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LPL » Topics » Article 15. Deadlock

This excerpt taken from the LPL 20-F filed Apr 11, 2005.

Article 15. Deadlock

 

15.1 In the event of a Deadlock, each Party shall within ten (10) days of such Deadlock having arisen, cause its nominees on the Board of Directors to prepare and circulate to the other Party a memorandum setting out its position on the matter in dispute and its reasons for adopting such position. Each such memorandum shall be considered by a committee (“Mediation Committee”) comprised of respective nominees of NEG and LPL which shall meet together within 30 days of receipt of the memoranda and use its reasonable endeavors to resolve the Deadlock.

 

15.2 If the members of the Mediation Committee referred reach unanimous agreement, the Mediation Committee shall issue a statement setting out the terms of such agreement and each Party shall exercise the voting rights and other powers of control available to it in relation to the JVC to procure that the terms of such agreement are implemented. If the Mediation Committee does not so agree within 60 days of referral of the matter to the Mediation Committee, the top management of NEG and LPL shall discuss the matter in dispute.

 

15.3 If the Mediation Committee does not so agree within 60 days after the referral of the matter to the Mediation Committee, and the top management of NEG and LPL cannot agree within 30 days after the above 60 day period, and if LPL wishes to dispose all shares in the JVC currently held by LPL, LPL shall be entitled to sell those shares to NEG at the Fair Market Value, without the right of set-off, and if NEG wishes to purchase all shares in the JVC currently held by LPL, NEG shall purchase those shares at either: (1) Fair Market Value plus 5% thereof; or (2) if the Fair Market Value is lower than the par value, then the Fair Market Value plus 15% thereof (but not higher than the par value plus 5%), (the above rights given to LPL and NEG being hereinafter called “Option” and the

above shares which may be sold or purchased being hereinafter called “Option Shares”). The Option shall be exercised by either party (“Option Party”) serving on a written notice (“Option Notice”) of its wish to exercise the Option to the other party (“Non-Option Party”) within 30 days after failure by the top management of NEG and LPL to resolve the Deadlock within the above 30 days period.

 

15.4 Upon the determination of the Fair Market Value, the Non-Option Party shall within fifteen (15) days (i) agree to the Board of Directors or Shareholder resolution that is the subject of the Deadlock or withdraw the Board of Directors or Shareholder resolution that is the subject of the Deadlock, as the case may be, (and pay for all of the cost of determination of the Fair Market Value) or (ii) agree to the implementation of the Option. If the Non-Option Party accepts the implementation of the Option, the Option Party shall within fifteen (15) days (i) withdraw the Board of Directors or Shareholder resolution that is the subject of the Deadlock or agree to the Board of Directors or Shareholder resolution that is the subject of the Deadlock, as the case may be, (and pay for all of the cost of determination of the Fair Market Value) or (ii) proceed with the Option. If the Option Party decides to proceed with the Option, the Option Party shall give to the Non-Option Party written notice (the “Option Sale and Purchase Notice”), and upon such notice, the Non-Option Party shall immediately become bound to sell or buy, as the case may be, and the Option Party shall be bound to buy or sell, as the case may be, the Option Shares. The completion of the sale and purchase pursuant to an Option Notice shall take place no later than sixty (60) days after the date on which the Option Sale and Purchase Notice shall have been delivered; provided that if the purchasing party shall not be in a position to buy the shares due to laws and government regulations, the purchasing party shall have a right to designate a third party who may buy the shares.

 

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