EXHIBIT 10.2
DATED the 13th day of January 2003
(1) IMMTECH INTERNATIONAL INC.
and
(2) XX. XXXX XXX XXXX
and
(3) LENTON FIBRE OPTICS DEVELOPMENT
LIMITED
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SHAREHOLDERS' AGREEMENT
RELATING TO
LENTON FIBRE OPTICS DEVELOPMENT
LIMITED
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Xxxx, Xxx and Xxxxx
Solicitors & Notaries
15th Floor, Hang Seng Xxxxxxxx
00 Xxx Xxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Tel: (000) 0000-0000
Fax: (000) 0000-0000
SHAREHOLDERS' AGREEMENT
THIS AGREEMENT, is made on the 13th day of January 2003,
BETWEEN:
(1) IMMTECH INTERNATIONAL INC., a company incorporated in Delaware with its
principal place of business at 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX
00000, Xxxxxx Xxxxxx of America ("IMMT"); and
(2) XX. XXXX XXX XXXX of Flat B, 16th Floor, 132 Broadway, Mei Foo Sun Chuen,
Kowloon, Hong Kong ("Chan"); and
(3) LENTON FIBRE OPTICS DEVELOPMENT LIMITED, a company incorporated in Hong Kong
under the Companies Ordinance with registered number 673085 whose registered
office is at 00xx Xxxxx, Xxxx Seng Building, 77 Des Voeux Road, Central, Hong
Kong (the "Company").
BACKGROUND
The parties wish the Company to be reorganised, financed, operated and managed
in the following manner.
OPERATIVE SECTION
FOR GOOD AND VALUABLE CONSIDERATION, the parties agree as follows:
The Company and Chan represent and warrant to IMMT:
Chan owns 12,074,000 Shares of the Company;
1. the "Business" of the Company, (i) since its inception, has been the
intermittent leasing of the Land to hold storage containers and (ii) is
now the development of the Land in the PRC for the construction and
operation of the Plant to manufacture pharmaceutical products by itself
and under license from IMMT and others;
2. in exchange for 1,200,000 shares of common stock of IMMT, US$0.01 par
value, the Company will deliver to IMMT 9,659,200 Shares representing 80%
of the issued and outstanding Shares; and
3. each knows of no reason that would prevent the construction of the Plant
on the Land.
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, the following expressions shall have the following
meanings unless the context requires otherwise:
"Agreement" means this shareholders' agreement and the attached Schedule A and
Schedule B;
"Annual Business Plan" means an annual plan describing the business which the
Company will undertake during the relevant fiscal year;
"Annual Company Budget" means an annual budget of Operating Costs and Capital
Costs contemplated under Article X;
"Asset Book Value" means the net book value of the Company's assets (after
deducting depreciation) less all of the Company's net book liabilities at the
relevant time, as determined by the auditors of the Company in accordance with
generally accepted accounting principles consistently applied, excluding any
appraisal increase credits, and for the purposes of determining depreciated net
book value under this definition, annual depreciation shall be charged, in
respect of such of the Company's assets as are depreciable under generally
accepted accounting principles, on a straight line basis and depreciation for a
period of less than twelve (12) months shall be prorated for such period;
"Board of Directors" means the board of directors of the Company which shall be
created with its members appointed pursuant to Clause 5.01;
"Capital Costs" means all costs, expenses, liabilities and charges (excluding
depreciation and amortisation) incurred or accrued by the Company in accordance
with this Agreement and which are properly chargeable as capital expenses of the
Company in accordance with generally accepted accounting principles;
"Chairperson" means the chairperson of the Company who shall be appointed
pursuant to Clause 5.05;
"Completion" means completion as stipulated under Clause 9.03;
"Confidential Information" means all knowledge or information and any data,
materials, drawings, specifications, documents or information obtained or used
in conjunction with any business or any contract, agreement or information
directly or indirectly connected with the Company or any Shareholder, including
but not limited to trade secrets, client lists, intellectual and industrial
property, drawings, financial information, specifications, analysis, feasibility
studies, information, data or knowledge and all other knowledge or information
whatsoever relating directly or indirectly to the Business of the Company or the
business of any Shareholder;
"Deed of Indemnity" means the deed of indemnity entered into on the date hereof
among IMMT, the Company and Chan in relation to the Company, as the same may be
amended, modified or supplemented from time to time;
"Defaulting Shareholder" means any Shareholder in default under Clause 12.01 and
which has failed to remedy such Default in accordance with this Agreement;
"Director" means a director of the Company;
"Events of Default" or "Default" means the occurrence of one of the events
described in Clause 12.01;
"General Manager" means the general manager of the Company who shall be
appointed pursuant to Clause 5.06;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative Region of the People's
Republic of China;
"Land" means the land particulars of which are set out in Schedule B;
"Memorandum and Articles of Association" means the Memorandum and Articles of
Association of the Company, a copy of which as at the date of this Agreement, is
attached as Schedule A;
"Non-Defaulting Shareholder" means any Shareholder which is not a Defaulting
Shareholder;
"Operating Costs" means all costs, expenses, liabilities and charges other than
Capital Costs incurred or accrued by the Company and which are properly
chargeable as operating expenses of the Company in accordance with generally
accepted accounting principles;
"Other Shareholder" means that Other Shareholder which is referred to and
described in Clause 9.02;
"Plant" means a "good manufacturing practice" facility (a facility designed to
ensure the quality of the pharmaceutical products produced and that products are
produced under sanitary conditions) capable of producing reasonable commercial
quantities of IMMT's products, built to the reasonable satisfaction of IMMT;
"Prime Rate" means rate of interest announced by The Hongkong and Shanghai
Banking Corporation Limited from time to time as the prime rate of annual
interest charged by it for demand loans in United States dollars;
"Prohibited Encumbrance" means any security, security interest, lien, charge,
privilege, mortgage, pledge or other encumbrance, the creation or existence of
which is prohibited under Clause 9.01;
"PRC" means the People's Republic of China;
"Shareholder" means any one of the Shareholders;
"Shareholders" means collectively IMMT and Chan;
"Share Purchase Agreement" means the agreement entered into on the date hereof
among IMMT, the Company and Chan in relation to the Company, as the same may be
amended, modified or supplemented from time to time; and
"Shares" means shares in the issued share capital of the Company as constituted
upon the formation of the Company and at any time thereafter;
"US$" means United States dollars.
1.02 References to "Clauses", "Articles", "Sections" and "Schedules" are
references to clauses, articles or sections in and schedules to this Agreement.
1.03 References to statutory provisions shall be construed as references to
those provisions as amended or re-enacted.
1.04 In this Agreement words importing the singular include the plural and words
importing gender include all genders and corporate entities.
1.05 References to persons include references to individuals, firms, companies,
corporations and unincorporated bodies or persons and vice versa.
1.06 All accounting matters under this Agreement shall be determined in
accordance with generally accepted accounting principles in Hong Kong and
accounting terms used herein and not otherwise defined shall have the meanings
given to them in accordance with such generally accepted accounting principles
in Hong Kong and any reference to generally accepted accounting principles shall
be deemed to be a reference to generally accepted accounting principles in Hong
Kong.
1.07 The headings in this Agreement do not affect its interpretation.
ARTICLE II
CONDITIONS PRECEDENT
2.01 This Agreement is conditional upon:
(a) the board of directors of IMMT having approved this Agreement and
the implementation thereof;
(b) the conditions, if any, stipulated in the Share Purchase Agreement
having become unconditional in all respects (save for the condition
relating to this Agreement becoming unconditional); and
(c) IMMT being satisfied with the preliminary feasibility studies
prepared by or as instructed by Chan over the Land on the
development of the Plant.
2.02 If the conditions set out in Clause 2.01 are not fulfilled or waived, as
applicable, for any reason whatsoever within 90 days from the date of this
Agreement (or such later date as IMMT shall determine), IMMT shall have the
right to terminate this Agreement and upon the exercise of such right, this
Agreement (save for Clause 7.01) shall be terminated and none of the parties to
this Agreement shall have any claim against the others save for any antecedent
breach.
ARTICLE III
COMPANY ORGANISATION
3.01 Memorandum and Articles of Association
The Company has been formed under the laws of Hong Kong and its Memorandum and
Articles of Association are in the form attached herein as Schedule A.
3.02 Share Capital
Upon execution of the Subscription Agreement and this Agreement by all relevant
parties:
(a) the Company has an authorized share capital of HK$12,500,000.00
divided into one (1) class of ordinary Shares of HK$1.00 each.
(b) the total registered and beneficial shareholdings of the Company
shall be as follows:
Percentage of
Party Shares Beneficial Interests
----- ------ --------------------
IMMT 9,659,199 80%
Stutterham Limited (as 1 0%
nominee of IMMT)
Chan 2,414,799 20%
Seconom Limited (as 1 0%
nominee of Chan)
3.03 Professional Advisers
The auditors of the Company as of the execution of this Agreement shall be Xxxxx
X.X. Xxxxxx & Co. and may be changed from time to time by the Board of
Directors. All other financial and other advisers shall be those parties who are
appointed and approved by the Board of Directors. The professional charges
incurred by the financial and legal advisers shall be approved by the Board of
Directors and shall be borne solely by the Company.
ARTICLE IV
OPERATIONS
4.01 Scope and Objective
The scope and objective of the Company shall be in accordance with the
Memorandum of the Company and the provisions of this Agreement. The primary
activity and purpose of the Company shall be to own and develop the Land for the
construction and operation of the Plant to manufacture pharmaceutical products
by itself and under license from IMMT and others.
4.02 The Company
The Company shall carry on its Business and operations in accordance with the
provisions of this Agreement and shall take no action contrary to any applicable
law or regulation.
4.03 Management of the Land
Chan shall be responsible for the management of the Land, whether by himself or
through his nominees, in accordance with the Business of the Company, including
the collection of income derived from or related to the Land and payment of
expenses related to or arising from the Land, all subject to the Board of
Directors oversight and Company's construction of the Plant.
4.04 Government Relations
Each of the parties to this Agreement acknowledges and agrees that in order to
exploit to the fullest extent possible the Business in which the Company is and
will be engaged, it is essential that each of the parties uses all reasonable
endeavours to maintain on their behalf, and on behalf of the Company, good
relationships with all relevant government authorities.
4.05 Formation of Subsidiary
The Company shall pursuant to the instruction IMMT (i) establish one or more
wholly-owned subsidiaries (one to be named Immtech Hong Kong Limited or such
other name as IMMT shall in its sole discretion determine) and (ii) transfer
title in the Land to Immtech Hong Kong Limited or such other wholly-owned
subsidiary of the Company as IMMT shall so determine, free from encumbrances.
Chan shall be responsible for ensuring that Immtech Hong Kong Limited and any
other wholly-owned subsidiary of the Company be duly registered by the relevant
PRC authorities and that the proper subsidiary be registered as the owner of the
land use right in respect of the Land (free and clear of encumbrances) within
three (3) months from IMMT's instruction.
The operation, board of directors and business of any such subsidiary to comply
in all respects with the requirements of this Agreement including but not
limited to composition, quorum, voting and other requirements imposed on the
Company's Board of Directors.
ARTICLE V
GENERAL MANAGEMENT
5.01 Composition of Board of Directors
The general overall control and management of the Company shall be vested with
the Board of Directors which shall at all times consist of five (5) Directors of
whom four (4) shall be the nominees of IMMT (one of whom shall initially be
Xxxxxxx Xxxx) and one (1) shall be the nominee of Chan. If and when any vacancy
occurs on the Board of Directors, it shall be filled at the commencement of
business at the next succeeding meeting of the Board of Directors by a nominee
of either IMMT or Chan as the case may be who is not then represented on the
Board of Directors according to the foregoing requirements.
5.02 Notice of Board of Directors' Meetings
Board of Directors' meetings may be called by any Director or the Chairperson,
which shall be held in Hong Kong at least once per year.
Unless otherwise agreed by all Directors, not less than seven (7) days' notice
in writing or by telephone of a Board of Directors' meeting must be given to
each Director, stating the date, time, place and agenda of the Board of
Directors' meeting and no business may be conducted at a Board of Directors'
meeting other than the business specified in the agenda unless all the Directors
are present and so agree.
5.03 Alternate Directors
Each Director shall be entitled to appoint in writing any other Director or any
other person to be his alternate. Each alternate shall have one vote for every
Director whom he represents in addition to any vote of his own.
5.04 Board of Directors' Meeting
All Board of Directors' meetings shall be conducted in accordance with the
provisions of the Memorandum and Articles of Association and applicable laws.
The quorum for the meetings of the Board of Directors shall be three (3),
provided that at least one (1) Director nominated to the Board of Directors by
IMMT shall be present. A quorum must be present at the beginning of and
throughout each meeting. If a quorum is not present within twenty (20) minutes
of the time appointed for a Board of Directors' meeting, that meeting shall
stand adjourned until the same time and place on the same day in the following
week and if at such adjourned meeting a quorum is not present within twenty (20)
minutes of the time appointed for such adjourned meeting (or such longer
interval as the Chairperson of the relevant Board of Directors' meeting may
think fit to allow) the Director or Directors present (whether in person or
represented by alternates) shall constitute a quorum. Questions arising at any
Board of Directors' meeting shall be decided by a simple majority of votes
except when a larger majority is required by the Articles of Association, any
agreement between the Shareholders or by the relevant legislation, provided,
however, no action of the Board of Directors shall be valid or authorized unless
at least one Director nominated by IMMT votes with the majority. In the case of
an equality of votes, the Chairperson shall have a casting vote. Directors may
participate in a Board of Directors' meeting by means of a conference telephone
or similar communication equipment whereby all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person or by proxy or representative.
5.05 Chairperson
The Chairperson of the Company shall be nominated by IMMT. The Chairperson shall
preside as Chairperson for Board of Directors' meetings and Shareholders'
meetings and shall, in the event of a deadlock in the voting at such meetings,
be entitled to a casting vote.
5.06 General Manager
The General Manager of the Company shall be that person who is appointed to such
position from time to time by the Board of Directors.
5.07 General Manager's Responsibilities
The General Manager shall, in accordance with the Annual Business Plan and the
Board of Directors' direction and policy, be responsible for:
(a) ensuring that a draft of the Annual Company Budget and Annual
Business Plan for the next fiscal year are prepared for and
presented to the Board of Directors at least forty-five (45) days
prior to the end of the Company's fiscal year;
(b) ensuring that monthly management and financial reports are prepared
for and presented to the Board of Directors within fifteen (15) days
after the conclusion of each month;
(c) managing and supervising the Company's day to day activities;
(d) organising and managing the Company's marketing efforts;
(e) liaising with all regulatory authorities in regard to the operation
of the Company;
(f) providing feedback and information to all the Shareholders in
respect of the appropriateness of the Annual Business Plan; and
(g) monitoring and reporting to the Board of Directors the effectiveness
of the Company's strategy in achieving its objectives.
5.08 Approval of Certain Activities
The following matters shall only be undertaken by the Company with the prior
approval of such number of Shareholders holding not less than seventy-five (75)
per cent. of the Shares, measured in nominal value:
(a) amendments to the Memorandum or Articles of Association;
(b) any proceedings relating to the dissolution or winding-up of the
Company;
(c) any matters relating to the amalgamation, consolidation or merger by
or with another company;
(d) any proposed change in the authorized or issued share capital of the
Company or any subsidiary or in any of the rights or restrictions
attaching at the date hereof to any Shares or class of Shares of the
Company or any subsidiary or any proposal concerning options,
warrants or other rights to subscribe for Shares of the Company or
any subsidiary or in any manner vary the share capital of the
Company;
(e) the Company entering into any contract, agreement or arrangement
with any Director, Shareholder or other officer of the Company or
any person directly or indirectly connected with any such parties or
any independent consultants retained by the Company;
(f) the disposal, sale or transfer of a substantial part of the Business
or fixed or intangible assets of the Company other than in the
normal course of business;
(g) any expenditure by the Company in excess of six thousand United
States dollars (US$6,000.00);
(h) acquisition of capital assets or fixed assets, other than in the
Company's normal course of business (which does not include the
acquisition of stock) in excess of twenty thousand United States
dollars (US$20,000.00);
(i) the establishment and creation for employees of the Company of a
profit-sharing, bonus or equity option or retirement or similar
welfare scheme;
(j) the guaranteeing of the obligations of, or the making of a loan,
gift surety or security by the Company to any corporation,
partnership, joint venture or personal entity; or
(k) the change of auditors of the Company.
5.09 Approval of Material Contracts
The Company shall not, without first obtaining the approval of the Board of
Directors, enter into or incur any contractual commitment or obligation having a
financial liability in excess of six thousand United States dollars
(US$6,000.00) (or its equivalent in any other currency) in aggregate, or enter
into any contractual commitment or obligation when the extent of the financial
liability cannot be determined at the time of entering into such commitment or
obligation unless such contractual commitment or obligation is approved in the
Annual Business Plan.
5.10 Shareholders' Meetings
A Director may, at any time, summon a Shareholders' meeting of the Company by
giving the requisite notice as required under the relevant legislation to each
Shareholder. The proceedings of Shareholders' meetings shall be governed by the
provisions of the Memorandum and Articles of Association. The quorum for
Shareholders' meetings shall be not less than two (2) persons representing not
less than fifty (50%) per cent. of the issued share capital of the Company
(whether present in person or by proxy or representative) as further described
in the Company's Memorandum and Articles of Association. A quorum must be
present at the beginning of and throughout each meeting. If, within twenty (20)
minutes of the time appointed for a meeting, a quorum is not present, the
meeting shall stand adjourned until the same time and place on the same day in
the following week and if at such adjourned meeting a quorum is not present
within twenty (20) minutes from the time appointed for such adjourned meeting
(or such longer interval as the Chairperson of the meeting may think fit to
allow) the Shareholder or Shareholders present (whether in person or by proxy
representative) shall constitute a quorum. The Chairperson shall preside as
Chairperson at every Shareholders' meeting. Questions arising at any
Shareholders meeting shall be decided by a simple majority of votes except where
a greater majority is required by the Articles of Association, any agreement
between the Shareholders or by any relevant legislation, and in the case of an
equality of votes, the Chairperson shall have a casting vote. Shareholders may
participate in a Shareholders' meeting by means of a conference telephone or
similar communications equipment whereby all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person or by proxy or representative. Any action required or permitted to be
taken by the Shareholders under this Agreement may be taken by the Shareholders
without a meeting, without prior notice and without a vote, if authorized by the
written consent of the Shareholders having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting.
Copies of all actions taken by written consent shall be filed with the records
of the Company.
5.11 Exercise of Voting Rights
Each Shareholder undertakes with the other Shareholders to:
(a) exercise all voting rights and powers of control available to it in
relation to the Company so as to give full effect to the terms and
conditions of this Agreement including, where appropriate, the
carrying into effect of such terms as if they were embodied in the
Memorandum and Articles of Association;
(b) insure that the Directors nominated by it and its other
representatives will support and implement all reasonable proposals
put forward at Board of Directors and other meetings of the Company
for the proper development and conduct of the Business and purpose
of the Company as contemplated in this Agreement; and
(c) generally to use its best efforts to promote the Business, purpose
and interests of the Company.
5.12 No Exclusive Duty to Company
The Directors and Shareholders may have business interests and engage in
activities in addition to those relating to the Company. Neither the Company nor
any Shareholder shall have any right pursuant to this Agreement to share in or
participate in such other business interests or activities or to the income or
proceeds derived therefrom. No Director or Shareholder shall incur liability to
the Company or any other Shareholder as a result of engaging in any other
business interests or activities.
5.13 Limitations on Liability
The General Manager, Directors and any officers, employees, consultants or
agents of the Company shall not be liable to the Company or the Shareholders for
damages for any breach of duty to the Company or the Shareholders unless a
judgement for which no appeal has or can be taken finds that his or her acts or
omissions were in bad faith or involved intentional misconduct.
5.14 Indemnification
The General Manager, Directors and any officers, employees, consultants or
agents of the Company shall be indemnified and held harmless by the Company from
and against any claims and demands arising from any acts or omissions or alleged
acts or omissions in connection with the affairs of the Company except to the
extent they are found by a judgement from which no appeal has or can be taken to
have acted in bad faith or with intentional misconduct. The Company may advance
to any of such persons against whom any such claim or demand is made, quarterly
against invoice, the cost of defending against the same, upon receipt from such
person giving the invoice, his or her undertaking or reimburse the Company the
amount of such advance if such a judgement is entered.
5.15 No Liability of the Shareholders
All debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Shareholder shall be obliged personally for
any such debt, obligation or liability solely by reason of being a Shareholder.
5.16 Power to Bind the Company
No Shareholder, solely by reason of being a Shareholder, shall have any
authority to bind the Company except pursuant to authority conferred by the
Board of Directors or the General Manager in writing.
ARTICLE VI
FINANCIAL MATTERS
6.01 Equity Investment
No Shares (other than as stipulated in Clause 3.02) shall be issued without the
prior written approval of the Board of Directors.
6.02 Debt Investment
The Shareholders shall, if decided by all of the Directors, be obliged to make
loans to the Company or to guarantee any indebtedness or other obligations of
the Company in accordance with their proportionate equity interests in the
Company. The amount of the Shareholders' loans and the terms of the
Shareholders' loans shall also be decided by all of the Directors.
6.03 Dividends
Subject to the discretion of the Board of Directors, net after tax profit of the
Company, less the amount required to provide the Company with sufficient
reserves for reasonable operating and capital expenses, shall be paid and
distributed to the Shareholders.
6.04 Tax Returns
The General Manager shall cause to be prepared and filed, at the expense of the
Company, all necessary income tax returns for the Company and all tax reports to
Shareholders required to be prepared under the laws applicable to each
Shareholder. Each Shareholder shall furnish to the Company all information
necessary to enable the Company's income tax returns to be properly prepared and
filed.
ARTICLE VII
RESTRICTIONS
7.01 Non-Disclosure
No party to this Agreement shall, except with approval of the Board of
Directors, either during the term of this Agreement or thereafter, except in the
proper course of performing its obligations and duties for or on behalf of the
Company, divulge to any person or party whatsoever, and shall use its best
endeavours to prevent the unauthorized publication or disclosure of any
Confidential Information whatsoever concerning the Business or any dealings,
transactions or affairs of the Company or any Shareholder which come to such
party's knowledge during the subsistence of this Agreement or in the course of
fulfilling its obligations to either the Company or any other party hereto. The
obligations of this Clause shall not apply to any information which (i) was in
the public domain at the time of disclosure or use (ii) entered the public
domain through no action of the Shareholder or (iii) is disclosed in response to
a valid order by a court or governmental body; provided, however, that the
Shareholder shall provide the Company with written notice of any process seeking
such an order timely to enable the Company to seek a protective order or
otherwise prevent disclosure or use.
7.02 Non-Competition
The business of IMMT is the development, manufacturing and commercialisation of
pharmaceutical products using IMMT technology. The business of Chan is the
development of real estate in Hong Kong and PRC. No party shall, except with the
consent in writing of the Company or the other Shareholder (as applicable),
during the continuance of this Agreement and for a period of six (6) months
after ceasing to be a Shareholder in the Company, either alone or in partnership
with any other person, firm or corporation, as principal, agent, shareholder or
in any other manner, carry on or be engaged or concerned with or interested in,
any business, operation or enterprise whatsoever which is directly competitive
with the Business of the Company or the business of another Shareholder.
7.03 Legend on Share Certificates
Each certificate for a Share issued by the Company shall have the following
legend imposed thereon:
"The shares represented by this certificate are subject to the terms of a
Shareholders' Agreement dated the 13th day of January 2003 made between Immtech
International Inc., Xx. Xxxx Xxx Xxxx and Xxxxxx Fibre Optics Development
Limited, and may only be transferred in accordance with the provisions therein."
7.04 Beneficial Ownership
Each Shareholder represents, warrants and undertakes with and to the other
Shareholders that such Shareholder shall, so long as this Agreement remains in
force, be the sole beneficial Shareholder of all the Shares which are registered
in such Shareholder's name and shall not, without full disclosure to and written
consent from the other Shareholder execute or enter into any type of trust for
any other party. Without limiting the generality of the foregoing, any such
trust agreement or relationship shall be invalid for all purposes whatsoever
unless it strictly complies with this Clause 7.04. No other party may hold any
of the Shares which are beneficially owned by a Shareholder unless the identity
of such party has been disclosed to the other Shareholder and such other
Shareholder agrees to the third party holding Shares in trust for such
Shareholder.
7.05 Restriction on Transfer of Shares in Shareholders
The beneficial shareholdings of the Shareholders in the Company shall not be
transferred without the prior approval of the Board of Directors of the Company
and any breach of this Clause 7.05 shall be construed as a breach of this
Agreement by the respective Shareholder, provided that this Clause shall not
apply to shareholdings in a Shareholder which are transmitted to heirs of the
Shareholder upon his or her death so long as such persons agree to be bound by
the terms of this Agreement.
ARTICLE VIII
REPORTS, RECORDS AND INSPECTION OF PROPERTY
8.01 Access to Records
(a) Shareholders
The Chairperson and the General Manager shall permit each Shareholder, its
auditors and other representatives to examine and make copies at the
Shareholder's own expense and at all reasonable times of any and all documents
under the control of the Chairperson, the General Manager or the Company which
relate to any of the assets of the Company or anything to be done or purported
to be done under this Agreement or under any other agreement.
(b) Others
Subject to Board of Directors' approval, the Chairperson and the General Manager
shall, at the request of a Shareholder, allow any financial institution
(including any accountants or other experts designated by the Shareholder) to
which such Shareholder is or expects to become indebted in connection with the
Company or any potential purchaser of the Shareholder's Shares in the Company
(the "Record Inquirer"), to examine at any reasonable time all books and records
maintained by the Chairperson or the General Manager relating to the Company or
this Agreement or to discuss any matter relating thereto with the Chairperson
and the General Manager or to obtain from them such information as they may
reasonably request in connection therewith provided that in each case the Record
Inquirer has given to the Chairperson or the General Manager a written
undertaking of confidentiality satisfactory to the Board of Directors.
8.02 Inspection of Property
The Chairperson and the General Manager shall, at the request of a Shareholder,
permit each Shareholder and any other person or entity which is stated by a
Shareholder to have a legitimate interest over that Shareholder's Shares (such
as an insurer or a prospective lender or prospective purchaser) (the "Property
Inquirer") and which has given to the Chairperson or General Manager a written
undertaking of confidentiality satisfactory to the Board of Directors, to
inspect at any reasonable time and at the risk and expense of such Shareholder
and person any property of the Company, and to consult with the Chairperson, the
General Manager or any independent contractor or employees which may have been
engaged by the Company, provided that in each case that relevant Shareholder or
the Property Inquirer has given to the Chairperson or the General Manager a
written undertaking of confidentiality satisfactory to the Board of Directors.
8.03 Periodic Reports
(a) Chan shall, in every six (6) months after the calendar month in
which this Agreement is entered into, prepare a development plan for
the Land (the "Development Plan"). Chan shall deliver such
Development Plans to IMMT as promptly as possible after its
preparation which shall not in any event exceeds the 15th day of the
month which such Development Plan is required to be delivered
pursuant to this Agreement.
(b) Each Shareholder shall be entitled to receive, as promptly as
practicable after their preparation, copies of all reports prepared
at the request of the Board of Directors in connection with all
matters relating to anything done under this Agreement. All costs
and expenses relating to the preparation and distribution of such
reports shall be for the account of the Company. Any Shareholder may
require the Chairperson to prepare and furnish to it, at such
Shareholder's expense, such financial reports and data concerning
any aspect of the operation or maintenance of any property of the
Company as such Shareholder may reasonably request.
ARTICLE IX
TRANSFER OF SHARES
9.01 Restriction on Transfer
No Shareholder shall directly or indirectly transfer, mortgage, pledge or
otherwise dispose of or encumber or grant a security interest, lien, charge,
privilege or similar right in or on any of the Shares except with the prior
written approval of the Board of Directors.
9.02 Associated Companies
The parties hereto agree that a transfer of Shares to a transferee which is a
wholly-owned subsidiary of the transferor Shareholder or the ultimate holding
company of the transferor Shareholder shall be permitted provided that:
(a) the transferee Shareholder shall become subject to this Agreement;
(b) the obligations of the transferor Shareholder under this Agreement
will remain unaffected by the proposed transfer;
(c) prior written notice about such transfer has been given to the
Company by the transferor Shareholder; and
(d) the relevant Shares will be re-transferred to the transferor
Shareholder immediately upon the transferee ceasing to be a
wholly-owned subsidiary of the transferor Shareholder or such
ultimate holding company of the transferor Shareholder as the case
may be.
ARTICLE X
BUDGETS AND BUSINESS PLANS
10.01 Financial Year
The financial year end for the Company shall be 31st December or such other date
as determined by the Board of Directors.
10.02 Operations in Conformity with Budgets
Except as specifically permitted under this Agreement, all operations of the
Company in each financial year shall be conducted and conform with the Annual
Company Budget and Annual Business Plan for such fiscal year.
10.03 Annual Budgets and Plans
(a) Content of Budgets
At least forty five (45) days prior to the end of any financial year, the
General Manager shall submit to each of the Directors a proposed Annual Company
Budget and Annual Business Plan for the following financial year. The proposed
Annual Company Budget shall set out in reasonable detail the proposed
operations, works and undertakings to be carried out by the Company and shall
include for such financial year and each fiscal quarter thereof the amount, by
category, of all anticipated Operating Costs and Capital Costs.
(b) Approval of First Budget and Plan
As soon as practicable after the execution of this Agreement and in any event on
or before 31st March, 2003, a budget and business plan for the Company for the
remainder of the present financial year shall be submitted by the General
Manager to the Board of Directors for approval.
10.04 Approval of Budgets and Business Plans
As soon as practicable and before the beginning of each financial year of the
Company, the Annual Company Budget and Annual Business Plan submitted by the
General Manager to the Board of Directors shall be approved, with or without
amendment.
10.05 Effect of Approved Budgets and Plans
(a) Implementation
The General Manager shall implement each approved Annual Company Budget or
Annual Business Plan and carry out all activities and operations of the Company
in accordance therewith.
(b) Expenditures Outside the Budget
The General Manager shall not, without the prior approval of the Board of
Directors, incur in any financial year on behalf of the Company any expenditure
not provided for in the applicable Annual Company Budget except for:
(i) an amount not more than the greater of fifty thousand Hong
Kong dollars (HK$50,000.00) (or its equivalent in any other
currency) or ten (10%) per cent. in excess of the amount
provided for such item in the applicable Annual Company Budget
for such financial year and such amount shall in any event
only be spent on such item and in the best interests of the
Company; and
(ii) any unbudgeted expenditure which has otherwise been approved
by the Board of Directors and which shall not, adding to the
other amounts stipulated under this Clause 10.05(b) and which
has been incurred in that relevant financial year or are known
to the Board of Directors shall be incurred in that relevant
financial year, has the effect of causing a deficit in the
aggregate Annual Company Budget then in effect.
ARTICLE XI
UNWINDING OF INVESTMENTS
11.01 Dissolution of Company
(a) An "Event of Dissolution" shall be deemed to have occurred, unless
holders of 75% of the issued and outstanding Shares shall otherwise
vote, upon the happening of any of the following events which are
not, within 30 days of receipt of written notice of the party
causing such Event of Dissolution, cured:
(i) the Company's failure to, within 60 months from the date
hereof, (1) have prepared Plant architectural construction
plans to construct the Plant reasonably satisfactory to IMMT
and (2) obtain all necessary building permits and zoning and
regulatory approvals (including water, sewer, electrical and
other utilities, and environmental clearances),
(ii) the Company's sale, pledge or mortgage of the Land without
the approval of IMMT and Chan,
(iii) any Development Plan required to be delivered by Chan to IMMT
in Clause 8.03(a) not being timely delivered or approved by
IMMT,
(iv) the Company's land use right to the Land or other entitlement
or rights to the Land being terminated, cancelled, suspended
or otherwise affected or threatened,
(v) IMMT's inability to obtain authorization from a recognized
governmental authority to commercially sell any of its
product candidates within sixty (60) months from the date
hereof,
(vi) IMMT's inability to have patented its 3 step process to
produce its product candidate known as DB289 within
thirty-six (36) months from the date hereof,
(vii) the Company's inability to obtain two million Hong Kong
dollars (HK$2,000,000.00) in cash or commitments, through
grants, issuances of debt, sales of equity or other means
approved by the Company's Board of Directors, within six (6)
months (or such longer period as may be mutually agreed by
IMMT and Chan) from the date of hereof to commence
construction of the Plant, or
(viii) any breach or default under the Share Purchase Agreement or
the Deed of Indemnity.
(b) In the event that an Event of Dissolution shall occur that is not
remedied as provided in Clause 11.01(a) above, the Company and its
wholly-owned subsidiaries, including but not limited to Immtech Hong
Kong Limited, shall be liquidated and their affairs shall be wound
up and the Shareholders and the Board shall immediately take such
steps as are necessary to effect such liquidation of the Company and
its subsidiaries. All proceeds from such liquidation shall be
distributed in the following order:
(i) firstly, to creditors, excluding Shareholders who are
creditors, to the extent permitted by law, in satisfaction of
the Company's liabilities,
(ii) secondly, to the Shareholders, the asset contributed by each
Shareholder to the Company, returned to the contributing
Shareholder (any asset held by the Company at the time of
dissolution shall be returned to the contributing Shareholder
to extent then in the Company's possession and, if an asset
contributed to the Company by a Shareholder has been sold or
other disposed of, such Shareholder shall be entitled to a
priority return of the amount such asset was therefore sold or
to the asset for which such asset was therefore traded or
otherwise disposed of),
(iii) thirdly, to Shareholders who are creditors to the extent
principal and accrued interest remains unpaid, and
(iv) lastly, to the Shareholders, the value of the any remaining
assets, after liquidation or as otherwise proportionately
apportioned, pro rata in accordance with the number of Shares
held less any amounts otherwise received from the Company in
the form of dividends, management fees or otherwise.
(c) Simultaneously with the occurrence of any liquidation under Clause
11.01(b) above, Chan shall deliver to IMMT (i) all shares of Common
Stock of IMMT paid to Chan as Consideration Shares that he then
holds plus (ii) the cash value of any Consideration Shares disposed
of by Chan valued at the 5-day volume-weighted average of the
closing bid price of IMMT's Common Stock as reported by the
principal stock exchange on which IMMT's Common Stock is listed or
traded, or if not listed or traded as determined in good faith by
IMMT's board of directors, preceding the date of any Event of
Default, Event of Dissolution or liquidation of the Company, such
date determined in IMMT's sole discretion.
(d) If the Company shall have any liabilities to third parties at the
time an Event of Dissolution occurs to satisfy which would require
the disposal of assets contributed by the Shareholders to the
Company, the Shareholders shall, at the request of the liquidator,
advance pro rata to their respective shareholdings such sums as are
required to discharge all liabilities to third parties so as to
enable the distributions referred to in Clause 11.01(b)(ii) to be
made.
(e) The Shareholders shall appoint a liquidator for the Company to
effect the orderly dissolution of the Company and liquidation of the
Company's assets in accordance with the schedule set forth in Clause
11.01(b) above and to execute, deliver and/or file any documents or
instruments and take, and cause to be taken, such action as may be
necessary, appropriate or convenient to effect same.
(f) Each Shareholder shall execute and deliver, and cause to be executed
and delivered, such documents and take, and cause to be taken, such
action as may be necessary or appropriate to give effect to the
provisions of Clause 11.01(b) above and each Shareholder and the
Company hereby declare and confirm that the transaction or
arrangement stipulated pursuant to Clause 11.01(b) above is bona
fide and fair and in the interests of the parties.
(g) The Company shall cause Immtech Hong Kong Limited to remove the word
"Immtech" from Immtech Hong Kong Limited `s name if IMMT so
requests.
ARTICLE XII
DEFAULTS AND REMEDIES
12.01 Event of Default
Each of the following events shall be an Event of Default:
(a) if a Shareholder shall fail to pay when due any amount due under
this Agreement and such failure after notice from any Director shall
continue unremedied for a period of fifteen (15) days from the date
of such notice;
(b) if a Shareholder shall sell, assign, transfer or otherwise dispose
of its Shares or any part thereof otherwise than in accordance with
Article IX and this Article XII or if any steps shall be taken by
such Shareholder to do any of the foregoing;
(c) if a Shareholder shall create or suffer to be created a Prohibited
Encumbrance on any of its Shares including pursuant to a final
determination of bankruptcy from which no appeal has or can be
taken, or in any manner breach the provisions of Clause 9.01;
(d) if a Shareholder shall be in material breach of any of its material
obligations hereunder and such breach shall continue unremedied for
a period of thirty (30) days from its receipt of a written notice of
such breach.
12.02 Remedies Upon Default
(a) Option to Purchase
If a Shareholder shall be a Defaulting Shareholder by reason of the occurrence
of an Event of Default on its part, the Defaulting Shareholder shall be obliged
to sell, upon written request of the Non-Defaulting Shareholder, to the
Non-Defaulting Shareholder free and clear of any Prohibited Encumbrances, all of
the Defaulting Shareholder's Shares for a consideration equal to the Asset Book
Value of such Shares as at the date of purchase (the "Default Consideration").
The transfer of such Shares from the Defaulting Shareholder to the
Non-Defaulting Shareholder shall be completed at the registered office of the
Company within twenty (20) days after the expiry of the applicable notice
periods as provided in Clause 12.02(c).
At completion of the above mentioned transfer:
(i) the Defaulting Shareholder shall deliver the relevant share
certificates, bought and sold notes and instruments of
transfer accompanied by such other document as the
Non-Defaulting Shareholder may reasonably require against
delivery of funds for the Default Consideration but subject to
the provisions herein contained;
(ii) the Defaulting Shareholder shall pay to the Company any
indebtedness then owing by such Defaulting Shareholder to the
Company;
(iii) in pursuance of Clause 12.02, if the Defaulting Shareholder
fails in its obligation to convey to the Non-Defaulting
Shareholder title to its Shares free and clear of any
Prohibited Encumbrance, the Defaulting Shareholder shall pay
to the Non-Defaulting Shareholder upon demand by the
Non-Defaulting Shareholder: (1) such amount or amounts as the
Non-Defaulting Shareholder may require to obtain the immediate
discharge of such Prohibited Encumbrances together with
interest on such amounts at the Prime Rate plus five (5%) per
cent. per annum; or (2) the amount then outstanding or
guaranteed by such Prohibited Encumbrance and which the
Non-Defaulting Shareholder have assumed as a result of the
transfer stipulated under Clause 12.02(a).
(b) Failure to Transfer
If the Defaulting Shareholder, upon being tendered the Default Consideration
under Clause 12.02 (a), fails to validly convey such Shares to the
Non-Defaulting Shareholder, the Non-Defaulting Shareholder shall be entitled to,
upon tendering the Default Consideration or any other payment into any court of
competent jurisdiction, an immediate order from such court to convey to and vest
in such Non-Defaulting Shareholder the Defaulting Shareholder's Shares.
(c) Notice of Intention
The Non-Defaulting Shareholder shall not exercise its recourse under Clause
12.02(a) against the Defaulting Shareholder unless and until it shall have given
to the Defaulting Shareholder written notice of its intention to do so and the
Defaulting Shareholder shall fail to cure its Default within fifteen (15) days
from the date of receipt of such notice.
(d) Set-Off
A Non-Defaulting Shareholder may deduct by set-off from the price to be paid for
the Defaulting Shareholder's Shares under Clause 12.02(a) any amount owing by
the Defaulting Shareholder to the Non-Defaulting Shareholder.
12.03 Consequences of Default
(a) Status of Defaulting Shareholder
A Shareholder in Default shall, upon the occurrence of the Event of Default,
lose all rights to vote at any Shareholders' meeting. The voting rights of the
Defaulting Shareholder shall be vested in the Non-Defaulting Shareholder or its
nominees and the Defaulting Shareholder shall have no further right to take part
in the management of the Company or decide matters in connection therewith and
the Non-Defaulting Shareholder may decide any matter which is reserved for the
Shareholders hereunder.
(b) Forfeiture of Dividends
If a Defaulting Shareholder shall be in Default, so long as any contribution
which such Defaulting Shareholder is required to make pursuant to this Agreement
remains outstanding, such Defaulting Shareholder shall be forfeited of its right
to any dividends from the Company and such dividends shall be held by the
Company in satisfaction or partial satisfaction of the Defaulting Shareholder's
delinquent contributions.
(c) Restatement in Certain Circumstances
If all contributions and amounts required to be paid pursuant to this Agreement
are made good by a Defaulting Shareholder (with interest as required) within
fifteen (15) days as stipulated under Clause 12.02(c), the Defaulting
Shareholder shall, if it is then not otherwise in Default, be reinstated in its
rights as of the date of such cure.
(d) Payments by Non-Defaulting Shareholder
Any amounts paid by the Non-Defaulting Shareholder to make up a delinquent
contribution or payment of the Defaulting Shareholder and not recovered shall,
without prejudice to any other provisions of this Agreement, constitute a debt
due and payable by the Defaulting Shareholder and shall bear interest from the
date the payment was made until the date of payment by the Defaulting
Shareholder at an annual rate equal to the Prime Rate in effect from time to
time during the period plus five (5%) per cent. per annum.
(e) Supervision of Operations
Without prejudice to any other right or recourse, if either Shareholder shall be
in Default under Clause 12.01(a), the Non-Defaulting Shareholder may,
immediately reduce, curtail or suspend any Business of the Company. If the
Defaulting Shareholder is not reinstated in its rights under Clause 12.03(c)
within the period allowed for reinstatement, the Non-Defaulting Shareholder may
if it chooses, take such action to protect its interest as it shall deem
appropriate including, without limitation, suspending or ceasing any operations
of the Company or liquidating any Business or property of the Company or any
other action permitted to it under this Agreement or at law.
12.04 Interest
Any sum at any time owing by any party to any other party or to the Company or
otherwise payable under this Agreement between the parties which is not paid
when due shall, without prejudice to any other right or recourse from the
creditor under this Agreement or at law, bear interest from its due date until
payment in full at the Prime Rate plus five (5%) per cent. per annum.
ARTICLE XIII
GENERAL
13.01 Remedies Not Exclusive
Any remedy given under this Agreement to a any party shall be in addition to any
other remedy now or hereafter existing under this Agreement or at law. All such
remedies shall be cumulative and the exercise of one shall not be deemed a
waiver of the right to exercise any other or others. No delay or omission in the
exercise of any such remedy and no extension of the time allowed for the making
of any payment due shall impair any such remedy or shall be construed to be a
waiver of any default, Event of Dissolution or Event of Default or any
acquiescence.
13.02 Survival and Indemnity
Each party to this Agreement hereby severally, and not jointly, indemnifies and
saves harmless the other party from and against any loss, liability, damage or
expense arising out of the failure of such party to strictly comply with the
provision of this Agreement. All Clauses required to give full effect to the
meaning and intent of this Agreement shall survive the termination of this
Agreement and without limiting the generality of the foregoing, Clause 7.01 and
Clause 7.02 shall survive the termination of this Agreement.
13.03 Notice of Claim
Each party hereto agrees with the other party that on receiving notice of, or
becoming aware of any action, cause of action, proceeding, claim or other matter
to which it claims to be entitled to recover against or seek indemnity from the
other party as hereinbefore provided:
(a) it shall give prompt written notice thereof to the other party
hereto; and
(b) in the event that such matter is an action, cause of action,
proceeding, claim or demand with respect to which such entitlement
or indemnity is admitted by the other party, such other party, at
such other party's election, shall be entitled and permitted to
assist in or undertake the defence of the same.
13.04 Brokers
IMMT hereby represents to Chan and the Company that it has, in connection with
the transactions contemplated by this Agreement, engaged the services of two
brokers who are each entitled to 30,000 shares of Common Stock of Immtech as
remuneration for their services.
13.05 Notice
Each notice, demand or other communication given or made under this Agreement
shall be in writing and delivered or sent to the relevant party at its address
or facsimile number set out below (or such other address or facsimile number as
the addressee has by five (5) Business Days' prior written notice specified to
the other parties):
To IMMT:
Name: Immtech International Inc.
Address: 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000,
Xxxxxx Xxxxxx of America
Fax Number: (000) 000 0000
Attention: Mr. T. Xxxxxxx Xxxxxxxx
To Xxxx:
Name: Xx. Xxxx Xxx Xxxx
Address: Flat B, 16th Floor, 132 Broadway, Mei Foo Sun Chuen, Kowloon,
Hong Kong
Fax Number: (000) 0000 0000
To the Company:
Name: Lenton Fibre Optics Development Limited
Address: 00xx Xxxxx, Xxxx Seng Xxxxxxxx, 00 Xxx Xxxxx Xxxx, Xxxxxxx,
Xxxx Xxxx
Fax Number: (000) 0000 0000
Attention: Xx. Xxxx Xxx Xxxx
Any notice, demand or other communication so addressed to the relevant party
shall be deemed to have been delivered (a) if given or made by letter, when
actually delivered to the relevant address; and (b) if given or made by fax,
when dispatched.
13.06 Action
Each of the parties to this Agreement shall at all times during the currency of
this Agreement execute and deliver, and cause to be executed and delivered, such
documents and take, and cause to be taken, such action as may be necessary or
appropriate to give effect to the provisions of this Agreement.
13.07 Entire Agreement
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof. It is expressly declared that no variation,
release, discharge or modification to this Agreement shall be effective unless
made in writing and signed by the party or parties concerned.
13.08 The Terms of this Agreement to Prevail
In the event of any ambiguity or conflict arising between the terms of this
Agreement and those of the Company's Memorandum and Articles of Association, the
terms of this Agreement shall prevail.
13.09 Waiver
The failure at any time to require performance of any provision of this
Agreement shall not affect the full right to require such performance at any
later time. The waiver of a breach of any provision shall not constitute a
waiver of the provision or of any succeeding breach.
13.10 Character of Agreement
Nothing contained in this Agreement shall make any party the agent or partner of
any other parties or shall empower a party to act on behalf of any other party
or to bind any other party.
13.11 Severability
If at any time any provision of this Agreement shall be or shall become illegal,
invalid or unenforceable in any respect under the law of any jurisdiction, the
legality, validity and enforceability of the remaining provisions of this
Agreement shall not be affected or impaired thereby.
13.12 No Assignment
This Agreement shall not, unless otherwise provided herein, be assigned by any
party without the prior written consent of the other parties and shall be
binding upon the parties and their respective successors and permitted assigns.
13.13 Costs for Agreement
Each party hereto shall be responsible for its own costs and expenses (including
legal fees and disbursements) relating to the preparation and execution of this
Agreement.
13.14 Counterparts
This Agreement may be executed simultaneously in two (2) or more counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute the same Agreement.
13.15 Compliance with Law
During the currency of this Agreement each of the parties shall comply with all
applicable laws, regulations and orders and any requirements of any governmental
authority relating to, without limitation, all operations, processes or
practices whatsoever which may directly or indirectly relate to this Agreement.
13.16 Governing Law: Arbitration
This Agreement shall be construed and interpreted in accordance with the laws of
Hong Kong, without regard to its laws regarding conflict of laws. Any dispute
arising hereunder shall be exclusively settled by confidential arbitration at
the Hong Kong International Arbitration Centre under its then rules. The
arbitration shall be conducted in Hong Kong by three arbitrators, one selected
by each party to the dispute and the third by the two so selected. Judgment upon
the arbitrators' award may be entered and enforced in any court of competent
jurisdiction. The arbitrators shall have no authority to amend this Agreement.
13.17 Time of the Essence
Time shall be of the essence as regards any date or period mentioned in this
Agreement or any date or period substituted for the same by agreement of the
parties hereto or otherwise.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by ) /s/ T. Xxxxxxx Xxxxxxxx
)
for and on behalf of )
IMMTECH INTERNATIONAL INC. )
)
in the presence of:- ) /s/ Notary
SIGNED by )
) /s/ Chan Xxx Xxxx
XX. XXXX XXX XXXX )
)
in the presence of:- ) /s/ Notary
SIGNED by ) /s/ Chan Xxx Xxxx
)
for and on behalf of )
LENTON FIBRE OPTICS )
DEVELOPMENT LIMITED )
)
in the presence of:- ) /s/ Notary
SCHEDULE A
MEMORANDUM AND ARTICLES OF ASSOCIATION
SCHEDULE B
THE LAND
Description
of the Land Tenure Owner
----------- ------ -----
Lot No. B105-20, 50 years from Lenton Fibre Optics
Futian Bonded Zone, 5th February, 2001 Development Limited
Shenzhen, to 5th February, 2050
People's Republic
of China
