TANGSHAN CAOFEIDIAN INVESTMENT CO., LTD EMCORE CORPORATION SHAREHOLDERS AGREEMENT
EXHIBIT
10.2
3rd
February 2010
TANGSHAN
CAOFEIDIAN INVESTMENT CO., LTD
EMCORE
CORPORATION
CONTENTS
Clause Page
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THIS SHAREHOLDERS AGREEMENT
(Agreement) is made on this third
day of February 2010.
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BETWEEN
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(1) TANGSHAN CAOFEIDIAN INVESTMENT
CO., LIMITED, a limited liability company incorporated under the laws of
the People’s Republic of China, with its principal place of business
at Kilometre Zero, Caofeidian Industrial Zone, Tangshan City, Hebei
Province 063200, People’s Republic of China (Party A);
and
(2) EMCORE CORPORATION, a
publicly listed company incorporated under the laws of New Jersey, with its
principal executive office at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx,
XXX (Party
B).
WHEREAS
(A) Pursuant
to a share purchase agreement dated 3rd February 2010 (SPA),
Party B has agreed to sell and Party A has agreed to purchase a 60% interest in
the share capital of a newly established Hong Kong subsidiary of Party B (the
Company) which
will directly or indirectly (through its subsidiaries) hold Party B’s fibre
optic assets for the operation of the Business.
(B) Following
the completion of the said share purchase pursuant to the SPA, Party A and Party
B will own 60% and 40% of the equity interests of the Company,
respectively.
(C) The
Parties have entered into this Agreement in order to set out the terms governing
the relationship of Party A and Party B as Shareholders in the Company as well
as the management and operation of the Company.
IT IS HEREBY AGREED as
follows:
1. Definitions
and interpretations
1.1 Definitions
Words and
expressions used in this Agreement shall have the meanings set out below unless
the context otherwise requires:
Acceptance
Period has the meaning as set out in Clause 9.3(b).
Affiliate
of any particular Person means any other Person Controlling, Controlled by or
under common Control with such Person.
Articles
of Association means the memorandum and
articles of association of the Company jointly agreed by the Shareholders (as
may be amended, modified or supplemented from time to time).
Auditing
Firm means PriceWaterhouseCoopers, Ernst & Young, Deloitte Touche
Tohmatsu, KPMG, or their joint venture accounting firms incorporated in the PRC,
or such other accounting firms with comparable qualifications and international
reputation as may be approved from time to time by the Board.
Board
means the Company’s board of directors as constituted from time to
time.
Board Term
has the meaning as set out in Clause 6.2.
Business
means the business of the Group Companies which shall be the designing,
manufacturing and selling of telecom, enterprise, cable tv,
fiber-to-the-premises, video transport, sub-systems and systems that enable the
transmission of video, voice and data over high-capacity fiber optic cables in
various fiber-optic transmission networks, and/or such other business activity
as may be approved by the Board from time to time.
Business
Day means any day (except Saturday or Sunday) on which banks in Hong
Kong, Beijing and New York City are open for the transaction of normal banking
business.
Budget
means the budget for the initial 24 months of operation of the Company following
the Establishment Date as set out in Schedule 3 of this Agreement and, for any period
thereafter, the agreed budget of the Group Companies as approved by the Board
prior to the start of each Financial Year.
Business Plan
means the business plan for the initial 24 months of operation of the
Company following the Establishment Date as set out in Schedule 4 of this Agreement and, for any period
thereafter, the agreed business plan of the Group Companies as approved by the
Board prior to the start of each Financial Year.
CEO means
the chief executive officer of the Company.
CFO means
the chief financial officer of the Company.
Chairman
means the Chairman of the Board.
Change of
Control in respect of a Person occurs when another Person who is not an
Affiliate of such Person acquires, directly or indirectly, either by itself or
in concert with others, Control over such Person.
Completion
means the closing of the SPA in accordance with the terms of the
SPA.
Confidential
Information means and includes all proprietary information and/or the
information relating to the business or assets of any of the Parties, the
Company or their respective Affiliates (including oral, video or electronic data
and information or those transmitted or acquired in writing via any other
media), which is acquired by a Party by virtue of this Agreement or in its
capacity as a Shareholder.
Control
means:
(a)
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the
ownership or control (directly or indirectly) of more than 50 per cent of
the voting share capital of the relevant undertaking;
or
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(b)
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the
ability to direct the casting of more than 50 per cent of the votes
exercisable at general meetings of the relevant undertaking on all, or
substantially all, matters; or
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(c)
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the
right to appoint or remove directors of the relevant undertaking holding a
majority of the voting rights at meetings of the board on all, or
substantially all, matters.
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COO means
the chief operating officer of the Company.
Deadlock
has the meaning as set out in Clause 10.2.
Deadlock Notice
has the meaning as set out in Clause 10.3.
Deadlock Offer
Notice has the meaning as set out in Clause 10.4.
Deed of Adherence
means a deed in the form set out in Schedule 2.
Defaulting
Party has the meaning as set out in Clause 11.1(d).
Directors
means the directors who are appointed by the Company from time to time in
accordance with this Agreement and the Articles of Association, including any
alternate director where applicable.
Dispute
has the meaning as set out in Clause 29.1.
Emergency
Deadlock Event has the meaning as set out in Clause 10.8.
Encumbrance
means any mortgage, pledge, lien, restriction, assignment, security interest,
title retention, option, priority, trust arrangement, equity interest, any type
of preferential arrangement, hypothecation or security arrangement, or any other
agreement or arrangement which causes a guarantee or any other person’s equity,
equity interest or right (including any right to acquire, option, pre-emptive
right or priority).
ESOP means
the Company’s employee share option plan to be drawn up by the Parties and
approved by the Board.
Establishment
Date means the date of establishment of the Company as a joint venture
between Party A and Party B, being the date of Completion of the transactions
contemplated under the SPA.
Event of Force
Majeure has the meaning as set out in Clause 22.1.
Financial
Year means any fiscal year of the Group Companies commencing from 1st
January to 31st December of any given calendar year.
Fundamental
Issue has the meaning as set out in Clause 10.3.
Group
Company means the Company or any
of its Subsidiaries.
Governmental
Body means any:
(a)
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nation,
state, county, city, town, village, district, or other jurisdiction of any
nature;
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(b)
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federal,
state, local, municipal, foreign, or other
government;
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(c)
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governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court, arbitral
body or other tribunal with competent
jurisdiction);
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(d)
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multi-national
or supra-national organization or body;
or
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(e)
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body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of
any nature, including any national securities exchange (and including, for
this purpose, any automated quotation
service).
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IFRS means
International Financial Reporting Standards promulgated by the International
Accounting Standards Board (IASB)
(which includes standards and interpretations approved by the IASB and
International Accounting Standards (IAS)
issued under previous constitutions), together with its pronouncements thereon
from time to time, and applied on a consistent basis.
Initial Equity
Interest has the meaning as set out in Clause 9.2.
Insolvency
Event means any of the following:
(a)
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a
court of competent jurisdiction makes an order or a resolution is passed,
for the dissolution, liquidation, winding up, administration or
reorganisation (by way of voluntary arrangement, scheme of arrangement or
otherwise) of a Person, whether out of court or otherwise (and otherwise
than in the course of a reorganisation or restructuring previously
approved in writing by all the other
Shareholders);
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(b)
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any
step is taken whether out of court or otherwise (which is not withdrawn or
discharged within 30 days) to appoint a liquidator, manager, receiver,
administrator or other similar officer (whether out of court or otherwise)
in respect of a Person; or
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(c)
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if
a Person enters into any composition, assignment or arrangement with its
creditors generally.
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Lock-up Period
means the period from the date of this Agreement up to the end of the
second anniversary following Establishment Date.
Material Event of
Force Majeure has the meaning as set out in Clause 22.3.
Non-transferring
Shareholder has the meaning as set out in Clause 9.3(a).
Offered
Shares has the meaning as set out in Clause 9.3(b).
Ordinance
means the Companies Ordinance of Hong Kong (Cap. 32).
PRC means
the People’s Republic of China, which, for the purposes of this Agreement does
not include the Hong Kong Special Administrative Region, the Macau Special
Administrative Region and the territory of Taiwan.
PRC GAAP
means the PRC Generally Accepted Accounting Principles.
PRC
Subsidiary has meaning set out in Clause 5.2.
Pre-emptive
Right has the meaning as set out in Clause 9.3(b).
Regulatory
Approvals means any necessary
approvals required by any competent governmental or regulatory agencies or
authorities;
Reserved Matters
has the meaning as set out in Clause 6.7.
Share(s)
means the ordinary share(s) with par value of HK$0.01 each in the share capital
of the Company, having the rights and benefits as granted by, and being subject
to the restrictions set out in, the Articles of Association.
Shareholders
means Persons at the relevant time hold Shares (and Shareholder means any one of
them), including any Person to whom Shares have been Transferred or issued and
who has agreed to be bound by this Agreement by executing a Deed of
Adherence.
Shareholders
Loans has the meaning as set out in Clause 4.1.
Shareholders’
Meeting has the meaning set out in Clause 8.1.
SIAC has
the meaning as set out in Clause 29.1.
Subsidiaries
or Subsidiary
means, in relation to a specific Person (holding
company), any company or other commercial entity who is Controlled by the
holding company (either directly or through one or more
Subsidiaries).
Surviving
Provisions means Clause 1 (Definitions And
Interpretations), Clause 15 (Confidentiality), Clause 16 (Entire Agreement), Clause 18 (No Assignment), Clause 19 (Modification), Clause 20 (Notices), Clause 21 (Waiver), Clause 25 (Costs And Tax), Clause 26 (Conflict with the Articles Of
Association), Clause 27 (Severability), Clause 28 (Governing Law), Clause 29 (Dispute Resolution) and
Clause 30 (Language).
Termination
Events has the meaning as set out in Clause 11.1.
Third Party
Purchaser has the meaning as set out in Clause 9.3(a).
Transfer
means to sell, assign, hypothecate or create any charge on, security
interest in or any other Encumbrance on, or otherwise dispose of.
Transfer
Notice has the meaning as set out in Clause 9.3(a).
Tribunal
has the meaning as set out in Clause 29.1.
US$ means
the United States Dollar, the lawful currency of the United States of
America.
US
Subsidiary means the corporation incorporated in the State of Delaware
which holds the principal U.S.-based assets of the Business.
1.2 Interpretation
(a)
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Unless
the context otherwise requires, capitalised terms not defined in this
Agreement shall have the meaning as set forth in the
SPA.
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(b)
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Words
importing the singular shall include the plural and vice versa, and words
importing one gender shall include every
gender.
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(c)
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The
headings in this Agreement are inserted for ease of reference only and do
not affect the construction or interpretation of this
Agreement.
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(d)
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References
to a “Person” shall include a body corporate, unincorporated organisation
and partnership (in each case whether or not having separate legal
personality).
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(e)
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References
to any document (including this Agreement) are the references to that
document together with any amendment, supplementation or modification
thereto or consolidation or novation thereof as made from time to
time.
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(f)
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Where
any obligation in this Agreement is expressed to be undertaken or assumed
by any Party, that obligation is to be construed as requiring the Party
concerned to exercise, to the extent possible, all rights and powers of
control over the affairs of any other Person which it is able to exercise
(whether directly or indirectly) in order to secure performance of the
obligation.
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2. Shareholding
structure of the Company
2.1 The
authorised share capital of the Company shall be HK$1,000,000 divided into
[100,000,000] Shares with a par value of HK$0.01 per Share. The issued share
capital of the Company as of the Establishment Date shall be 10,000,000
Shares.
2.2 On the
Establishment Date, the number of Shares held by Party A and Party B
respectively shall be as follows:
Shareholder
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Total
number of Shares
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Shareholding
Proportion at Completion
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Party
A
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6,000,000
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60%
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Party
B
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4,000,000
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40%
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3. Employee
Share Option Plan
3.1 The
Parties agree that as soon as practicable following the Establishment Date, the
ESOP shall be submitted to the Board for review and approval. The
ESOP shall contemplate the issuance of an additional 10% of the share capital in
the Company to specified categories of employees of the Group Companies upon
exercise of the option rights granted under the ESOP. The Parties shall cause
all Directors to vote in favour of the ESOP.
4. Shareholders
loans and Future Financing
4.1 Shareholders
Loans
Each of
Party A and Party B (each, a Lending Shareholder) shall provide shareholders
loans in accordance with this Clause 4 on the terms
provided in Schedule 5 (the Shareholders
Loans) following the Establishment Date.
4.2 Party
A Loan
Party A
shall provide a term loan in the aggregate amount of US$18,000,000 (or its
equivalent, in such proportion of RMB and US$ to be agreed by the Shareholders)
no later than ninety (90) days following the Establishment Date to the Company
to be utilised in accordance with the Business Plan and Budget. In addition,
Party A shall within ninety (90) days after the first anniversary of the
Establishment Date provide an additional term loan in the aggregate amount of
US$9,000,000 (or its equivalent, in such proportion of RMB and US$ to be agreed
by the Shareholders) to the Company to be utilised in accordance with the
Business Plan and Budget. The principal terms of the term loans shall be as set
out in Schedule 5.
4.3 Party
B Loan
Party B
shall within five (5) Business Days following Completion, provide a shareholder
loan to the Company for an aggregate amount of US$2,000,000 to be paid into a
U.S. bank account designated by the Company, to be utilised in accordance with
the Business Plan and Budget. In addition, Party B shall on or around the first
anniversary of within ninety (90) days after the first anniversary of the
Establishment Date provide an additional term loan in the aggregate amount of
US$1,000,000 to the Company to be utilised in accordance with the Business Plan
and Budget. The principal terms of the term loans shall be as set out in Schedule 5.
4.4 Priority
of Shareholders Loan
Unless
otherwise agreed by Party A and Party B, the Shareholders Loans shall be rank
pari passu with each
other and with respect to any other present and future unsecured and
unsubordinated indebtedness of the Company owed to the Shareholders and their
Affiliates or third parties from time to time.
4.5 Use
of Shareholders Loan
The
Shareholders agree that the Company and its Subsidiaries shall use the
Shareholders Loans only for the following purposes and in accordance with the
Budget and Business Plan of the Company as approved by the Board from time to
time:
(a)
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to
expand capacity by setting up new facilities in the
PRC;
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(b)
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as
capital contribution to (or subsequent increase in the capital of) the
Subsidiaries of Company;
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(c)
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to
satisfy the working capital needs of the Group Companies;
and
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(d)
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for
general corporate purpose(s) of the Group Companies in relation to the
Business (including research and development, and acquisitions as approved
by the Board).
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4.6 Future
Capital Increase and Financing
Increase
of share capital
4.7 The share
capital of the Company may be increased from time to time as the Shareholders
may agree in accordance with this Agreement. In case of any proposed
increase in the share capital, each Shareholder shall be entitled (but has no
obligation) to subscribe to such increase on a pro-rata basis in proportion to
its shareholdings in the Company at the time of the increase. Each
Shareholder may exercise its right to subscribe for all or any of its entitled
amount of the capital increase by giving notice in writing to the Company within
twenty (20) Business Days after a preliminary proposal with respect to the
increase in registered capital has been approved by the Board.
4.8 Notwithstanding
Clause 4.7, if a Shareholder does not subscribe for
its full pro rata entitlement in respect of a capital increase in the manner
described in Clause 4.7, to the extent permitted by
law and subject to Regulatory Approvals, the other Shareholder shall have the
right at its option, by giving a written notice to the Company and the
non-subscribing Shareholder within ten (10) Business Days after the expiration
of the twenty (20) Business Day period referred to in Clause 4.7, to subscribe for all or any part of such
Shareholder’s pro rata entitlement for which the Shareholder has not
subscribed.
Future
financing
4.9 Subject
to on-going review of expansion and acquisition strategies by the Board, the
Shareholders agree that it is their intention that the Company will expand
primarily through acquisitions and Party A shall be responsible for either
providing, arranging or assisting in the arrangement of financing for such
acquisitions that have been approved by the Board.
4.10 If and to
the extent that all the Shareholders agree to participate in any such guarantee,
bond or financing arrangement then, unless the Shareholders agree
otherwise:
(a)
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any
liability or obligation to be assumed by them in relation to any such
guarantee, bond or financing arrangement shall be borne pro rata to their
existing shareholdings in the Company;
and
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(b)
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any
such liability or obligation shall be several and not joint or joint and
several.
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5. Business
Business
principles
5.1 The
Business of the Group Companies shall be conducted based on sound commercial
principles, in accordance with the Business Plan and Budget as formulated and
approved by the Board from time to time, and in compliance with all applicable
laws. The initial Budget and Business Plan of the Group Companies which have
been formulated and agreed by the Shareholders are appended in Schedule 3 and Schedule 4 respectively.
Establishment
of PRC operations
5.2 Pursuant
to the Restructuring Plan of Party B, Party B shall as soon as practicable after
the establishment of the Company, procure the Company to apply to the relevant
Governmental Bodies for the incorporation of a foreign-invested enterprise in
Caofeidian Industrial Zone, Tangshan City, Hebei Province, PRC (the PRC
Subsidiary). The Parties will endeavour to agree on the name,
registered capital, total investment, business scope, term and other relevant
matters concerning the PRC Subsidiary as soon as practicable following the date
of this Agreement.
All costs
in connection with the establishment of the PRC Subsidiary shall be borne by the
Company, and the Company shall reimburse each Party in full for all reasonable
and proper costs incurred on behalf of the Company in connection with the
foregoing.
6. Board
of directors
Board
of Directors
6.1 The
Company shall be managed by the Board in accordance with the provisions of this
Agreement and applicable laws. The Board shall be responsible for the overall
strategy, direction, policy and management of the Group Companies.
Subject to Clause 9.2(b), the Board shall consist
of five (5) Directors, three (3) of whom shall be nominated by Party A, two (2)
of whom shall be nominated by Party B, and their appointment shall be subject to
formal appointment at the Shareholders Meeting. Each Shareholder shall forthwith
take all steps necessary to ensure (by the exercise of voting rights or
otherwise) that the persons nominated as Directors pursuant to this Clause 6.1 are so appointed.
6.2 The Board
shall have a term of three (3) years (the Board
Term). At the end of the Board Term, a new Board shall be
elected, and members of the Board may stand for re-election upon nomination by
the relevant Shareholder in accordance with this Agreement. If for any reason a
new Board has not been elected upon the end of the Board Term, the existing
Directors shall continue to serve as Directors and exercise powers and discharge
duties accordingly, until a new Board has been elected.
6.3 Subject
to the legal obligations of the Directors, each Shareholder shall use best
efforts to procure that the Directors it nominates comply with this Agreement
and take all necessary measures to give effect to this Agreement.
Nomination
and removal
6.4 Any
Shareholder may at any time, by placing a written notice to the Board and by
sending a copy of the same to the other Shareholder, remove any Director
nominated by it. The Directors shall take all actions necessary in order to
remove such Director as soon as practicable after receipt of such written
notice. Upon a Director’s position becoming vacant by reason of removal,
resignation, retirement, illness, loss of civil capacity, death or any other
reason, the Party that originally nominated such Director may by written notice
to the Board and sending a copy of the same to the other Shareholder, nominate a
new Director to fill the vacant position. The Directors shall take all actions
necessary in order to appoint such nominee to the Board as soon as practicable
after receipt of such written notice. The Director nominated to fill the vacant
position shall serve out the remaining Board Term. In the event that
any Shareholder ceases to hold any Shares, such Shareholder shall procure that
all the Directors appointed by it shall immediately resign from the Board. Each
Party agrees that it will not arbitrarily and without just cause act to remove a
Director nominated by the other Party at a Shareholders’ Meeting.
Compensation
upon removal
6.5 Any
Shareholder who removes any Director in accordance with this Clause 6 and the relevant provisions of the Articles of
Association shall bear and indemnify the other Shareholder and the Company in
full for any liability arising from such removal and in connection with any
claim for unfair and wrongful dismissal, and any reasonable costs and expenses
incurred in defending such claim, including without limitation the attorney fees
actually paid.
Board
meetings
6.6 The Board
shall convene a meeting at least twice a year to be held in such location as
stated in the notice of meeting (provided that such location shall be reasonably
convenient for the Directors), and such meeting may be attended in person or by
means of telephone, videoconferencing or any other modern communication devices
using which the Directors can properly communicate with each other in real time,
and the Directors who properly attended a meeting via such devices shall be
deemed to have attended in person.
6.7 At each
meeting of the Board, and in respect of each resolution proposed to the Board,
each Director shall have one (1) vote. Subject to Clause 6.10 and unless otherwise required by the Ordinance or
other applicable laws, all resolutions passed by the Board shall be adopted by
the affirmative votes of a simple majority of the Directors present at the
meeting in person or by proxy. Notwithstanding the foregoing and
subject to Clause 6.10, the adoption of any
resolutions for any of the matters set out in Schedule 1 (the Reserved
Matters) shall require the affirmative vote of at least one (1) Director
nominated by Party A and at least one (1) Director nominated by Party B,
provided, however, that the Reserved Matters shall cease to require the
affirmative vote of at least one (1) Director nominated by Party B immediately
upon a Change of Control occurring in respect of Party B.
Notice
of meetings
6.8 Unless
otherwise waived by all the Directors, the notice of each meeting of the Board
shall be sent to each Director not less than fourteen (14) days prior to the
convening of such meeting and shall be accompanied by the agenda of the meeting
together with all written papers to be circulated to the Directors or be
presented at the meeting. Within fourteen (14) days after such
meeting, a copy of the minutes of that meeting shall be delivered to each
Director. Unless otherwise agreed by the Board, the minutes of
meetings of the Board shall be prepared in English and Chinese
languages.
Chairman
6.9 Party A
shall nominate a Director to act as the Chairman. Any Director may
convene a Board meeting and the Chairman (or in his absence, any other Director
elected at a Board meeting) shall preside over the Board meeting. The Chairman
shall not have a casting vote in the event of a deadlock over any matter to be
decided by the Board.
Quorum
6.10 Each
Board meeting shall require a quorum of at least three (3) Directors, present in
person or by proxy, and shall include at least one (1) Director appointed by
Party A and one (1) Director appointed by Party B. If proper notice
to convene a Board meeting under Clause 6.8 has
been given and if the required number of Directors fail to attend the meeting by
themselves or by proxy within one (1) hour of the time scheduled for the
commencement of the Board meeting, and therefore a quorum is not constituted in
accordance with this Clause 6.10, such Board meeting shall be adjourned and
reconvened in the same location and at the same time on the seventh (7th) day
(or such later date as specified by the Chairman) from the date of the earlier
meeting, and if at the reconvened meeting a quorum is not present within one (1)
hour from the time scheduled for the commencement of the Board meeting, then the
Directors present (provided their numbers shall be not less than two) shall be
deemed to constitute a quorum. In the event that a meeting is reconvened and
held in accordance with this Clause 6.10, only such
matters as are specified in the agenda for the originally scheduled meeting may
be dealt with and be decided upon at such reconvened meeting.
Attendance
by Proxy
6.11 If any
Director is unable to attend a Board meeting, he may send a written notice to
the Board at least one (1) Business Day prior to the date of convening the Board
meeting and appoint an alternate to attend the meeting as proxy. An alternate
director shall be a person already serving as a Director at the time of
appointment and may represent one or more Directors. Such alternate
director shall be entitled to attend and vote at meetings of the Board and to be
included in the quorum. Each alternate director shall have one (1)
vote of every Director whom he represents, in addition to his own vote as a
Director.
Written
resolutions
6.12 A written
resolution signed by all Directors then entitled to receive a notice of Board
meeting shall be deemed as valid and effectual as if it had been passed at a
meeting of the Board duly convened and held, without the need for any agenda or
notice. The signature of any Director may be given by his
alternate. Any such resolution may be signed by the Directors in one
or more counterparts which shall, when taken together, constitute one and the
same document. A cable, telex, fax message or other written electronic
communication sent by a Director or his alternate shall be deemed to be a
document signed by him for the purposes of this Clause 6.12.
Remuneration
6.13 The
remuneration of Directors, officers and senior management personnel of the
Company shall be approved by the Shareholders at the annual general meeting of
the Company. The Company shall reimburse a Director for reasonable
expenses incurred in respect of travelling, accommodations and other living
expenses to attend Board meetings if the Board agrees to do so.
Subsidiaries
of the Company
6.14 The
Shareholders shall procure that, subject to applicable laws and regulations in
the jurisdiction in which the relevant Subsidiary is incorporated, the size,
composition, term and procedure of the board of each of the Subsidiaries of the
Company (including any future Subsidiaries to be established by the Company)
shall be consistent with those adopted for the Board of the Company as set forth
above.
7. Management
of Group Companies
Appointment
of management personnel
7.1 For the
first and second Board Term and provided that Party B holds no less than 25% of
the Shares in the Company, Party B shall be entitled to nominate the CEO (whose
appointment shall be approved by the Board), who shall in turn be entitled to
nominate the COO and appoint other senior management personnel of the Company
(other than the CFO) to be approved by the Board. Party B shall ensure that the
CEO candidate it nominates, and shall procure the CEO to ensure that each of the
candidates for other senior management personnel he nominates or appoints, shall
have good moral character and possess the requisite levels of expertise,
qualifications and experience to fulfil the position for which he has been
nominated. At the earliest of (a) the end of the second Board
Term; (b) when Party B ceases to hold at least 25% of the Shares in
the Company; or (c) immediately upon a Change of Control occurring in respect of
Party B, Party B shall cease to have the right to nominate the CEO and the CEO
shall thereafter be appointed by the Board upon nomination of either
Shareholder.
7.2 The CEO,
CFO and COO shall be responsible to the Board and their respective powers,
duties and responsibilities shall be within such scope as specified by the
Board.
7.3 For the
first and second Board Term and provided that Party A holds no less than 25% of
the Shares in the Company, Party A shall be entitled to nominate the CFO (whose
appointment shall be approved by the Board). Party A shall ensure that the CFO
candidate it nominates shall have good moral character and possess the requisite
levels of expertise, qualifications and experience to fulfil the position for
which he has been nominated. At the earlier of (a) the end of the second Board
Term or (b) when Party A ceases to hold at least 25% of the Shares in the
Company, Party A shall cease to have the right to nominate the CFO and the CFO
shall thereafter be appointed by the Board upon the nomination by either
Shareholder.
7.4 Any
Shareholder may at any time, by placing a written notice to the Board and by
sending a copy of the same to the other Shareholder, remove any management
personnel nominated by it. The Directors shall take all actions necessary in
order to remove such management personnel as soon as practicable after receipt
of such written notice. Upon a management position becoming vacant by reason of
removal, resignation, retirement, illness, loss of civil capacity, death or any
other reason, the Party that originally nominated such management personnel may
by written notice to the Board and sending a copy of the same to the other
Shareholder, nominate a new management personnel to fill the vacant position.
The Directors shall take all actions necessary in order to approve the
appointment of such nominee as soon as practicable after receipt of such written
notice.
7.5 The
Shareholders shall procure that, subject to applicable laws and regulations in
the jurisdiction in which the relevant Subsidiary is incorporated, the
nomination of senior management personnel of each Subsidiary (including any
future Subsidiaries to be established by the Company) shall be effected in
accordance with the provisions set forth in Clauses 7.1 and 7.2 above, and
the board of directors of each Subsidiary shall accordingly appoint such senior
management personnel so nominated.
7.6 The term
of office of the CEO, COO and CFO of the Company (and the equivalent positions
of each Subsidiary) shall be three (3) years, or such other term as deemed
appropriate by the board of directors of the relevant Group
Company. Upon expiration of the term of service, an individual may
serve consecutive terms if re-appointed by the board of directors of the
relevant Group Company. The CEO, COO and CFO of the Company (and the
equivalent positions of each Subsidiary) may only be removed by the board of
directors of the relevant Group Company by resolution. In such case,
each successor shall be nominated and appointed in the same manner as his
predecessor, and shall serve out the remaining term of service of his
predecessor.
7.7 Performance
benchmarks of the Company shall be decided by the Board. The Board
will review on a regular basis the Company’s actual performance against the
financial, operational and strategic benchmarks set by the Board at the
beginning of each year, with a view to assess the conditions of the
Company. If the Company’s performance does not meet the relevant
benchmarks, the Board will consider adopting strategic alternatives (including
sale of the Company or its assets), and such decisions shall not constitute a
Reserved Matter of the Board.
8. Shareholders’
meeting
Shareholders’
meeting and voting rights
8.1 An annual
general meeting of the Company shall be convened by the Board within four (4)
months after the end of each Financial Year, unless otherwise required by the
Ordinance or the Articles of Association of the Company, in Hong Kong, the PRC
or the United States or any other location provided that such location shall be
reasonably convenient for the Directors and Shareholders. General
meetings other than such annual general meetings shall be called extraordinary
general meetings (such annual general meetings and extraordinary general
meetings to be collectively referred to as Shareholders'
Meeting). Unless waived by all Shareholders, the notice of each
Shareholders’ Meeting shall be given by the Chairman to all Shareholders no less
than thirty (30) days prior to the date of convening such meeting, and shall be
accompanied by the agenda of the meeting together with all written papers to be
circulated to the Shareholders or presented at the meeting. In
addition, any extraordinary general meeting of the Shareholders may be held and
convened by the Shareholders in accordance with the Ordinance. Within
fourteen (14) days after each Shareholders’ Meeting, a copy of the minutes of
that meeting shall be delivered to each Shareholder. The minutes of
Shareholders’ Meetings shall be written in English and Chinese
languages.
Unless
otherwise prohibited by the Articles of Association of the Company or the
Ordinance, a Shareholders’ Meeting may also be held by means of telephone,
videoconferencing or any other modern communication devices using which the
representatives of the Shareholders can properly communicate with each other in
real time, and the representatives of Shareholders who properly attended a
meeting via such devices shall be deemed to have attended in
person.
Quorum
for Shareholders’ Meeting
8.2 The
quorum required by any Shareholders’ Meeting shall be constituted by at least
one (1) representative appointed by Party A and one (1) representative
appointed by Party B, present in person or by proxy. If proper notice
to convene a Shareholders' Meeting under Clause 8.1 has been given and if the required number
of Shareholders fail to attend the meeting by themselves or by proxy within
one (1) hour of the time scheduled for the commencement of the meeting, and
therefore a quorum is not constituted in accordance with this Clause 8.2, such Board meeting shall be adjourned and
reconvened in the same location and at the same time on the fourteenth (14th) day
(or such later date as specified by the Chairman) from the date of the earlier
meeting, and if at the reconvened meeting a quorum is not present within one (1)
hour from the time scheduled for the commencement of the meeting, then the
Shareholders present shall be deemed to constitute a quorum. In the event that a
Shareholders’ Meeting is reconvened and held in accordance with this Clause 8.2, only such matters as are specified in the agenda
for the originally scheduled meeting may be dealt with and be decided upon at
such reconvened meeting.
Written
resolution
8.3 A written
resolution signed by all of the Shareholders shall be deemed as valid and
effective as the resolution passed at a Shareholders’ Meeting duly convened,
without the need for any agenda and notice. The signature of any
Shareholder may be given by his duly authorised representative. Any
such resolution may be signed by the Shareholders in one or more counterparts
which shall, when taken together, constitute one and the same
document.
Voting
at Shareholders’ Meeting
8.4 Subject
to Clause 8.2 and unless otherwise required by the
Ordinance or other applicable laws, all resolutions passed by the Shareholders’
Meeting shall be adopted by the affirmative votes of more than fifty percent
(50%) of the voting rights present at the relevant Shareholders’
Meeting. Notwithstanding the foregoing, the adoption of any
resolutions for any of the matters set out below shall require the affirmative
votes of at least seventy-five percent (75%) of the voting rights present at the
relevant Shareholders’ Meeting provided, however, that immediately upon a Change
of Control occurring in respect of Party B, the following matters shall, unless
otherwise mandatorily required by the Articles of Association of the Company and
the Ordinance, cease to require at least seventy-five percent (75%) of the
voting rights present at the relevant Shareholders’ Meeting:
(a)
|
modifications
to the Articles of Association of the Company, which do not constitute
corrections, restatements or amendments made to comply with applicable
laws or this Agreement;
|
(b)
|
redemption
of Shares, buy-back of Shares, reduction or conversion of capital or
change of the authorised share capital of the
Company;
|
(c)
|
any
form of reorganisation of the Company, including any merger, amalgamation,
reconstruction or consolidation of the Company with any third
party;
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(d)
|
winding
up, liquidation or dissolution of the Company or commencement of
bankruptcy proceedings with respect to, or appoint a liquidator or
official receiver to manage the assets of, the
Company.
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8.5 Each
Shareholder undertakes to the other Shareholders as follows:
(a)
|
to
exercise all voting rights and powers of control in relation to the
Company so as to give full effect to the terms and conditions of this
Agreement; and
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(b)
|
to
procure the Director(s) appointed by it and its other representatives and
nominees (subject to the Directors’ fiduciary duties to the Company) to
support and implement all resolutions of the
Shareholders.
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9. Restrictions
on sale of equity interest
Lock-up
of Equity Interest
9.1 During
the Lock-up Period, except with prior written consent of the other Shareholders
or except for the transactions contemplated in Clause 9.4 (Transfer to Affiliates and Mandatory
Transfers), each of the Shareholders shall not Transfer the legal or
beneficial interest in all or any part of the Shares held or owned by it to any
third party.
Transfer
following expiry of Lock-up Period
9.2 Subject
to the provisions in this Clause 9, each
Shareholder shall be permitted to:
(a)
|
transfer
up to twenty five percent (25%) of the total equity interest in the
Company then held by it following the expiry date of the Lock-up Period
(Initial
Equity Interest); and
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(b)
|
transfer
up to an additional twenty five percent (25%) of its Initial Equity
Interest on or after the expiry of each 12-month anniversary following the
Lock-up Period provided that, if, as a result of such transfer of stock in
the Company, the percentage interests of the parties hereto are reduced,
the following shall apply:
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(i)
|
Party
A shall only have the right to nominate two (2) Directors if it holds 30%
or more, but less than 45% equity interest in the Company from time to
time;
|
(ii)
|
Party
A and Party B shall only have the right to nominate one (1) Director if
that Party holds 15% or more, but less than 30% equity interest in the
Company from time to time; and
|
(iii)
|
Party
A and Party B shall lose the right to nominate a Director if that Party
holds less than 15% equity interest in the
Company.
|
(c)
|
The
foregoing provisions shall not apply if the Parties’ percentage interests
are reduced through the issuance of additional Shares by the Company
rather than by transfer.
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Pre-emptive
Right
9.3 Subject
to Clauses 9.1 to 9.2, each of Party A and Party B
undertakes the following:
(a)
|
If
any Shareholder receives a bona fide written offer from a third party
purchaser (the Third Party
Purchaser) and intends to accept such offer, the selling
Shareholder shall give a written notice (the Transfer
Notice) to the other Shareholder (the Non-transferring
Shareholder) relating to the Third Party Purchaser offer and shall
set out details of the identity of the Third Party Purchaser, the price of
and other terms and conditions for the Third Party Purchaser
offer.
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(b)
|
Subject
to Clause 9.3(d), within fifteen (15) days after receipt of
the Transfer Notice (the Acceptance
Period), the Non-transferring Shareholder shall have the right to
notify the selling Shareholder in writing of its election to purchase all
(but not less than all) of the Shares offered for sale (Offered
Shares) at the price stated in the Third Party Purchaser offer and
under the other terms and conditions as set out in the Transfer Notice
(the Pre-emptive
Right).
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(c)
|
The
failure by the Non-transferring Shareholder to deliver the notice under
Clause 9.3(b) to the selling Shareholder within the Acceptance Period
shall be deemed as waiver of its right to exercise its Pre-emptive Right.
In such case and subject to Clause 9.3(a), the selling Shareholder may
transfer the Offered Shares to the Third Party Purchaser at the price and
under other terms and conditions not more favourable than those as set out
in the Transfer Notice and based on good faith and arm's length terms,
provided that (i) such transfer shall be completed within ninety (90) days
after the date of the Transfer Notice and the Third Party Purchaser enters
into a Deed of Adherence, and (ii) the Third Party Purchaser purchases all
(but not less than all) of the Shares offered for sale by the selling
Shareholder.
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(d)
|
For
purposes of this Clause 9.3, a bona fide
offer means a genuine offer obtained through negotiations based on good
faith and arm’s length terms, and given by an unrelated party which is not
otherwise affiliated with the selling
Shareholder.
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Transfer
to Affiliates and Mandatory Transfers
9.4 Notwithstanding
other provisions of this Clause 9, each Party may
freely transfer all or part of its Shares to one of its
Affiliates. The transferring Shareholder shall give written notice to
the Board and the other Shareholder of the transfer, specifying the name, legal
address and legal representative (if applicable) of the Affiliate and providing
documentary evidence reasonably satisfactory to the other Shareholder that the
proposed transferee is its Affiliate, provided always that such Affiliate shall
enter into a Deed of Adherence.
9.5 Notwithstanding
other provisions of this Clause 9, Party A shall be
entitled to Transfer all or part of its Shares to any PRC state-owned enterprise
that is not controlled by the PRC military or a designated military supplier who
conducts substantial business with the PRC military, provided that:
(a)
|
the
Transfer is required by any applicable PRC law or mandated in writing by a
competent Governmental Body having jurisdiction over Party
A;
|
(b)
|
it
shall give written notice to the Board and Party B in respect of the
transfer, setting out the name, legal address and legal representative (if
applicable) of the transferee; and
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(c)
|
Party
A agrees, to the extent permitted by applicable PRC law or the competent
Governmental Body, to use reasonable efforts to procure the transferee to
undertake in writing to comply with the terms and conditions of this
Agreement.
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10. Deadlock
10.1 The
Parties shall cause the Directors to, in good faith, attempt to arrive at a
consensus when considering significant decisions relating to the management and
the operation of the Company. The Parties shall strive to avoid
impasse in decisions to be made by the Board.
10.2 A Deadlock
shall be deemed to have occurred in the event that a decision cannot be made on
any matter to be decided by the Board (including any Reserved Matter as
specified in Schedule 1) due to which no
action can be taken on the matter in question in three (3) successive duly
convened Board meetings at which a quorum is present.
10.3 Upon a
Deadlock having occurred, either Shareholder may give notice in writing (the
Deadlock
Notice) to the Chief Executive Officer (or person holding an equivalent
position) of the other Shareholder (collectively referred to as the “Chief
Officers”), of the existence of a Deadlock and the issue on which Deadlock has
arisen (hereinafter referred to as the Fundamental
Issue). The Deadlock Notice shall specify in reasonable detail the nature
of the Fundamental Issue giving rise thereto. The Chief Officer receiving the
Deadlock Notice shall promptly arrange for a meeting with the other Chief
Officer for the purpose of resolving the Deadlock. The meeting shall be held
within twenty-five (25) Business Days from the date the Deadlock Notice is
given.
10.4 In the
event the Fundamental Issue is not resolved within seventy-five (75) days after
the aforementioned meeting of the Chief Officers, unless the Shareholders
mutually agree in writing regarding an alternative solution, Party A may within
fifteen (15) Business Days notify Party B (a Deadlock Offer
Notice) specifying a price at which it offers to sell or purchase all
(but not less than all) of the Shares of Party B. If Party A does not issue a
Deadlock Offer Notice within the said fifteen (15) Business Day, Party B may
within a further fifteen (15) Business Days serve a Deadlock Offer Notice on
Party A specifying a price at which it offers to sell or purchase all (but not
less than all) of the Shares of Party A. A Deadlock Offer Notice is
irrevocable.
10.5 Within a
period of ten (10) Business Days after receiving a Deadlock Option Notice, the
recipient Party shall at its sole option elect either to:
(a)
|
buy,
all of the other Party’s Shares at the price stated in the Deadlock Offer
Notice; or
|
(b)
|
require
the other Party to buy all (but not less than all) of the Shares held by
the recipient Party at the same price per Share as would have applied to a
purchase under option (a).
|
10.6 If the
recipient Party fails to make an election within the period stipulated in Clause
10.5, it shall be deemed to have agreed to sell to
the Party issuing the Deadlock Offer Notice all (but not less than all) of the
Shares held by the recipient Party at the same price per Share as would have
applied to a purchase under Clause 10.5(a).
10.7 If (a)
neither Party issues a Deadlock Offer Notice within the required period as
provided under Clause 10.4 or (b) the recipient
Party is deemed to have agreed to sell its Shares under Clause 10.6 but the Party issuing the Deadlock Offer Notice
does not wish to proceed with the purchase, the Parties shall (unless they agree
otherwise) make reasonable efforts to seek a third party purchaser for either
all of the Shares held by both Parties or the entire shareholding of one of the
Parties. If a third party purchaser acceptable to the Parties cannot be found
within a sixty (60)-day period, the Parties shall proceed without
delay to commence liquidation proceedings in respect of the
Company.
10.8 An Emergency
Deadlock
Event occurs where the Board is unable to make a decision on any matter
on the first occasion the matter is put to the Board and such matter, if not
addressed immediately, will or is reasonably likely to lead to the imminent
insolvency or bankruptcy of either the Company or all of the Group Companies
taken as a whole. In the case of an Emergency Deadlock Event having occurred, if
such Emergency Deadlock Event is not resolved by the Board in consultation with
the Chief Officers within thirty (30) days after the initial Board meeting that
considered the matter, the Party whose nominated Director initially proposed the
matter to the Board may serve the other Party a Deadlock Offer Notice specifying
a price at which it offers to sell or purchase all (but not less than all) of
the Shares of the other Party, in which case Clauses 10.4 to 10.7 shall apply mutatis
mutandis.
10.9 Notwithstanding
any Deadlock or Emergency Deadlock Event, the Parties must, so far as it is
reasonably practicable, continue to perform and comply with their respective
obligations under this Agreement to the extent that such obligations are not the
subject of the Deadlock until the procedure described in this Clause 10 has been completed.
11. Termination
11.1 A Party,
or either Party as specified below, shall be entitled to terminate this
Agreement forthwith upon the occurrence of any of the following events (Termination
Events):
(a)
|
by
the remaining sole Shareholder if upon completion of Transfer of Shares
according to this Agreement (including pursuant to the procedure
applicable to a Deadlock), the Company has only one remaining
Shareholder;
|
(b)
|
upon
mutual agreement in writing by the Parties to terminate this
Agreement;
|
(c)
|
by
Party A, in the event that any Regulatory Approval required from any U.S.
Governmental Body, or by Party B, in the event any Regulatory Approval
required from PRC Governmental Body is withdrawn or modified or is not
renewed at any time preventing the Group Companies from continuing to
carry on the Business or a substantial part thereof, thereby rendering the
Company unable to achieve the commercial objectives set by the
Board;
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(d)
|
by
the non-Defaulting Party, upon a Party (the Defaulting
Party) committing a material breach or default of this Agreement or
a material breach or default of any of the Ancillary Agreements causing
material detriment to a Group Company (such right of termination shall be
without prejudice to any right or action to claim damages by the
non-Defaulting Party).
|
(e)
|
by
the non-insolvent party upon an Insolvency Event occurring in respect of
the other Party;
|
(f)
|
by
either Party, upon occurrence of a Material Event of Force Majeure as
provided in Clause 22.3;
|
(g)
|
by
either Party if all or a material portion of the assets or property of the
Group Companies are expropriated or requisitioned by any Governmental
Body.
|
11.2 In the
case of a Termination Event in Clause 11.1(b), 11.1(c), 11.1(e), 11.1(f) or 11.1(g), the
Shareholder electing to terminate shall have the right to serve a Deadlock Offer
Notice to the other Shareholder in accordance with the procedures set out in
Clause 10.4, in which case, Clauses 10.5 to 10.7 shall apply mutatis
mutandis.
11.3 In the
case of a Termination Event in Clause 11.1(d), the
non-Defaulting Party shall have the right to serve a Deadlock Offer Notice to
the Defaulting Party in accordance with the procedures set out in Clause 10.4,
in which case, Clauses 10.5 to 10.7 shall apply mutatis mutandis, provided
that if the
Defaulting Party accepts or is deemed to have accepted the non-Defaulting
Party’s offer to purchase all of its Shares, the Parties agree that the
non-Defaulting Party shall be entitled to purchase the Defaulting Party’s Shares
at a per Share price which is 80% of the price of such Shares that would have
applied had the Defaulting Party not committed a material breach or
default.
11.4 Nothing
in this Clause 11 shall affect the non-Defaulting
Party’s right to claim damages or other compensation under applicable law for a
breach or, where appropriate, to seek an immediate remedy of an injunction,
specific performance or similar court order to enforce the Defaulting Party’s
obligations.
12. Business
Plan and Budget
The CEO
and CFO shall draw up the draft Business Plan and Budget. The Company
shall procure that the Business Plan and Budget for the next Financial Year be
submitted to the Board for examination and approval prior to 31 October of each
Financial Year and in addition to setting out details of the current situation
of the Group Companies and the Business, it shall also include detailed plans
and projections regarding:
(a)
|
estimated
revenues, expenditures and profits of the Group
Companies;
|
(b)
|
staffing
levels and plans for recruitment of personnel of the Group Companies;
and
|
(c)
|
planning
assumptions for all of the above.
|
The Board
shall complete its examination and approval of each Business Plan and Budget for
the next Financial Year prior to 31 December of each year. The
Company shall procure the CEO and the CFO to implement the Business Plan and
Budget as approved by the Board.
13. Financial
Affairs and Accounting
Financial
Year
13.1 The
financial year of the Company shall be from 1 January to 31 December (the Financial
Year). However the first financial year will begin on the
Establishment Date and end either on 31 December of the same calendar year, or
31 December of the following calendar year as the Board may decide at its first
meeting and subject to approval by the relevant Governmental Bodies (if
necessary).
Accounting
Principles and System
13.2 The
Company shall ensure that each Group Company keeps its accounts and prepare
financial statements in accordance with IFRS, or
(a) in
the case of Group Companies incorporated in the PRC, PRC GAAP; and
(b) in
the case of Group Companies incorporated in the United States, US
GAAP.
In
addition, the Company shall keep consolidated accounts for the Group Companies
in accordance with IFRS. If requested by Party A for its financial
reporting purposes, the Company shall prepare consolidated accounts for the
Group Companies in accordance with PRC GAAP. If requested by
Party B for its financial reporting purposes, the Company shall prepare
consolidated accounts for the Group Companies in accordance with US
GAAP.
13.3 The
accounting system and procedures to be adopted by the Company shall be approval
by the Board. The Company shall maintain complete and accurate
financial and accounting books and records and provides periodic reporting of
financial information which is in accordance with all relevant laws and
regulations and meets the requirements of the Shareholders and the
Board. The Company shall ensure that the other Group Companies keep
their respective accounting systems and procedures in accordance with the
requirements under this Clause 13.3.
13.4 US$ shall
be used as the units of account by the Company in its financial accounts or in
the case of any Group Companies incorporated in the PRC, RMB shall be used as
the units of account in its financial accounts. All financial
statements and reports of the Group Companies shall be written in English (and
in Chinese in the case of Group Companies incorporated in the
PRC). Party A shall be entitled to request copies of the English
language financial statements and reports to be translated into Chinese and the
costs of such translation shall be borne by the Company.
Independent
Auditor
13.5 The
Company shall engage an Auditing Firm as its auditor, to examine and verify the
annual financial statements of the Group Companies. The auditor shall
be appointed by the Board for two (2) years or such other term as it considers
desirable, and may be replaced by the Board at any time.
13.6 A
Shareholder may, at its own expense, appoint another accountant to audit the
accounts of the Company on its behalf. Reasonable cooperation and
access to the accounting books and records shall be given to such accountant and
such accountant shall maintain the confidentiality of all information disclosed
during the course of this audit (except for disclosure to the relevant party and
its Affiliates).
Company
Financial Statements
13.7 Within
twenty-five (25) days following the end of each fiscal quarter for the Company,
the CEO shall submit to the Board an operating report for the Group Companies
such fiscal quarter for review.
13.8 Within
120 days following the end of each Financial Year, the CEO shall submit to the
Board audited financial statements for the Group Companies for such Financial
Year (including audited balance sheet, profit and loss statement, cash flow
statement, foreign exchange balance and a profit distribution plan) together
with the audit report of the Auditing Firm.
13.9 The Board
shall review the audited financial statements and audit report of the Group
Companies and submit the same to the Shareholders’ Meeting for
approval.
Compliance
with Law
13.10 The
Parties agree that each of them and their respective representatives, as well as
the Company, shall operate in compliance with all applicable laws with respect
to the operation and business of the Company.
14. Information
and Reporting
14.1 A
Shareholder may examine the books, records and accounts to be kept by the
Company and each Group Company. A Shareholder shall be entitled to
receive any information held by the Company and each Group Company which such
Shareholder reasonably requires to keep it properly informed about the business
and affairs of such Group Company and generally to protect its interests as a
Shareholder.
14.2 Without
prejudice to the generality of Clause 14.1, the
Company and each Group Company shall, and each Shareholder shall procure that
the Company and each Group Company shall, supply each Shareholder
with:
(a)
|
unaudited
financial statements of the Group Companies at the quarterly Board
meetings of the Company. If the Board meeting is not held
within thirty (30) days of the end of a calendar quarter then the Company
or a Group Company shall in any event provide the unaudited quarterly
financial statements to each Party on the thirtieth (30th)
day after the end of the calendar
quarter;
|
(b)
|
annual
audited financial statements under IFRS or PRC GAAP (where relevant),
including cash flow statements as soon as they are available and no later
than 120 days after the end of the relevant Financial
Year;
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(c)
|
a
copy of monthly management accounts (including monthly income statement,
cash flow statement and balance sheet) of each Group
Company;
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(d)
|
written
details (including the Board’s reasonable estimate of potential liability
thereunder) of any litigation or arbitration commenced or threatened
against any Group Company which, if successful, would be likely to have a
material adverse effect on the Group Company as soon as practicable after
such litigation is threatened or
commenced.
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14.3 Each
Shareholder shall be entitled to request information, records, statements and
reports relating to the financial affairs of the Group Companies from the CFO
and CEO subject to reasonable notice of not less than five (5) Business Days,
and the CFO and CEO, as the case may be, shall promptly provide such information
requested (if readily available) and in any event within five (5) Business Days
of the request. Where the requested information is not readily
available, the CFO and CEO, as the case may be, shall use his or her best
endeavours to provide such information as soon as practicable.
15. Confidentiality
15.1 Confidentiality
undertaking
Each
Shareholder undertakes to the other Shareholders and to the Company that, unless
with the prior written consent of the relevant Shareholder who has provided the
Confidential Information, none of the Shareholders, its respective management,
employees, agents, Affiliates, Subsidiaries or other persons under its control
and the respective management, employees and agents of such person will, during
the validity period and after the termination of this Agreement (for whatever
reason) use, or divulge to any third party, or publish, or disclose, or permit
to publish or disclose any such Confidential Information which it has received
or acquired, or is likely to receive or acquire (whether or not such information
is marked as confidential if it is documented). Each Party acknowledges that
Party B is a publicly traded Unites States company listed on Nasdaq and
subject to the securities laws and regulations of the United
States. Each Party further acknowledges and agrees that it is aware,
and that its officers, employees, agents and other representatives are aware, of
restrictions imposed by the United States federal securities laws on a person
possessing material, non-public information about a company (which in the case
of Party B could include information about the Company) and that each party
and its officers, employees and agents will comply with such laws.
15.2 Exceptions
The
obligations as set out in Clause 15.1 shall not
apply to any information which:
(a)
|
is
in the public domain or obtained from the public through whatever channel
pursuant to this Agreement;
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(b)
|
is
rightfully in a Shareholder’s possession due to disclosure by a third
party entitled to disclose the Confidential Information and which is not
subject to restrictions as to the use and disclosure thereof, and such
information has been stored through proper
channels;
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(c)
|
is,
as required by any applicable law or any stock exchange, Governmental Body
or antitrust organisation with competent jurisdiction as appropriate,
disclosed only to the extent required by any Shareholder, which shall
first notify the other Shareholders of its intent to disclose the
information and take into account the reasonable opinion of the other
Shareholder; or
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(d)
|
is
independently developed by a Shareholder without use of the Confidential
Information.
|
15.3 Announcements
Except as
set forth below, any Shareholder or its Affiliates (or through a third party)
shall not publish any announcement or press release in connection with the
execution or subject matter of this Agreement without the prior written consent
of the other Shareholder (such consent shall not be unreasonably
withheld). If any Shareholder or any of its Affiliates has an
obligation to announce, disclose or declare under applicable laws or regulations
(including the listing rules of the relevant stock exchange) or as required by
any stock exchange or by any Governmental Body, the Shareholder shall inform
the other Shareholders and give the other Shareholders a
reasonable opportunity to comment on what is to be announced, disclosed or
declared prior to such announcement, disclosure or declaration, provided that
the other Shareholders shall not prevent or impede the Shareholder from its
obligations required by law or the rules of the relevant stock
exchange.
16. Entire
agreement
Save in
respect of the SPA, this Agreement (together with any relevant documents
referred to herein) constitute the entire agreement among the Parties and
supersedes any previous agreement, arrangement or memorandum among the Parties
relating to the subject matter of this Agreement, which shall cease to be
binding on all Parties.
Each
Party acknowledges that it is not relying on any statements, warranties or
representations given or made by any Party relating to the subject matter
hereof, save as expressly set out in this Agreement.
17. Further
Assurance
Each of
the Parties agrees to perform (or procure the performance of) all further acts
and things, and execute and deliver (or procure the execution and delivery of)
such further documents, as may be required by law or as may be necessary or
desirable to implement and/or give effect to this Agreement and the transactions
contemplated by it.
18. No
assignment
A Party
may not assign this Agreement or otherwise assign the interests in this
Agreement or any right or remedy hereunder without the prior written consent of
the other Parties, except that such assignment is pursuant to a Transfer in
accordance with Clause 9.
19. Modification
No
modification or amendment to this Agreement shall become effective, except where
it is signed in writing and confirmed by the authorised representative of each
of the Parties.
20. Notices
Each
notice, demand or other communication to be sent or given under or in connection
with this Agreement shall be in writing and delivered by facsimile, hand or
courier to the addresses or facsimile numbers of the relevant Parties as set out
below (or such other addresses or facsimile numbers as informed to the other
Parties in writing three (3) Business Days in advance):
To Party A:
Address:
|
0
Kilometre, Xxxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx
000000, People’s Republic of China
|
Facsimile
Number: x00
0000 000 0000
Attention: General
Manager
To Party B:
Address: 00000
Xxxxxxxx Xxxx, XX Xxxxxxxxxxx, XX 00000 XXX
Facsimile
Number: x0
000 000 0000
Attention: Chief
Executive Officer
Any
notice, demand or other communication so given to the relevant Party shall be
deemed to have been duly given: (a) if delivered by hand or courier, at the time
its receipt is signed for, whether or not the person signing for such receipt
has authority to do so, and (b) if sent or given by facsimile, when confirmation
of its transmission has been recorded by the sender's facsimile machine. In the
case of any notice received (or deemed received if not actually received by the
time of receipt as deemed) after 4.00 p.m. on any day, service shall be deemed
to occur on the next following Business Day.
21. Waiver
Any
Party’s failure to exercise, or delay in exercising, any right or remedy under
the provisions of this Agreement shall not operate or be construed as the
Party’s waiver of such right or remedy.
22. Force
majeure
22.1 None of the Parties shall be
liable for any breach of or failure to perform any of its obligations hereunder
where and to the extent that such breach or failure is caused by any event
beyond such Party’s reasonable control, including acts of God, fire, flood,
storms, typhoons, earthquakes, landslides, tsunamis, wars, civil strikes,
actions of any Governmental Body not attributable to Party A, epidemics,
terrorism and other similar events (an Event of Force
Majeure).
22.2 If an
Event of Force Majeure occurs, the performance of the contractual obligations
under this Agreement of the Party affected by such Event of Force Majeure shall,
to the extent and for the duration that they are affected by such Event of Force
Majeure, be suspended and shall automatically be extended, without penalty, for
a period equal to such suspension. A Party claiming an Event of Force Majeure
shall promptly give notice to the other Party by appropriate means, and shall
furnish reasonably substantial proof of the occurrence and duration of the
adverse consequences of such Event of Force Majeure. A Party claiming an Event
of Force Majeure shall also use all reasonable efforts to mitigate or terminate
the effects of Force Majeure on its obligations hereunder.
22.3 If an
Event of Force Majeure occurs in respect of any material obligation under this
Agreement (Material Event of
Force Majeure), the Parties shall immediately consult with each other in
order to find an equitable solution and shall use all reasonable efforts to
minimise the consequences of such Event of Force Majeure. If they are unable to
find a solution after six (6) months and the aforesaid Event of Force Majeure
continues unabated, either Party shall be entitled to terminate this Agreement
in accordance with Clause 11.1(f).
23. Counterparts
This
Agreement may be executed in any number of counterparts, and by each party on
separate counterparts. Each counterpart is an original, but all counterparts
shall together constitute one and the same instrument. Delivery of a counterpart
of this Agreement by e-mail attachment or telecopy shall be an effective mode of
delivery.
24. No
partnership
This
Agreement shall not constitute or be deemed to constitute a partnership between
the Parties and the Parties shall not have any power to bind the others in any
way.
25. Costs
and tax
Each
Party shall bear its own costs and expenses (including attorney fees and
transaction costs) incurred by it in its preparation, negotiation, execution and
performance of this Agreement and completion of the transactions contemplated
hereunder.
26. Conflict
with the articles of association
Notwithstanding
that the provisions of the Articles of Association or the Company’s further
amendments thereto may be contrary hereto, in the event of any ambiguity or
conflict arising between the provisions of this Agreement and those of the
Articles of Association, the provisions of this Agreement (so long as they
remain in full force and effect) shall prevail. The Company is not bound by any
provision of this Agreement to the extent that it constitutes an unlawful xxxxxx
on any statutory power of the Company.
27. Severability
If any
provision of this Agreement is or is held to be invalid or unenforceable, then
so far as it is invalid or unenforceable it has no effect and is deemed not to
be included in this Agreement. This shall not invalidate any of the
remaining provisions of this Agreement. The Parties shall use all
reasonable endeavours to replace any invalid or unenforceable provision by a
valid provision the effect of which is as close as possible to the intended
effect of the invalid or unenforceable provision.
28. Governing
law
This
Agreement shall be governed by and construed in accordance with the laws of Hong
Kong without giving effect to its principles of conflict of laws requiring the
substantive law of any other jurisdiction.
29. Dispute
Resolution
29.1 The
Parties agree that any dispute, claim, controversy or disagreement (the Dispute)
arising out of, relating to, or in connection with this Agreement (including the
formation, existence, validity, enforcement, performance, breach, termination or
interpretation thereof), shall be referred to and finally resolved in accordance
with the Arbitration Rules administered by the Singapore International
Arbitration Centre (SIAC) for
the time being in force, which rules are deemed to be incorporated herein by
reference. The legal seat of the arbitration shall be
Singapore. The arbitration tribunal (Tribunal) shall
consist of three arbitrators to be appointed by the chairman of the
SIAC. The language of the arbitration shall be English and
Chinese.
29.2 The
prevailing party shall be entitled to recover its reasonable costs and expenses,
including witness fees and expenses, arbitrators’ fees and expenses, and fees
and expenses of legal representation, incurred in the arbitration proceedings or
in any action to enforce this Agreement or any arbitral award in any judicial
proceeding.
29.3 The
arbitral award shall be delivered to the parties, shall be in writing, shall
state the reasons for the award, and shall be final and binding upon the
parties, and the parties agree to be bound thereby and to act
accordingly. Nothing in this Clause 29
shall prevent any Party from seeking conservatory or interim measures,
including, but not limited to, temporary restraining orders or preliminary
injunctions or their equivalent, from any court of competent jurisdiction before
the Tribunal is constituted or, thereafter, upon the order of the
Tribunal.
29.4 Judgment
upon any award may be entered by any court having jurisdiction thereof or having
jurisdiction over the relevant party or its assets. Each of the
Parties knowingly, voluntarily, intentionally and expressly waives any and all
rights it may have to a trial by jury with respect to any litigation instituted
to compel arbitration pursuant to this Clause 29 or to confirm, recognize, enforce, vacate, modify
or correct an award. Each of the Parties acknowledges and agrees that
any Party may effect a valid service or process in any arbitration or judicial
proceedings by delivering any arbitral or judicial process or notice by
utilizing the provisions set out in Clause 29.
30. Language
This
Agreement shall be written in both English and Chinese. Both language versions
shall have equal effect.
31. Effectiveness
Following
execution of this Agreement by the authorised representatives of the Parties,
this Agreement shall take effect from the Establishment Date.
IN WITNESS WHEREOF, the
Parties have duly executed this Agreement as of the day and year first above
written.
SIGNED
by
By:
/s/ Yong Xxxx
Xxx
Name: Yong
Xxxx Xxx
Title: General
Manager
for and
on behalf
of
TANGSHAN
CAOFEDIAN
INVESTMENT CO.,
LIMITED
SIGNED
by
By: /s/ Hong Q.
Hou
Name: Hong
Q.
Hou
Title: Chief
Executive Officer
for and
on behalf
of
EMCORE
CORPORATION