UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, DC 20549

 

 

SCHEDULE 13D

 

Under the Securities Exchange Act of 1934
(Amendment No.     )*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

1  This CUSIP number applies to the Issuer’s American Depositary Shares, each representing two Ordinary Shares.

 

 

Page 2 of 8 pages

 

 

(1) As further described in Items 2 and 4, the Reporting Persons (as defined in Item 2 below) may also be deemed to beneficially own 17,924,692 Ordinary Shares of the Issuer (as defined in Item 1 below) beneficially owned by Assure (as defined in Item 2 below) by reason of the Consortium Agreement (as defined in Item 4 below), which are excluded from the above share amounts and percentages.

(2) Based on a total of 111,858,666 Ordinary Share outstanding as of March 11, 2013, as provided by the Issuer, which include 10,437,340 restricted Ordinary Shares that have been granted and are currently issuable by the Issuer under its 2006 Stock Incentive Plan. See Item 5.

 

 

Page 3 of 8 pages

 

 

(1) As further described in Items 2 and 4, the Reporting Persons (as defined in Item 2 below) may also be deemed to beneficially own 17,924,692 Ordinary Shares of the Issuer (as defined in Item 1 below) beneficially owned by Assure (as defined in Item 2 below) by reason of the Consortium Agreement (as defined in Item 4 below), which are excluded from the above share amounts and percentages.

(2) Based on a total of 111,858,666 Ordinary Share outstanding as of March 11, 2013, as provided by the Issuer, which include 10,437,340 restricted Ordinary Shares that have been granted and are currently issuable by the Issuer under its 2006 Stock Incentive Plan. See Item 5.

 

 

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	This Schedule 13D represents the initial statement on Schedule 13D jointly filed by the Reporting Persons (as defined in Item 2 below) with respect to Simcere Pharmaceutical Group (the “Company” or the “Issuer”), and (i) amends and supplements the statement on Schedule 13D filed on February 9, 2009, by Mr. Ren with respect to the Issuer with the United States Securities and Exchange Commission (the “SEC”), as amended and/or supplemented by Amendment No. 1 to the Schedule 13D filed on July 27, 2009, and (ii) replaces and supersedes the statement on Schedule 13G filed on February 12, 2008, by NGM with respect to the Issuer with the SEC, as amended and/or restated by Amendment No. 1 to the Schedule 13G filed on February 9, 2009, Amendment No. 2 to the Schedule 13G filed on February 9, 2010, Amendment No. 3 to the Schedule 13G filed on February 11, 2011, Amendment No. 4 to the Schedule 13G filed on February 14, 2012, and Amendment No. 5 to the Schedule 13G filed on February 14, 2013.
Item 1.	Securities and Issuer
	This Schedule 13D relates to Ordinary Shares, par value US$0.01 per share (“Ordinary Shares”), of the Issuer. The address of the Issuer’s principal executive office is No. 699-18 Xuan Wu Avenue, Xuan Wu District, Nanjing, Jiangsu Province 210042, The People’s Republic of China.
Item 2.	Identity and Background
(a) — (c) and (f)	This Schedule 13D is filed jointly by Mr. Jinsheng Ren (“Mr. Ren”) and New Good Management Limited (“NGM”) pursuant to Rule 13d-1(k) promulgated by the SEC under Section 13 of the Act. Mr. Ren and NGM are collectively referred to herein as the “Reporting Persons.”  The Reporting Persons are making this single, joint filing because they may be deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Act by reason of their relationship described in Item 2 and the Consortium Agreement (as defined in Item 4 below).   Mr. Ren is the chairman of the board of directors of the Company.  Mr. Ren is a citizen of The People’s Republic of China. His principal occupation is as a director of the Issuer.  Mr. Ren’s principal business address is c/o Simcere Pharmaceutical Group, No. 699-18 Xuan Wu Avenue, Xuan Wu District, Nanjing, Jiangsu Province 210042, The People’s Republic of China.   NGM is a company incorporated under the laws of the British Virgin Islands.  NGM is an investment holding company. Mr. Ren and Excel Advanced Group Limited, an investment holding company incorporated under the laws of the British Virgin Islands, are the record holders of 33.2% and 34.8% of the total outstanding shares of NGM, respectively.  Excel Advance Group Limited is 100% owned by Mr. Yong Ren, Mr. Ren’s son, and Mr. Ren is the sole director of Excel Advance Group Limited.  Other record shareholders of NGM include certain other family members of Mr. Ren and management members of the Issuer.  NGM’s principal business address is at the offices of Offshore Incorporations Limited, P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.  Mr. Ren, Mr. Weidong Ren (Mr. Ren’s brother) and Mr. Jindong Zhou are the directors of NGM. Mr. Weidong Ren is a citizen of The People’s Republic of China and his principal occupation is the General Legal Counsel of the Issuer.  Mr. Jindong Zhou is a citizen of The People’s Republic of China and his principal occupation is an executive vice president of the Issuer.  The business address of each of Mr. Weidong Ren and Mr. Jindong Zhou is c/o Simcere Pharmaceutical Group, No. 699-18 Xuan Wu Avenue, Xuan Wu District, Nanjing, Jiangsu Province 210042, The People’s Republic of China. By virtue of the shareholding position and directorship of Mr. Ren and his family members in NGM, Mr. Ren may be deemed to be a beneficial owner having power to direct the voting and disposition of the Ordinary Shares held by NGM.

 

 

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	As further described in Item 4 below, the Reporting Persons may be deemed to (i) be a “group” with Assure Ahead Investments Limited, a company incorporated under the laws of the British Virgin Islands and controlled by Hony Capital II, L.P., which directly holds 17,924,692 Ordinary Shares of the Issuer (“Assure”), for purposes of Section 13(d) of the Act as a result of entering into the Consortium Agreement (as defined in Item 4 below) and (ii) beneficially own the 17,924,692 Ordinary Shares directly held by Assure.  However, each Reporting Person expressly disclaims beneficial ownership of any Ordinary Shares of the Issuer directly held by Assure, and does not affirm membership in a “group” (within the meaning of Rule 13(d)5(b) of the Act) with Assure, and this Schedule 13D shall not be construed as acknowledging that any of the Reporting Persons beneficially owns any Ordinary Shares of the Issuer beneficially held by Assure or any other person or is a member of a group with Assure or any other person.  The Reporting Persons are only responsible for the information contained in this Schedule 13D and assume no responsibility for information contained in any other Schedules 13D filed by Assure.   The agreement between the Reporting Persons relating to the joint filing of this Schedule 13D is attached hereto as Exhibit 7.01.
(d) — (e)	During the five years preceding the date of this filing, none of the Reporting Persons has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
Item 3	Source and Amount of Funds or Other Consideration
	The information set forth in or incorporated by reference in Items 2, 4 and 5 of this statement is incorporated by reference in its entirety into this Item 3.   The Reporting Persons may be deemed to beneficially own the Ordinary Shares directly held by Assure by reason of the Consortium Agreement (as defined in Item 4 below).  No Ordinary Shares were purchased by the Reporting Persons and thus no funds were used by any of the Reporting Persons for such purpose.
Item 4	Purpose of Transaction
	The Ordinary Shares currently owned by Mr. Ren and NGM were acquired for investment purposes.   On March 11, 2013, Mr. Ren, NGM and Assure entered into a consortium agreement (the “Consortium Agreement”), a copy of which is attached hereto as Exhibit 7.02.  Under the Consortium Agreement, Mr. Ren, NGM and Assure agreed, among other things, to form a consortium (the “Consortium”) to (i) jointly deliver a non-binding proposal (the “Proposal Letter”) to the Issuer’s board of directors for the acquisition of all the Ordinary Shares (including the Ordinary Shares represented by American Depositary Receipts) not beneficially owned by the Consortium (the “Transaction”), (ii) deal exclusively with each other with respect to the Transaction for 12 months after the date thereof (except otherwise agreed therein), (iii) conduct a joint assessment of the Issuer as promptly as reasonably and share all information reasonably necessary to evaluate the Issuer, and (iv) use their reasonable best efforts to work together to structure, negotiate and do all things necessary or desirable, subject to the Issuer’s approval, to enter into the definitive agreements in respect of the Transaction.  In addition, Consortium have agreed not to (1) make a competing proposal for the acquisition of the Issuer, or (2) acquire or dispose of any Ordinary Shares of the Issuer.   On March 11, 2013, the Consortium, on behalf of itself, submitted the Proposal Letter to the Issuer’s board of directors, a copy of which is attached hereto as Exhibit 7.03. In the Proposal Letter, the Consortium proposed to acquire, through an acquisition vehicle to be established by the Consortium, all of the Ordinary Shares and American Depositary Shares (each representing two Ordinary Shares, “ADSs”) not already owned by the Consortium for US$4.78 per Ordinary Share or US$9.56 per ADS in cash. The Consortium also stated in the Proposal Letter that they are interested only in acquiring the Ordinary Shares not already owned by them or their affiliates, and that they do not intend to sell their stakes in the Issuer to a third party.

 

 

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	The Consortium intends to finance the transactions contemplated under the Proposal Letter through a combination of debt and equity capital.   If the Transaction is completed, the Issuer’s ADSs would become eligible for termination of registration pursuant to Section 12(g)(4) of the Act and would be delisted from the New York Stock Exchange.   The description of the Consortium Agreement and the Proposal set forth above in this Item 4 do not purport to be complete and are qualified in their entirety by reference to the full text of the Consortium Agreement and the Proposal Letter, which have been filed as Exhibits 7.02 and 7.03, respectively, and are incorporated herein by this reference.   None of the Issuer, any of the Reporting Persons or Assure is obligated to complete the transactions described herein, and a binding commitment with respect to the Transaction will result only from the execution of definitive documents, and then will be on the terms provided in such documentation.   Except as indicated above, none of the Reporting Persons currently have any plans or proposals that relate to or would result in any other action specified in Item 4 of this Schedule 13D. The Reporting Persons reserve their right to change their plans and intentions in connection with any of the actions discussed in this item 4, including, among others, the purchase price and the financing arrangement for the transactions contemplated under the Proposal Letter. Any action taken by the Reporting Persons may be effected at any time and from time to time, subject to any applicable limitations imposed by any applicable laws.
Item 5	Interest in Securities of the Issuer
	The information contained on each of the cover pages of this Schedule 13D and the information set forth or incorporated in Items 2, 3, 4, and 6 are hereby incorporated herein by reference.
(a) — (b)	Mr. Ren directly owns an aggregate of 6,665,988 restricted Ordinary Shares, which constitute approximately 6.0% of the outstanding Ordinary Shares of the Issuer.  Such restricted Ordinary Shares directly owned by Mr. Ren include (i) 2,665,988 restricted Ordinary Shares that are fully vested and were granted to him on May 7, 2009 in exchange for his then outstanding share options to acquire 5,500,000 Ordinary Shares under the Issuer’s 2006 Stock Incentive Plan and (ii) 4,000,000 restricted Ordinary Shares that were granted to him on September 11, 2012 and are currently issuable under the terms of 2006 Stock Incentive Plan Restricted Share Award Agreement between Mr. Ren and the Issuer (a copy of which has been filed as Exhibit 7.04 and is incorporated herein by this reference), subject to certain vesting schedules with respect to rights to dividends and transfers.   NGM directly owns an aggregate of 37,388,990 Ordinary Shares, which constitute approximately 33.4% of the outstanding Ordinary Shares of the Issuer.  Such Ordinary Shares directly owned by NGM include (i) 36,950,602 Ordinary Shares held of record and (ii) 438,388 Ordinary Shares represented by ADSs, and such Ordinary Shares were initially acquired by NGM through a series of reorganizations prior to the Issuer’s initial public offering in April 2007.   Pursuant to Rule 13d-3 of the Act, the Reporting Persons each may be deemed to beneficially own 44,054,978 Ordinary Shares of the Issuer as of March 11, 2013 by reason of their relationship as described in Item 2 and the Consortium Agreement, which constitute approximately 39.4% of the outstanding Ordinary Shares of the Issuer.   The above disclosure of percentage information is based on a total of 111,858,666 outstanding Ordinary Shares as of March 11, 2013, as provided by the Issuer, which include 10,437,340 restricted Ordinary Shares granted and currently issuable under the 2006 Stock Incentive Plan.
(c)	Except as set forth in Items 3 and 4 above, none of the Reporting Persons has effected any transactions in the Ordinary Share of the Company during the 60 days preceding the filing of this Schedule 13D.
(d) — (e)	Not applicable.

 

 

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Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.
	The information regarding the Consortium Agreement, the Proposal Letter and the 2006 Stock Incentive Plan Restricted Share Award Agreement under Items 3, 4 and 5 are incorporated herein by reference in their entirety.   On June 20, 2012, NGM entered into a Rule 10b5-1 Trading Plan (the “Sales Plan”) in reliance on Rule 144 under the Securities Act of 1933, as amended, and Rule 10b5-1 under the Act with a broker-dealer.  Under the Sales Plan, the broker-dealer may sell on behalf of NGM up to an aggregate number of ADSs specified in the Sales Plan subject to certain conditions and terms. As of the date hereof, 219,194 ADSs under the Sales Plan had not yet been sold.  Following entering into the Consortium Agreement and the submission of the Proposal Letter, NGM has notified the broker-dealer to suspend the Sales Plan in accordance with its terms.   To the best knowledge of the Reporting Persons, except as described above, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons and between any of the Reporting Persons and any other person with respect to any securities of the Issuer, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies, or a pledge or contingency, the occurrence of which would give another person voting power over the securities of the Issuer.
Item 7.	Material to be Filed as Exhibits.
Exhibit 7.01:	Joint Filing Agreement by and among the Reporting Persons, dated as of March 12, 2013.
Exhibit 7.02:	Consortium Agreement by and among New Good Management Limited, Jinsheng Ren and Assure Ahead Investments Limited, dated as of March 11, 2013.
Exhibit 7.03:	Proposal Letter from New Good Management Limited, Jinsheng Ren and Assure Ahead Investments Limited to the board of directors of the Issuer, dated as of March 11, 2013.
Exhibit 7.04:	2006 Stock Incentive Plan Restricted Share Award Agreement by the Issuer and Jinsheng Ren, dated as of September 11, 2012.

 

 

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SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

 

 

		Dated: March 12, 2013
		New Good Management Limited
		By:	/s/ Jinsheng Ren
			Name: Jinsheng Ren
			Title: Chairman
		Jinsheng Ren
		By:	/s/ Jinsheng Ren

 

Exhibit 7.01

 

Joint Filing Agreement

 

In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting Persons (as such term is defined in the Schedule 13D referred to below) on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Ordinary Shares, par value US$0.01 per share, of Simcere Pharmaceutical Group, a Cayman Island company, and that this Agreement may be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts all of which, taken together, shall constitute one and the same instrument.

 

Signature Page

 

IN WITNESS WHEREOF, the undersigned hereby execute this agreement as of March 12, 2013.

 

 

		New Good Management Limited
		By:	/s/ Jinsheng Ren
			Name: Jinsheng Ren
			Title: Chairman
		Jinsheng Ren
		By:	/s/ Jinsheng Ren

 

Exhibit 7.02

 

CONSORTIUM AGREEMENT

 

THIS CONSORTIUM AGREEMENT (this “Agreement”) is dated as of March 11, 2013 and is entered into by and among Jinsheng Ren (“Founder”), New Good Management Limited, a company incorporated under the laws of the British Virgin Islands (“NGM”) and an affiliate of Founder, and Assure Ahead Investments Limited, a company incorporated under the laws of the British Virgin Islands (“Assure”, together with Founder and NGM, the “Consortium Members” and each, a “Consortium Member”).

 

RECITALS

 

WHEREAS, the Consortium Members propose to undertake a transaction (the “Transaction”) to acquire Simcere Pharmaceutical Group (the “Company”), a company incorporated under the laws of the Cayman Islands and listed on the New York Stock Exchange (“NYSE”), which would result in a delisting of the Company from NYSE and deregistering the Company under the United States Securities Act of 1934, as amended (the “Exchange Act”);

 

WHEREAS, (a) in connection with the Transaction, the Consortium Members propose to form a new company (“Parent”) under the laws of the Cayman Islands, and to cause Parent to form a direct, wholly-owned subsidiary (“Merger Sub”) under the laws of the Cayman Islands, and (b) at the closing of the Transaction, the Consortium Members intend that Merger Sub will be merged with and into the Company, with the Company being the surviving company and becoming a direct, wholly-owned subsidiary of Parent;

 

WHEREAS, on the date hereof, the Consortium Members will submit a non-binding proposal, a copy of which is attached hereto as Schedule I (the “Proposal Letter”), to the board of directors of the Company (the “Company Board”) in connection with the Transaction; and

 

WHEREAS, in accordance with the terms of this Agreement, the Consortium Members will cooperate and participate in: (a) the evaluation of the Company, including conducting due diligence of the Company and its business; (b) discussions regarding the Proposal Letter with the Company; and (c) the negotiation of the terms of definitive documentation in connection with the Transaction (in which negotiations the Consortium Members expect that the Company will be represented by a special committee of independent and disinterested directors of the Company Board), including an agreement and plan of merger among Parent, Merger Sub and the Company in form and substance to be agreed by the Consortium Members (the “Merger Agreement”), which shall be subject to the approval of the shareholders of the Company and any financing documents in connection with the Transaction.

 

1

 

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual agreements and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Consortium Members agree as follows:

 

1.             Certain Definitions.

 

“Agreement” shall have the meaning in the preamble.

 

“Assure” shall have the meaning in the preamble.

 

“Cleary” shall have the meaning in Section 5(a).

 

“Company” shall have the meaning in the recitals.

 

“Company Board” shall have the meaning in the recitals.

 

“Competing Transaction” shall mean (i) any direct or indirect acquisition by any person or entity of any securities representing a controlling equity interest in the Company or all or substantially all of its assets or (ii) a recapitalization, restructuring, merger, consolidation or other business combination involving a change in control of the Company or any of its material subsidiaries, in either case other than the Transaction involving all of the Consortium Members.

 

“Consortium Advisors” shall have the meaning in Section 5(a).

 

“Consortium Members” shall have the meaning in the preamble.

 

“Definitive Agreements” shall have the meaning in Section 4(b).

 

“Exchange Act” shall have the meaning in the recitals.

 

“Exclusivity Period” shall mean the period beginning on the date hereof and ending on the date of termination of this Agreement pursuant to Section 17.

 

“Founder” shall have the meaning in the preamble.

 

“Merger Agreement” shall have the meaning in the recitals.

 

“Merger Sub” shall have the meaning in the recitals.

 

“NGM” shall have the meaning in the preamble.

 

“NYSE” shall have the meaning in the recitals.

 

“Parent” shall have the meaning in the recitals.

 

“Proposal Letter” shall have the meaning in the recitals.

 

 

“Representatives” shall mean, with respect to a person, such person’s employees, directors, officers, partners, members, affiliates, agents, advisors (including, but not limited to, legal counsel, accountants, consultants and financial advisors), and any representative of the foregoing. For the avoidance of doubt, (i) the Representatives of any Consortium Member shall include the advisors retained to represent solely such Consortium Member pursuant to Section 5(b) and (ii) the Representatives of Assure shall include the investors in Hony Capital II, L.P. and Hony Capital Fund V, L.P., funds affiliated with Assure.

 

“Rules” shall have the meaning in Section 10.

 

“Shareholder Shares” shall have the meaning in Section 2(b).

 

“Shares” shall mean the ordinary shares of the Company, with par value of US$ 0.01 each.

 

“Transaction” shall have the meaning in the recitals.

 

“Transfer” shall have the meaning in Section 3(b).

 

2.             Participation in Transaction.

 

(a).          The Consortium Members agree to participate in the Transaction on the terms of this Agreement.

 

(b).          In connection with the Transaction, each Consortium Member agrees to either (i) transfer, contribute and deliver the Shares beneficially owned (as determined pursuant to Rule 13d-3 under the Exchange Act) by such Consortium Member (“Shareholder Shares”) to Parent in exchange for equity of Parent or (ii) have the Shareholder Shares held by such Consortium Member cancelled in connection with the Transaction.

 

3.             Commitment to the Consortium.

 

(a).          Within the Exclusivity Period, and except for actions taken by Founder in his capacity as the Chairman of the Company Board or a Director of the Company, each Consortium Member will deal exclusively with each other with respect to the Transaction and will not, and will cause his or its Representatives acting in such capacity not to, without the written consent of the other Consortium Members: (i) directly or indirectly initiate, solicit, encourage or otherwise engage in discussions or negotiations with the Company or any third party with respect to a Competing Transaction; (ii) provide any information to any third party with a view to the third party pursuing a Competing Transaction; or (iii) enter into any written or oral agreement, arrangement or understanding (whether legally binding or not) regarding, or do anything which is directly inconsistent with, or omit to do anything, which omission is directly inconsistent with, the Transaction involving all of the Consortium Members as contemplated under this Agreement.

 

(b).          Within the Exclusivity Period, each Consortium Member will not, and will not permit his or its Representatives to, directly or indirectly: (i) sell, offer to sell, give, pledge, encumber, assign, grant any option for the sale of or otherwise transfer or dispose of, or enter into any agreement, arrangement or understanding to sell, any Shareholder Shares (in each instance a “Transfer”), or enter into any contract, option or other arrangement or

 

 

understanding with respect to a Transfer or limitation on voting rights of the Shareholder Shares or any right, title or interest thereto or therein except as contemplated under this Agreement and the Definitive Agreements; (ii) deposit any Shareholder Shares into a voting trust or grant any proxy or enter into a voting agreement, power of attorney or voting trust with respect to any Shareholder Shares; (iii) finance or offer to finance any Competing Transaction, including by offering any equity or debt finance in support of any Competing Transaction; (iv) take any action that would have the effect of preventing, disabling or delaying any Consortium Member or his or its affiliate from performing his or its obligations under this Agreement; or (v) agree (whether or not in writing) to take any of the actions referred to in the foregoing clauses (i), (ii), (iii) or (iv) of this Section 3(b). Notwithstanding the foregoing, Founder may make a Transfer to his spouse, siblings, parents, lineal descendants or antecedents or the estates of or trusts for the benefit of Founder or his spouse, siblings, parents or lineal descendants or antecedents, and each of NGM and Assure may make a Transfer to its affiliates; provided, however, that in all cases, any such Transfer shall not relieve the transferor of his or its obligations hereunder, and the transferee or other recipient executes a counterpart copy of this Agreement and becomes bound thereby as is the transferor.

 

(c).          Each Consortium Member shall immediately cease and terminate any existing activities, discussions and negotiations in connection with any Competing Transaction and shall notify the other Consortium Members immediately if such Consortium Member or any of his or its Representatives receives any approach or communication with respect to any Competing Transaction and shall disclose to the other Consortium Members the identity of any other persons involved and the nature and content of the approach or communication.

 

(d).          Each Consortium Member shall vote or cause to be voted all of the Shareholder Shares held by such Consortium Member (i) in favor of the adoption of the Merger Agreement and the Transaction and (ii) against any Competing Transaction at any shareholders meeting of the Company.

 

4.             Process.

 

(a).          Upon signing of this Agreement, the Consortium Members shall immediately deliver the Proposal Letter to the Company Board.

 

(b).          Within the term of this Agreement and as permitted by the Company Board, the Consortium Members shall as promptly as reasonably practicable conduct a joint assessment of the Company, shall share all information reasonably necessary to evaluate the Company, and shall in good faith and with mutual cooperation use their reasonable best efforts to work together to structure, negotiate and do all things necessary or desirable, subject to the Company’s approval, to enter into the Merger Agreement, financing documents and other ancillary documents in connection with the Transaction (the “Definitive Agreements”). The Consortium Members and their respective Representatives shall coordinate with each other in performing due diligence, securing financing, and structuring and negotiating the Transaction, including establishing appropriate vehicles for the purpose of the Transaction; provided, however, that in no event will any Consortium Member be obligated without his or its consent to enter into or otherwise be a party to any Definitive Agreements.

 

 

5.             Appointment of Advisors.

 

(a).          The Consortium Members agree that Cleary Gottlieb Steen & Hamilton LLP (“Cleary”) shall be engaged as U.S. legal counsel to provide U.S. legal services to the Consortium Members in relation to the Transaction.  The Consortium Members may jointly select additional advisors (such advisors, together with “Cleary”, the “Consortium Advisors”) and shall (i) agree to the scope and engagement terms of the Consortium Advisors prior to their engagement; and (ii) engage all Consortium Advisors on terms that provide for work undertaken and reports prepared to be for the benefit of (A) the Consortium Members and (B) any vehicle established by the Consortium Members for the purposes of the Transaction (including Parent).

 

(b).          If a Consortium Member requires separate representation in connection with specific issues arising out of the Transaction or other matters contemplated by the Definitive Agreements, it may retain other advisors to advise them. Each Consortium Member which engages separate Advisors will be solely responsible for the fees and expenses of any such advisors.

 

6.             Confidentiality.  Each Consortium Member shall, and shall procure his or its Representatives to, keep this Agreement and the Transaction confidential and shall not make any public statement or announcement concerning or disclose to any third party the fact that discussions or negotiations are taking place concerning the Transaction or any of the terms, conditions or other facts with respect thereto, including the status thereof, other than as mutually agreed in writing by the Consortium Members or as required by applicable laws, rules or regulations. Each Consortium Member shall coordinate in good faith all press releases and regulatory filings (including any Schedule 13D filings to disclose his or its participation in the Transaction) and other public relation matters relating to the Transaction. Notwithstanding the foregoing, Assure may disclose this Agreement or the status of negotiations between the Consortium Members with respect to the Transaction to any investors in Hony Capital II, L.P. and Hony Capital Fund V, L.P., funds affiliated with Assure.

 

7.             Certain Fees and Expenses.

 

(a).          If the Transaction is not consummated, and the failure for the Transaction to be consummated is not due to the breach of this Agreement by any Consortium Member, the Consortium Members agree that: Mr. Ren and NGM, on the one hand, and Assure, on the other hand, shall share, on an equal basis, all fees and out-of-pocket expenses (i) payable in connection with the Transaction to the Consortium Advisors or any lender or other financing sources or (ii) incurred in the defense, pursuit or settlement of any disputes or litigation relating to the Transaction; provided, however, that each Consortium Member shall bear fees and out-of-pocket expenses payable by him or it to any advisor retained by him or it in connection with the Transaction.

 

(b).          If the Transaction is not consummated due to the unilateral breach of this Agreement of one or more Consortium Members, the Consortium Members in breach shall be responsible for all fees and out-of-pocket expenses related to the Transaction (other than fees and costs incurred by a Consortium Member requiring separate representation as contemplated by Section 5(b)).

 

 

(c).          Subject to Section 7(e) herein, upon consummation of the Transaction, Parent shall reimburse each Consortium Member for all fees and out-of-pocket expenses incurred by him or it in connection with the Transaction (other than fees and costs incurred by a Consortium Member requiring separate representation as contemplated by Section 5(b)); provided, however, that such reimbursable expenses of each Consortium Member other than Founder incurred prior to the execution of this Agreement shall be limited to those approved in writing by Founder prior to the date hereof.

 

(d).          Mr. Ren and NGM, on the one hand, and Assure, on the other hand, shall share, on an equal basis, any termination, break-up or other fees or amounts (including amounts paid in settlement of any disputes or litigation relating to the Transaction) payable by the Consortium Members in accordance with their agreed equity beneficial ownership in Parent.

 

(e).          This Section 7 shall survive the termination of this Agreement.

 

8.             Warranties.  Each Consortium Member represents and warrants in respect of himself or itself to each other Consortium Member, as an inducement to that Consortium Member to enter into this Agreement, that (a) he or it has full power and authority to execute, and perform his or its obligations under, this Agreement and to proceed with the Transaction; (b) the execution, delivery and performance of this Agreement has been properly authorized by all required corporate action of such Consortium Member; (c) the execution, delivery and performance of this Agreement will not violate, to the extent applicable, the provisions of the charter or bylaws, memorandum or articles of association or other constituent document of such Consortium Member or conflict with or constitute a breach of or default under any agreement to which a Consortium Member or by which or any of his or its assets or property is bound; (d) this Agreement constitutes a valid and binding obligation on him or it in accordance with its terms; and (e) he or it has made adequate arrangements to ensure that the required funds are available to effect payment in full for his or its share of the fees and expenses of the Transaction.

 

9.             Remedies. It is understood and agreed that money damages may not be a sufficient remedy for a breach of this Agreement by any Consortium Member and that each Consortium Member shall be entitled to seek equitable relief, including injunction and specific performance, as a remedy of any such breach by the other Consortium Members. Such remedies shall not be deemed to be the exclusive remedies for a breach by a Consortium Member but shall be in addition to all other remedies available at law or in equity to the other Consortium Members. Each Consortium Member further agrees not to raise as a defense or objection to the request or granting of such relief that any breach of this Agreement is or would be compensable by an award of money damages, and each Consortium Member agrees to waive any requirements for the securing or posting of any bond in connection with such remedy.

 

 

10.          Governing Law; Arbitration. This letter agreement and all matters arising out of or relating to this letter agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to conflict of laws principles. Any dispute, controversy or claim arising out of or relating to this letter agreement, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in Hong Kong under the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “Rules”) in force when the notice of arbitration is submitted in accordance with these Rules. There shall be three arbitrators, one to be appointed by the claimant, one to be appointed by the respondent and the third to be appointed by the secretary general of the Hong Kong International Arbitration Centre. The arbitration proceedings shall be conducted in English.

 

11.          No Modification. No provision in this Agreement can be waived, modified or amended except by written consent of the Consortium Members, which consent shall specifically refer to the provision to be waived, modified or amended and shall explicitly make such waiver, modification or amendment.

 

12.          No Waiver or Rights. It is understood and agreed that no failure or delay by any Consortium Member in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

 

13.          Counterparts; Entire Agreement. This Agreement may be signed and delivered by facsimile or portable document format via electronic mail and in one or more counterparts, each of which shall be deemed an original but all of which shall be deemed to constitute a single instrument. This Agreement sets forth the entire agreement and understanding among the Consortium Members and supersedes all prior agreements, discussions or documents relating thereto. No Consortium Member shall be entitled to punitive, exemplary, special, unforeseen, incidental, indirect or other consequential damages.

 

14.          Severability. If any provision of this Agreement is found to violate any statute, regulation, rule, order or decree of any governmental authority, court, agency or exchange, such invalidity shall not be deemed to affect any other provision hereof or the validity of the remainder of this Agreement, and such invalid provision shall be deemed deleted herefrom to the minimum extent necessary to cure such violation.

 

15.          Successors. This Agreement shall inure to the benefit of, and be binding upon, the Consortium Members and their respective successors and assigns. No Consortium Member may assign or transfer, directly or indirectly, his or its rights or obligations hereunder without the prior written consent of the other Consortium Members except as provided herein. No assignment will relieve the assignor of his or its obligations hereunder.

 

16.          No Third Consortium Member Beneficiaries. Unless otherwise specifically provided herein, each Consortium Member agrees and acknowledges that nothing herein expressed or implied is intended to confer upon or give any rights or remedies to persons who are not a party to this Agreement under or by reason of this Agreement.

 

 

17.          Term. This Agreement shall terminate upon the earlier of: (i) the mutual written agreement by the Consortium Members; (ii) the execution and delivery of the Definitive Agreements; and (iii) by any Consortium Member after the date 12 months after the date hereof; provided, that in case of the foregoing clause (iii), the right to terminate this Agreement under this Section 17 shall not be available to any Consortium Member whose breach of any of his or its obligations under this Agreement results in, or has been a material cause of, the failure of the execution of the Definitive Agreements prior to such date.

 

 

IN WITNESS WHEREOF, the Consortium Members have caused this Agreement to be executed and delivered as of the date first written above.

 

 

		Jinsheng Ren
		By:	/s/ Jinsheng Ren
			Name: Jinsheng Ren
		New Good Management Limited
		By:	/s/ Jinsheng Ren
			Name: Jinsheng Ren
			Title: Director
		Assure Ahead Investments Limited
		By:	/s/ John Huan Zhao
			Name: John Huan Zhao
			Title: Authorized Signatory

 

Consortium Agreement

Signature Page

 

 

Schedule I

 

Exhibit 7.03

 

The Board of Directors

Simcere Pharmaceutical Group

No. 699-18 Xuan Wu Avenue

Xuan Wu District, Nanjing

Jiangsu Province 210042

People’s Republic of China

 

March 11, 2013

 

Dear Sirs:

 

Jinsheng Ren (“Mr. Ren”), New Good Management Limited (“NGM”), an investment vehicle controlled by Mr. Ren, and Assure Ahead Investments Limited, an investment vehicle controlled by Hony Capital, and its affiliates (together with Mr. Ren and NGM, the “Buyer Parties”) are pleased to submit this preliminary non-binding proposal to acquire all outstanding ordinary shares (the “Shares”) and the American Depositary Shares (“ADSs”, each representing two Shares) of Simcere Pharmaceutical Group (the “Company”), in both cases, that are not beneficially owned by the Buyer Parties (the “Acquisition”).

 

We believe that our proposal of US$4.78 per Share and US$9.56 per ADS in cash will provide an attractive opportunity to the Company’s shareholders. This price represents a premium of approximately 20.1% to the Company’s closing price on March 8, 2013 and a premium of approximately 21.9% to the volume-weighted average price during the last 30 trading days.

 

The terms and conditions upon which we are prepared to pursue the Acquisition are set forth below. We are confident in our ability to consummate an Acquisition as outlined in this letter.

 

1.     Buyer.  The Buyer Parties have entered into an agreement dated March 11, 2013 (the “Consortium Agreement”), pursuant to which the Buyer Parties will form an acquisition vehicle for the purpose of pursuing the Acquisition (“Acquisition Vehicle”), and the Buyer Parties will work with each other on an exclusive basis in pursuing the Acquisition during the term of the Consortium Agreement.

 

2.     Purchase Price.  The Buyer Parties are prepared to pay for the Shares and ADSs acquired in the Acquisition at a price of US$4.78 per Share and US$9.56 per ADS, as the case may be, in cash.

 

3.     Financing.  We intend to finance the Acquisition with a combination of debt and equity capital.  We are confident that we will secure adequate financing to consummate the Acquisition.

 

4.     Due Diligence.  Parties providing financing will require a timely opportunity to conduct customary due diligence on the Company.

 

5.     Definitive Agreements.  We are prepared to negotiate and finalize definitive agreements (the “Definitive Agreements”) providing for the Acquisition and related transactions

 

 

promptly.  This proposal is subject to execution of the Definitive Agreements.  These documents will include provisions typical for transactions of this type.

 

6.     Confidentiality.  We are sure you will agree with us that it is in all of our interests to ensure that we proceed in a confidential manner, unless otherwise required by law, until we have executed the Definitive Agreements or terminated our discussions.  Please note that in order to comply with the United States securities laws requirements, the Buyer Parties will promptly disclose this proposal, as well as a copy of this proposal letter, in filings with the Securities and Exchange Commission on Schedule 13D.

 

7.     Process.  We believe that the Acquisition will provide superior value to the Company’s shareholders.  We recognize of course that the Company’s Board of Directors will, through a committee of independent directors, evaluate the proposed Acquisition before it can make its determination whether to endorse it.  In considering the proposed Acquisition, you should be aware that we are interested only in acquiring the outstanding shares that the Buyer Parties and their affiliates do not already own, and that the Buyer Parties and their affiliates do not intend to sell their stake in the Company to a third party.

 

8.     Advisors.  The Buyer Parties have retained Cleary Gottlieb Steen & Hamilton LLP as U.S. legal counsel in connection with the Acquisition.

 

9.     No Binding Commitment.  This letter constitutes only a preliminary indication of our interest, and does not constitute any binding commitment with respect to an Acquisition.  Such a commitment will result only from the execution of Definitive Agreements, and then will be on the terms provided in such documentation.

 

In closing, each of us would like to personally express our commitment to working together to bring this Acquisition to a successful and timely conclusion.  Should you have any questions regarding this proposal, please do not hesitate to contact Mr. Bing Yuan at +86 10 8265 5888.  We look forward to speaking with you.

 

 

Sincerely,

 

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		Jinsheng Ren
		By:	/s/ Jinsheng Ren
			Name: Jinsheng Ren
		New Good Management Limited
		By:	/s/ Jinsheng Ren
			Name: Jinsheng Ren
			Title: Director
		Assure Ahead Investments Limited
		By:	/s/ John Huan Zhao
			Name: John Huan Zhao
			Title: Authorized Signatory

 

Proposal Letter

Signature Page

 

Exhibit 7.04

 

[ENGLISH TRANSLATION]

 

SIMCERE PHARMACEUTICAL GROUP
2006 STOCK INCENTIVE PLAN

 

RESTRICTED SHARE AWARD AGREEMENT

 

THIS AGREEMENT (the “Agreement”), is made effective as of the 11th day of September, 2012 (hereinafter called the “Date of Grant”), between Simcere Pharmaceutical Group, a corporation incorporated in the Cayman Islands (hereinafter called the “Company”), and Jinsheng Ren (hereinafter called the “Participant”):

 

R E C I T A L S:

 

WHEREAS, the Company has adopted the Simcere Pharmaceutical Group 2006 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

 

WHEREAS, the Compensation Committee of the Board of Directors (hereinafter the “Committee”) has determined that it would be in the best interests of the Company and its shareholders to grant the restricted stock award provided for herein (the “Restricted Share Award”) to the Participant pursuant to the Plan and the terms set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

 

1. Grant of the Restricted Shares. The Company hereby grants to the Participant a Restricted Share Award consisting of 4,000,000 shares of the Restricted Shares (hereinafter called the “Restricted Shares”), on the terms and conditions of the Plan and additional the terms and conditions hereinafter set forth.  The Restricted Shares shall be vested in accordance with Section 2 of this Agreement and become nonforfeitable. The Participant shall pay the par value of the Restricted Shares, which is $0.01 per share, no later than the sale of the Restricted Shares.

 

2. Vesting.

 

(a) Subject to the Participant’s continued Employment with the Company, the Restricted Shares shall vest with respect to twenty percent (20%) of the Shares initially covered by the Restricted Shares on each of the first, second, third, fourth and fifth anniversaries of the Date of Grant and become nonforfeitable. Notwithstanding the foregoing, if any of the foregoing arrangement results in vesting a fraction of share, such fraction of share shall not be considered vested under this Agreement and shall be vested when the fractions of shares become a whole number as well as nonforfeitable.

 

(b) If the Participant’s Employment with the Company is terminated for any reason, the Restricted Shares shall, to the extent not then vested, be canceled by the Company without consideration in normal circumstances; provided however, upon approval of the Board of Directors of the Company (the “Board”) , the Restricted Shares may be accelerately vested.

 

(c) Notwithstanding any other provisions of this Agreement to the contrary, the Restricted Shares shall, to the extent not then vested and not previously forfeited, become fully vested and exercisable immediately prior to a Change in Control.

 

3. Certificate. Certificates evidencing the Restricted Shares shall be issued by the Company and shall be registered in the Participant’s name on the stock transfer books of the Company promptly after the date hereof, but shall remain in the physical custody of the Company or its designee at all times prior to the vesting of such Restricted Shares pursuant to Section 2.  As a condition to the receipt of this Restricted Share Award, the Participant shall deliver to the Company a stock power, duly endorsed in blank, relating to the Restricted Shares. No certificates shall be issued for fractional Shares.  Notwithstanding anything to the contrary, the Company has the option to acknowledge the Restricted Shares via non-bookkeeping means.

 

 

4.  Rights as a Shareholder. The Participant shall be the record owner of the Restricted Shares until or unless such Restricted Shares are forfeited pursuant to Section 2 hereof, and as record owner shall be entitled to all rights of a common stockholder of the Company, including, without limitation, voting rights with respect to the Restricted Shares. Without limiting the generality of the foregoing, (i) no cash or in-kind dividends or other distributions shall be paid with respect to the Restricted Shares which have not previously vested, and (ii) the Restricted Shares shall be subject to the limitations on transfer and encumbrance set forth in Section 7 hereof. As soon as practicable following the vesting of any Restricted Shares pursuant to Section 2, certificates for the Restricted Shares which shall have vested shall be delivered to the Participant or to the Participant’s legal guardian or representative along with the stock powers relating thereto.

 

5. Legend on Certificates. The certificates representing the Shares purchased by exercise of the Restricted Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable U.S. federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

6. No Right to Continued Employment. The granting of the Restricted Shares evidenced by this Agreement shall impose no obligation on the Company or any Affiliate to continue the Employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Employment of such Participant.

 

7. Transferability. The Restricted Shares may not, at any time prior to becoming vested pursuant to Section 2, be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such permitted transfer of the Restricted Shares to heirs or legatees of the Participant shall be effective to bind the Company unless the Committee shall have been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof.

 

8. Withholding. The Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Restricted Shares, its exercise or any payment or transfer under or with respect to the Restricted Shares and to take such other action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes. Hereon, the Company specifically suggests the Participant advise its tax consultant with respect to tax matters regarding the vest of the Restricted Shares.

 

9. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the Restricted Shares, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.

 

10. Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

 

11. Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the state of New York.

 

12. Restricted Share Award Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Restricted Share Award and the Restricted Shares granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

2

 

13. Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

[Signatures on next page.]

 

 

		Simcere Pharmaceutical Group
		/s/ Haibo Qian
		By: Haibo Qian
		Its: Secretary to the Board of Directors
		Participant
		/s/ Jinsheng Ren
		Name: Jinsheng Ren

 

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