EXHIBIT 10.6
SHORT FORM SHAREHOLDERS' AGREEMENT
THIS AGREEMENT has been made this 18/th/ day of August, 1999.
BETWEEN:
XXX XXXXXX, businessman, of 0000 Xxxxxxxxxx Xxxxxx,
Xxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
("Xxxxxx") OF THE FIRST PART
AND:
XXXX GEMMA, businessman, of 0000 Xxxxxxxx Xxxxxxx,
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
("Gemma") OF THE SECOND PART
AND:
XXXXXX XXXXXX, businessman, of 000 Xxxxx Xxxxx Xxxxx,
P.O. Box 103, Mayne Island, British Columbia V0N 2J0
("Dymont") OF THE THIRD PART
AND:
S.O. (XXX) XXXXXX, businessman, of 000 Xxxxx Xxxxx Xxxxx,
P.O. Box 103, Mayne Island, British Columbia V0N 2J0
("Tjelta") OF THE FOURTH PART
(Xxxxxx, Xxxxx, Dymont and Tjelta collectively referred to as the
"Shareholders")
WHEREAS:
A. The Shareholders are each holders of 1,000,000 common shares of
Hyperstealth Biotechnology Corporation (the "Company"), being an aggregate
4,000,000 common shares of the Company (the "Shares"), and will be shareholders
of successor companies in which they will hold shares (also, the "Shares");
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B. The Company (including successors) currently carries on the business of
developing and marketing hyperbaric xxxxxxxx together with negative passive ion
generators (collectively, the "Business");
C. The Company is currently restructuring its business so as a company
other than the Company may ultimately control the Business, in which case the
Shareholders will sell their Shares in the Company to the company that will
ultimately control the Business (the "Parent Company") at cost and the
Shareholders will purchase a similar percentage share interest in the Parent
Company;
D. The Shareholders desire to enter into this agreement in order to record
certain of their respective rights and obligations with respect to their
shareholdings in the Company or Parent Company, as the case may be.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the mutual covenants and agreements hereinafter set forth, the
parties hereto agree each with the other as follows:
1. Conduct with Respect to License Agreement
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1.1 The Shareholders have entered into license agreements (the "License
Agreements") dated August 17, 1999 with each of the Company and Hyperstealth
Biotechnology Inc. (a Colorado company) pursuant to which the Shareholders are
the licensors thereunder. The Shareholders hereby agree that with respect to
every and all transactions relating to the License Agreements, the Shareholders
will act as one collective unit and will make all decisions on a "majority"
basis, however, in the event that Shareholders are dead-locked with respect to
any decisions relating to the License Agreements, the Shareholders hereby agree
that Xxxxxx will have the casting vote.
1.2 The Shareholders hereby elect Xxxxxx to act as their representative and
spokesman with respect to any and all dealings and transactions relating to the
License Agreements.
2. Royalty Payments upon Retirement
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2.1 In the event that any Shareholder (the "Retiring Shareholder") retires,
terminates his employment with the Company or the Parent Company, as the case
may be, or otherwise disengages himself from the business of the Company or the
Parent Company, as the case may be (collectively, the "Retirement"), then the
Royalty (as that term is defined in the License Agreements) payable to such
Retiring Shareholder will be calculated as follows:
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(a) if the Retirement occurs at any time from the date of the License
Agreements to the end of the second year from the date of the License
Agreements, the Retiring Shareholder will receive a 0.5% Royalty for a
period of two years from the date of Retirement;
(b) if the Retirement occurs on or after the third year after the date of
the License Agreements, the Retiring Shareholder will receive a 0.5%
Royalty for a period of three years from the date of Retirement;
(c) if the Retirement occurs on or after the fourth year after the date of
the License Agreements, the Retiring Shareholder will receive a 0.5%
Royalty for a period of four years from the date of Retirement; and
(d) if the Retirement occurs on or after the fifth year after the date of
the License Agreements, the Retiring Shareholder will receive a 0.5%
Royalty for a period of five years from the date of Retirement.
2.2 The Retiring Shareholder will transfer, for an aggregate price of
$1.00, the Retiring Shareholder's Royalty from the License Agreements to the
non-Retiring Shareholders, pro-rata, and the reduced Royalty as set out in
section 2.1 above will be paid by the non-Retiring Shareholders through a
direction from Xxxxxx to the Company to pay such reduced Royalty payment to the
Retiring Shareholder directly from the Company. The non-Retiring Shareholders
will share equally in any portion of the Royalty granted to the Retiring
Shareholder under the License Agreements that is not paid to the Retiring
Shareholder pursuant to section 2.1.
3. Sale of Shares on Death
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3.1 Upon the death of any of the Shareholders (the "Deceased
Shareholder"), the personal representatives of the Deceased Shareholder will
provide the remaining Shareholders with a pro rata right of first refusal with
respect to the purchase and sale of all of the shares owned by the Deceased
Shareholder at the date of his death (the "Deceased's Shares"). The personal
representatives of the Deceased Shareholder will provide the remaining
Shareholders with written notice (the "Notice") of their intent to sell the
Deceased's Shares at a price to be determined in accordance with the provisions
of section 3.2 and upon the terms set forth in section 3.3 and the remaining
Shareholders will have 30 days from the date the purchase price is determined in
accordance with section 3.2 to accept the offer contained in the Notice. The
remaining Shareholders, as to those accepting the offer, have a right to
purchase equally. Not less than 50% of the offered shares shall be accepted for
purchase. In the event that any of the remaining Shareholders do not confirm
their acceptance of the offer within the said 30 days, the personal
representatives of the Deceased Shareholder may sell the shares to other parties
but on no lesser terms then those set out in the Notice and at no lesser
purchase price than that determined by section 3.2 below.
3.2 The purchase price of the shares purchased pursuant to this section
will be at the fair market value (calculated immediately prior to the death of
the Deceased Shareholder), as determined by a 10 day market average or, if there
is no market, as agreed between the personal representatives of the Deceased
Shareholder and the
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remaining Shareholders and failing agreement as determined by a single
arbitrator under the Commercial Arbitration Act (British Columbia).
3.3 The purchase price will be paid by the remaining Shareholders to the
personal representatives of the Deceased Shareholder and will be paid in 12
equal monthly payments together with interest (interest being accrued at 6%
annually, simple interest calculated monthly on the unpaid principal, payable
monthly in arrears).
3.4 If Revenue Canada or any other competent taxing authority at any time
hereafter proposes to issue or issues any assessment that would impose or
imposes any liability for tax on any of the parties hereto, or any other person,
on the basis that the fair market value for the shares purchased under this
section is greater or less than the purchase price fixed hereunder, then and in
that event the purchase price shall be adjusted to an amount equal to the fair
market value that is proposed by Revenue Canada or such other competent taxing
authority or used by it as the basis of any such assessment, to the extent that
counsel for any of the parties is of the opinion that the fair market value
basis proposed by Revenue Canada or such other competent taxing authority or
used by it in the making of any assessment would be upheld by a Court of
competent jurisdiction.
3.5 The right of the remaining Shareholders to receive the Offer set out
in section 3.1 above will not transfer to any remaining Shareholders' estates.
4. Default
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4.1 It is an event of default (a "Default") if a Shareholder (the
"Defaulting Shareholder") (the other Shareholders being referred to as the "Non-
Defaulting Shareholders"):
(a) fails to observe, perform or carry out any of his obligations under
this Agreement and such failure continues for 30 days after the Non-
Defaulting Shareholders or any of them has in writing demanded that
such failure be cured;
(b) becomes a bankrupt or commits an act of bankruptcy or if a receiver or
receiver-manager of its assets is appointed or makes an assignment for
the benefit of creditors or otherwise; or
(c) fails to observe, perform or carry out any of his obligations under
any employment contract made between the Company or the Parent
Company, as the case may be, and such Shareholder.
In the event that the purported Defaulting Shareholder disputes the
allegation of default, he will not be considered a Defaulting Shareholder until
the dispute has been properly adjudged but the Default, if any, will be
effective from the date of its occurrence.
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4.2 In the event of a Default, the Non-Defaulting Shareholder(s) may do
any one or more of the following:
(a) pursue any remedy available to them in law or equity, it being
acknowledged by each of the Shareholders that specific performance,
injunctive relief (mandatory or otherwise) or other equitable relief
may be the only adequate remedy for a Default;
(b) take all actions in their own names or in the name of the Defaulting
Shareholder, the Shareholders or the Company or Parent Company, as the
case may be, as may reasonably be required to cure the Default, in
which event all payments, costs and expenses incurred therefor shall
be payable by the Defaulting Shareholder to the Non-Defaulting
Shareholder(s) on demand with interest; or
(c) waive the Default provided, however, that any waiver of particular
Default shall not operate as a waiver of any subsequent or continuing
Default.
5. General Provisions
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5.1 This Agreement will terminate:
(a) if the Company or the Parent Company, as the case may be, ceases to
carry on business, has a receiving order made against it, goes into
bankruptcy either voluntarily or involuntarily or makes a proposal to
its creditors; or
(b) if the parties hereto consent in writing to the termination hereof.
5.2 The Shareholders will from time to time after the execution of this
Agreement make, do, execute or cause or permit to be made, done or executed, all
such further and other acts, deeds, things, devices and assurances in law
whatsoever as may be required to carry out the true intention and to give full
force and effect to this Agreement.
5.4 If any provision of this Agreement is unenforceable or invalid for any
reason whatever, such unenforceability or invalidity will not affect the
enforceability or validity of the remaining provisions of this Agreement and
such provision shall be severable from the remainder of this Agreement.
5.5 Any notice required to be given hereunder by any party will be deemed
to have been well and sufficiently given if mailed by prepaid registered mail,
telexed or telegraphed to, or delivered at, the address of the other party set
forth on the first page of this Agreement or at such other address as the party
may from time to time direct in writing, and any such notice will be deemed to
have been received, if mailed, five days after the time of mailing and 48 hours
after the time of telexing or telegraphing, and if
delivered, upon the date of delivery. If normal mail service, telex service or
telegraph service is interrupted by strike, slowdown, force majeure or other
cause, a notice sent by the impaired means of communication will not be deemed
to be received until actually received, and the party sending the notice will
utilize any other such services which have not been so interrupted or shall
deliver such notice in order to ensure prompt receipt thereof.
5.6 Time will be of the essence hereof.
5.7 This Agreement will be deemed to have been made and will be construed
in accordance with the laws of the Province of British Columbia and will be
treated in all respects as a British Columbia contract and the courts in British
Columbia will have exclusive jurisdiction over any disputes arising out of this
Agreement.
5.8 Should there be a disagreement or a dispute between the parties hereto
with respect to this Agreement or the interpretation of this Agreement, the
dispute will be referred to arbitration in accordance with the British Columbia
Commercial Arbitration Act.
5.9 The captions and section numbers appearing in this Agreement are
inserted for convenience of reference only and will in no way define, limit,
construe or describe the scope or intent of this Agreement nor in any way affect
this Agreement.
5.10 This Agreement will enure to the benefit of and be binding upon the
Shareholders and their respective representatives, successors, heirs, executors,
administrators, receivers, and permitted assigns.
5.11 This Agreement may be executed in counterparts, and if so executed,
all such parts will be read as constituting one agreement in the same manner as
if all parties executing this Agreement in counterparts were signatories to one
copy of this Agreement.
IN WITNESS WHEREOF the parties hereto have hereunto set their
respective hands and seals in the presence of their duly authorized signatories
as at date first written above.
SIGNED, SEALED AND DELIVERED )
by XXX XXXXXX, a Licensor herein, )
in the presence of: )
)
____________________________________)
Name ) /s/ Xxx Xxxxxx
) -------------------------------
) XXX XXXXXX
____________________________________)
Address )
)
____________________________________)
Occupation )
SIGNED, SEALED AND DELIVERED )
by XXXX GEMMA, a Licensor herein, )
in the presence of: )
)
____________________________________)
Name ) /s/ Xxxx Gemma
) ----------------------------
) XXXX GEMMA
____________________________________)
Address )
)
____________________________________)
Occupation )
SIGNED, SEALED AND DELIVERED )
by XXXXXX XXXXXX, a Licensor herein,)
in the presence of: )
)
____________________________________)
Name ) /s/ Xxxxxx Xxxxxx
) ----------------------------
) XXXXXX XXXXXX
____________________________________)
Address )
)
____________________________________)
Occupation )
SIGNED, SEALED AND DELIVERED by )
SVEN (XXX) TJELTA, a Licensor herein)
in the presence of: )
)
____________________________________)
Name ) /s/ Xxx Xxxxxx
) ----------------------------
) S.O. (XXX) TJELTA
____________________________________)
Address )
)
____________________________________)
Occupation )
