Certified Translation from the German language
EXHIBIT 10.15
INVESTMENT AGREEMENT
APL, INC.
AGREEMENT
ON THE ESTABLISHMENT OF A SILENT PARTNERSHIP BETWEEN
PHARMED LABS GMBH
SCHLIERSEESTRASSE 73, 81539 MUNICH
- hereinafter referred to as "Technology Company" -
AMERICAN PHARMED LABS, INC.
270 SYLVAN AVENUE
ENGLEWOOD CLIFFS, NJ 07632
USA
- hereinafter referred to as "APL, Inc."
and
TBG TECHNOLOGIE-BETEILIGUNGS-GESELLSCHAFT MBH
DER DEUTSCHEN AUSGLEICHSBANK
LUDWIG-ERHARD-PLATZ 1-3, 53179 BONN
- silent partner, hereinafter referred to as "tbg" -
in the amount of
DM 4,000,000
for the financing of the project described in Sec. 1 para. 2
PREAMBLE
1. Within the scope of the DtA Technology Program TBG will make an investment
to finance projects in the early phase, innovation projects and exit
financing projects as defined in the investment principles of said program
which form part of this Agreement.
2. Following the investment of TBG in the Technology Company, APL, Inc. holds
a share of 91.41% in the share capital of the Technology Company through
assumption of new shares issued in a capital increase.
APL, Inc. and TBG have entered into a separate agreement that inter alia
grants TBG the right to acquire shares in APL, Inc. for assignment of its
claim to repayment of the contribution to which it is entitled on the
basis of this Investment Agreement. This separate agreement further grants
APL, Inc. the right to demand from TBG the termination of the silent
partnership established with this Agreement and the transfer of the claim
to repayment of the contribution made by TBG under this Agreement for
shares in APL, Inc. (the "Option Agreement"). The Option Agreement is
attached to this Agreement as APPENDIX I.
SECTION 1
OBJECT OF THE COMPANY
1. The Technology Company, registered in the Commercial Register of the Local
Court Munich under HRB 117575, operates a business with the following
object pursuant to the Articles of Association in the version of August
25, 1997:
Research, development, production and distribution of pharmaceutical
products as well as the performance of all transactions serving this
purpose.
2. Within the scope of this object, the Technology Company deals with:
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Extended development program for innovative pain therapy systems (topical
and systematic) for the treatment of medium and severe pain with local
analytics and endogeneous morphins.
SECTION 2
CONTRIBUTION
1. tbg assumes a contribution in the amount of DM 4,000,000 exclusively for
the promotion of the innovation project described in Sec. 1 para. 2 and on
the basis of the information provided by the Technology Company in the
application for investment of October 1997.
2. The Technology Company can call in the contribution after the commencement
of the silent partnership (cf. Sec. 4 para. 1) to the extent its immediate
use according to its purpose is guaranteed.
The notice of call in of funds must be accompanied by a confirmation of
the requirements by APL, Inc.
4. This Agreement terminates if the contribution has not been called in at
least in part by June 30, 1998 at the latest.
5. At the time of the first partial call TBG shall retain a processing fee in
the amount of 1% of the total contribution agreed in this Agreement.
6. The contribution of TBG must be kept by the Technology Company on a
separate contribution account. Any withdrawals of TBG from this account
are excluded.
SECTION 3
COMMENCEMENT AND TERM OF THE SILENT PARTNERSHIP
1. The silent partnership begins as soon as both parties have signed this
Agreement, however, not before the Option Agreement between APL, Inc. and
TBG has been entered into.
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2. The term of the silent partnership is limited until December 31, 2007
subject to the termination of the Agreement pursuant to Sec. 12 or 13.
3. Upon termination of the silent partnership the contribution of TBG and any
share in profits not yet distributed are due for payment to TBG.
SECTION 4
MANAGEMENT
1. Unless provided otherwise below, TBG does not participate in the
management of the Technology Company.
2. The Technology Company requires the consent of TBG for
a) any amendment of the Articles of Association, in particular an
amendment of the object of the company, the admission of new
shareholders or the agreement of new participations;
b) the appointment and removal of managing directors of the Technology
Company or amendments to the managing director service agreements;
c) conclusion, amendment and termination of agreements regarding the
granting or acquisition of licenses, trademarks or know-how (except
in the daily software business), patents, utility models or designs
to the extent these concern the innovation project promoted by the
investment of TBG;
d) conclusion, amendment and termination of material distribution
agreements;
e) relocation, lease, sale or discontinuance of business operations in
whole or in part;
f) conclusion and termination of domination and profit and loss
transfer agreements;
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g) abandonment or material change of the innovation project described
in Sec. 1 para. 2;
h) to the extent these are not included in the project financing by
TBG, assumption of obligations for investments that exceed an amount
of DM 100,000 or in case of leasing, rent or usufructuary lease
agreements that exceed an amount of DM 10,000 per month.
3. Any consents pursuant to Sec. 4 para. 2 must be obtained directly from
TBG. Unless TBG declares its refusal to grant consent in writing within a
period of 14 days following receipt of the notice on the measures
requiring consent pursuant to Sec. 4 para. 2, the consent shall be deemed
given.
4. The provisions of this Sec. 4 shall apply only to the extent TBG does not
hold a participation in the Technology Company on the basis of other
investment agreements that grant TBG the same or more extensive rights
than the above.
SECTION 5
INFORMATION AND CONTROL RIGHTS
1. Unless TBG waives submission thereof, the Technology Company must report
to TBG every six months, as of March 31 and September 30 of each year, on
the economic situation of the Technology Company and the status of the
innovation project described in Sec. 1 para. 2. In addition, TBG shall
receive from the Technology Company a short monthly status report pursuant
to the attached APPENDIX II and at the end of the fiscal year an updated
business plan for the respective subsequent year.
2. The Technology Company must directly inform TBG in due time of all
measures that exceed the scope of the normal course of business.
3. In addition, TBG has the control rights set out in Sec. 716 German Civil
Code. This shall continue to apply following termination of the company in
the scope required to review the settlement amount.
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TBG may engage third persons for the exercise of its control rights.
4. The German Federal Audit Office is entitled to an audit right pursuant to
Sec. 91 German Federal Budget Act vis-a-vis the Technology Company and
APL. The Technology Company shall make available to the German Federal
Audit Office and TBG for audit purposes all documents that the German
Federal Audit Office considers necessary and furnish the corresponding
information, which the German Federal Audit Office and TBG shall treat
confidential.
5. Sec. 4 para. 4 shall apply mutatis mutandis.
SECTION 6
FISCAL YEAR, ANNUAL FINANCIAL STATEMENTS
1. The fiscal year of the silent partnership corresponds to that of the
Technology Company ("Investment Year"). The fiscal year of the Technology
Company ends on December 31 of each calendar year.
2. The Technology Company must prepare its annual financial statements
(balance sheet, profit and loss statement, notes) in compliance with Sec.
238 - 239 German Commercial Code within six months following the end of
the previous fiscal year and submit these to TBG in the original with
signature and certified by an auditor.
SECTION 7
PROFIT AND LOSS SHARING
1. TBG does not receive a minimum compensation independent of the annual
result of the Technology Company for its contribution. Under the Option
Agreement, TBG is granted the right to demand the exchange of the silent
partnership interest for shares of APL, Inc. on the basis of the terms
determined in the Option Agreement.
2. TBG receives a variable compensation of 6% of the annual profit realized
as from the calling in of the contribution.
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For any period in which TBG holds more than one participation in the
Technology Company, TBG, in addition to the respective minimum
compensation, shall receive only a total variable compensation of 9% of
the annual profits for all participations, however, at maximum 7% p.a. of
the aggregate of the contributions actually made.
Should further capital be injected into the Technology Company in further
financing rounds, the contracting parties shall adjust the profit share of
TBG to the then applicable capital structure.
Such share in profits is payable within two weeks following approval of
the annual financial statements (Sec. 6 para. 2).
3. The annual financial statements exclusive of the profit share of TBG is
decisive for the calculation pursuant to para. 2.
a) To be added to the annual profit are
- corporate income tax as well as bonus payments to the managing
directors, if any, to the extent these have reduced the annual
profit shown;
- extraordinary expenses to the extent these result from
business transactions prior to commencement of the silent
partnership;
- losses and sales or destruction of fixed assets to the extent
such assets existed at the time of commencement of the silent
partnership.
b) To be deducted from the annual profit are
- any amounts from the release of tax-free reserves set up prior
to the commencement of the silent partnership;
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- extraordinary income to the extent it results from business
transactions prior to commencement of the silent partnership;
- public grants, subsidies and allowances to the extent these
affected net income;
- income from the sale of fixed assets to the extent such assets
existed at the time of commencement of the silent partnership.
c) In the year of the calling in of the investment the annual profit
shall be deemed to have been realized evenly throughout the year for
the purposes of calculating the profit share pursuant to para. 2.
4. TBG does not participate in the losses of the Technology Company.
SECTION 8
SUBORDINATION
The contribution of TBG must be paid back using only funds from future annual
proftis, any excess liquidation proceeds or any funds in excess of all other
debt of the Technology Company vis-a-vis creditors that are not shareholders of
the Technology Company or APL, Inc. The subordination does not apply to claims
of all types to which the shareholders of the Technology Company or APL, Inc.
are entitled or which they asserted in another function.
Rather, such claims of the shareholders of the Technology Company or APL, Inc.
including any initial contributions and premium payments made by them and the
contribution of TBG under this Agreement have equal rank and must be satisfied
pro rata in the proportion of the amounts of the respective claims to each
other.
TBG shall in particular not assert its claims if and to the extent their
existence would cause grounds for bankruptcy or composition for the Technology
Company; rather, the claims of TBG under this Agreement shall not be treated as
bankruptcy or composition claims in bankruptcy or composition proceedings.
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SECTION 9
TAXES
The Technology Company shall ensure payment of the statutory capital gains tax
including solidarity surcharge with regard to the compensation for the silent
participation and withhold capital gains tax including solidarity surcharge from
the respective payments to TBG and pay such tax immediately after it becomes due
directly to the competent tax office. Following payment, the Technology Company
shall issue to TBG within two months after payment becomes due confirmations
within the meaning of Sec. 45a para. 2 German Income Tax Act on the forms
provided by TBG.
SECTION 10
DISSOLUTION OF SILENT PARTNERSHIP
In the event of the dissolution of the Technology Company, the silent
partnership shall also be dissolved. The silent participation must be repaid in
this case.
SECTION 11
TERMINATION
1. The Technology Company is entitled to repay the investment of TBG in whole
or in part observing a notice period of three months to June 30 or
December 31 of each year. In the event that TBG exercises the right set
out in Sec. 12 lit. a) pursuant to the Option Agreement and informs the
Technology Company thereof within four weeks as from receipt by TBG of the
declaration of the Technology Company pursuant to sentence 1, the
termination pursuant to sentence 1 shall become effective only at the
point in time set out in Sec. 12 sentence 2.
2. In addition, the silent partnership can be terminated for cause without
notice by written declaration of each of its partners. To the extent the
contribution has not been paid or has not been paid in full, TBG is
released from its contribution obligation upon the declaration of
termination.
TBG is in particular entitled to termination for cause if
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a) the Technology Company has provided incorrect information in its
investment application;
b) bills of exchange accepted by the Technology Company or APL, Inc.
are being protested, the Technology Company or APL, Inc. have
stopped payments, an application for bankruptcy or the institution
of court composition proceedings is filed or insolvency is
determined in another way;
c) the individuals with know-how in management positions with the
Technology Company or APL, Inc. at the time of the signing of the
Agreement on the Silent Partnership are no longer full-time managers
of the Technology Company or APL, Inc.;
d) one of the measures listed in Sec. 5 para 2 was performed without
the prior consent of TBG;
e) in case of Sec. 12.
Para. 1 sentence 2 shall apply accordingly unless the silent partnership is
terminated for cause by the Technology Company.
SECTION 12
TERMINATION THROUGH EXERCISE OF OPTION
The investment of TBG on the basis of this Agreement can also be terminated for
cause by TBG if
a) tbg exercises its right under the Option Agreement to demand the transfer
of shares in APL, Inc. for transfer of its claim to repayment of the
contribution;
or
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b) APL, Inc. exercises its right under the Option Agreement and demands the
termination of this Investment Agreement from TBG and transfers to TBG
shares in APL, Inc. for transfer of the claims of TBG for repayment of the
contribution.
The termination of the silent partnership shall become effective upon the
acquisition of shares in APL, Inc. by TBG.
SECTION 13
DUE PAYMENTS
Due payments shall bear interest at a rate of 4% p.a. from the occurrence of
default until receipt by TBG.
SECTION 14
GENERAL PROVISIONS
1. Any amendments of or additions to this Agreement require the written form.
There are no oral side agreements to this Agreement.
2. Should any provision of this Agreement be legally invalid, the remaining
provisions shall not be affected thereby. The Technology Company and TBG
are obligated to replace any invalid contractual provisions with legally
valid provisions that come as close as possible to the meaning and purpose
of the legally invalid provision.
3. Place of jurisdiction for all legal disputes arising from this Agreement
or its performance is Bonn.
Munich, February 17, 1998
(illegible signature) (illegible signature), Managing Director
- -------------------------------- ----------------------------------------
tbg Technologie-Beteiligungs Pharmed Labs GmbH
Gesellschaft mbH der
Deutschen Ausgleichsbank
(illegible signature), Chairman
- -------------------------------
American Pharmed Labs, Inc.
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I, Martina Bohmfeldt, in my capacity as a sworn translator for the English
language, hereby certify that the above is a correct and complete translation of
the German text presented to me in electronic form.
Frankfurt am Main, November 12, 2004
/s/ MARTINA BOHMFELDT
- -------------------------------
Martina Bohmfeldt
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