 NOTICES
Any demand, notice or other communication (a "Communication") to be given in
connection with this Agreement shall be given in writing and may be given by
personal delivery, by registered mail or by transmittal by fax addressed to the
recipient as specified in writing by each of the parties hereunder on the date
of this Agreement or to such other address, fax number or individual as may be
designated by notice by any party to the other from time to time. Any
Communication given by personal delivery shall be conclusively deemed to have
been given on the day of actual delivery thereof (or the next Business Day if
such day is not a Business Day) and, if given by registered mail, on the 5th
Business Day following the deposit thereof in the mail and, if given by fax, on
the day of transmittal thereof (or the next Business Day if such day is not a
Business Day). If the party giving any Communication knows or ought reasonably
to know of any difficulties with the postal system which might affect the
delivery of mail, any such Communication shall not be mailed but shall be given
by personal delivery or by fax.
4.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the Province of British Columbia.
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4.9 INDEPENDENT LEGAL ADVICE
Each of the parties hereto acknowledges that they have jointly retained ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP to draft this Agreement and they have been advised that they may
wish to seek independent legal advice with respect to the execution of this
Agreement and all related documentation and each party confirms that it does not
require or it does not wish to seek independent legal advice and such party
enters into this Agreement by such party's own free will and voluntarily without
any coercion or duress or influence, having been imposed upon such party by any
of the parties hereto.
4.10 EXECUTION IN COUNTERPARTS AND BY FAX
This Agreement may be executed in multiple counterparts and by fax and each such
executed counterpart shall be deemed an original for all purposes and all of
which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
THE DS FAMILY TRUST
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Trustee
LI & FANG ENTERPRISES LTD.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Person
________________________________________
▇▇▇▇▇ ▇▇▇ LUNG
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YUKON HEALTH ENTERPRISES LIMITED
Per: /s/ Sun ▇▇▇ ▇▇▇▇▇
___________________________________
Name: Sun ▇▇▇ ▇▇▇▇▇
Title: Director
________________________________________
▇▇▇▇▇ EN ▇▇▇ ▇▇
________________________________________
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
FAITH EQUITY LIMITED.
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇ Zen
___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇ Zen
Title: Director
GLOBAL EQUITIES OVERSEAS LIMITED
Per: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Title: Director
GOLDPAC INVESTMENT PARTNERS LTD.
Per: /s/ ▇▇▇ ▇▇▇
___________________________________
Name: ▇▇▇ ▇▇▇
Title: Authorized Signatory
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CHOW TAI FOOK NOMINEE LIMITED
Per: /s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇
___________________________________
Name: ▇▇▇▇▇ ▇▇▇ Pui
Title: Director
/s/ ▇▇▇▇▇▇ ▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇▇▇▇
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SCHEDULE A
NAMES OF SHAREHOLDERS WHO ARE PARTIES TO THIS AGREEMENT
Number of
Common Shares
of Dragon
Shareholders Group Phamaceuticals
Name of Shareholder to which it belongs Contact Inc. held
-------------------------- ------------------- ----------------- --------------
The DS Family Trust A ▇▇▇▇▇ ▇▇▇▇▇ 400,000
Li & Fang Enterprises Ltd. A ▇▇▇▇▇ ▇▇▇▇▇ 125,000
▇▇▇▇▇ ▇▇▇ Lung A ▇▇▇▇▇ ▇▇▇▇▇ 497,500
Yukon Health Enterprises B ▇▇. ▇▇▇ ▇▇▇▇▇ Sun 600,000
Limited
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇ C ▇▇▇▇ ▇▇ 560,000
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ C ▇▇▇▇ ▇▇ 160,000
Faith Equity Limited D ▇▇▇▇▇▇ ▇▇▇▇ 408,000
Global Equities Overseas D ▇▇▇▇▇▇ ▇▇▇▇ 600,000
Limited
Goldpac Investment Partners E ▇▇▇ ▇▇▇ 1,543,000
Ltd.
Chow Tai Fook Nominee F ▇▇. ▇▇▇ ▇▇▇▇▇ Sun 2,000,000
Limited
▇▇▇▇▇▇ ▇▇▇▇ D ▇▇▇▇▇▇ ▇▇▇▇ 56,500
A-1
