Exhibit 10.2
BUSINESS MANAGEMENT AGREEMENT
AGREEMENT made as of the 27th. February, 2002, by and among SHIMODA
RESOURCES HOLDINGS, INC., a corporation organized under the laws of Nevada (the
"Corporation"), and SHIMODA CAPITAL ADVISORS LIMITED, a limited liability
company organized under the laws of the Cayman Islands (the "Business Manager").
WITNESSETH:
- -----------
WHEREAS, the Corporation is organized under the laws of Nevada, formed of
the purpose of acquiring resources licences and resource companies in Emerging
Europe,i.e. the Russian Federation and other former Soviet Union republics, as
well as Central and Eastern Europe; and
WHEREAS, the Corporation desires to retain the management services of the
Business Manager for the Corporation, and the Business Manager is willing to
render such services, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual convenience
hereinafter set forth, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged the parties hereto intending to
be legally bound hereby agree as follows:
1. Appointment of the Business Manager. The Corporation hereby appoints the
Business Manager to act as the Business Manager to the Corporation for the
period and on the terms set forth in this Agreement. The Business Manager
accepts such appointment and agrees to render the services described herein for
the compensation herein provided, in accordance with the terms and conditions
set forth herein.
2. Duties of the Business Manager. Subject to the overall supervision and
authority of the Corporation's Board of Directors, the Business Manager shall be
responsible for the acquisition, management and disposition of the assets of the
Corporation in accordance with the Corporation's objectives, policies and
restrictions, the execution of all contracts, agreements, instruments and other
documents related to such activities, subject to the following understandings:
(a) The Business Manager shall furnish a continuous management program for
the Corporation and, in so doing, shall determine from time to time what
resources opportunities will be acquired, retained, sold or pledged by the
Corporation.
(b) The Corporation hereby appoints the Business Manager as an agent of the
Corporation with discretionary authority to negotiate and to effect resource
acquisition transactions and to implement the objectives and policies described
in the Bylaws on behalf and in the name of the Corporation pursuant to the
Business Manager's determination either directly with, or indirectly through a
sub-Business Manager, or with any other such agent.
(c) The Corporation appoints the Business Manager as an agent of the
Corporation with discretionary authority to determine when and how much the
Corporation should borrow, to negotiate the terms of all such borrowings and to
borrow, or instruct the Corporation's directors to borrow and to execute
documents in connection with such that prior written notice of such borrowings
shall be given to the Corporation's directors.
(d) Whenever the Business Manager deems the purchase or sale of an
resources opportunity to be in the best interest of the Corporation, the
Business Manager may, but shall not be obligated to aggregate if any. Allocation
of any resources opportunities, so aquired or sold, as well as the expenses
incurred in the transaction, will be obligations to the Corporation.
(f) The Business Manager shall render to the Corporation's Board of
Directors such periodic and special reports as the Corporation's Board of
Directors may reasonably request.
(g) The Business Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Bylaws of the Corporation
and the instructions and directions of the Board of Directors of the
Corporation.
(h) The Business Manager shall use its best efforts, judgment and facilities
in the performance of its duties under this Agreement.
3. Execution of Acquisitions and Divestments. The Corporation authorizes the
Business Manager directly or through any sub-Business Manager, to select the
agents that will execute acquisitions and divestments for the Corporation and
directs the Business Manager to use its best efforts to obtain the best
available price and execution except as prescribed herein.
4. Delivery of Documents. The Corporation has delivered to the Business Manager
copies of the Bylaws of the Corporation as in effect on the date hereof, and
will promptly notify and will deliver to the Business Manager all future
amendments and supplements thereto, if any. The Business Manager may rely on
these documents.
5. Remuneration and Expenses.
(a) Fees.
(i) For the services provided by the Business Manager pursuant to this
Agreement, the Corporation shall pay the Business Manager as
compensation therefor a management fee equal to 1.5% per annum of the
enterprise value (EV) of the Corporation, payable monthly in advance.
This fee shall be paid in U.S. Dollars and in immediately available
funds promptly at the beginning of each such month.
(ii) The Business Manager shall also be entitled to receive a
performance fee equal to 15.0% of the appreciation in the EV per share
of the Corporation per quarter, payable in arrears, paid only in
respect to appreciation that causes the EV of such share to exceed the
highest EV of the share on any previous performance fee calculation
date.
The performance fee is intended to create an incentive for the Business Manager
to maximise the performance of the Corporation's shares.
(b) Expenses.
The Corporation shall reimburse the Business Manager for all
reasonable out-of-pocket expenses incurred by it in connection with
the services to be performed by it pursuant to this Agreement. The
Business Manager shall be authorized to pay or cause the payment of
all expenses of the Corporation.
(c) Fees of an Advisor.
The Corporation shall bear and pay all the fees and expenses incurred
by it in connection with the retention of the services of any Resource
Project Advisor in connection with the performance of the Business
Manager's duties under the Agreement. The agreements between the
Business Manager and each Advisor, if any, will contain provisions
requiring the Advisors to adopt standards of care similar to those
contained in this Agreement.
(d) Performance Fee Disclosure.
The Corporation acknowledges that the fee arrangement contained in
Section 6(a) hereof may create an unrealized appreciation for the
Business Manager to make acquisitions that are riskier or more
speculative than would be the case in the absence of a performance
fee.
Since the Business Manager's compensation 5(a) hereof is based in part on the
unrealized appreciation of assets for which market quotations are not readily
available, the value of such assets will be recorded at their fair value as
determined in good faith by the Board of Directors of the Corporation in
consultation with the Business Manager.
6. Liability and Indemnification of Business Manager.
(a) The Business Manager shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Corporation in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Business
Manager in the performance of its obligations and duties under this Agreement.
Nothing herein shall in any way constitute a waiver or limitation of any rights
which the undersigned may have under any federal securities laws.
(b) The Corporation shall indemnify the Business Manager to the fullest
extent permitted by law against any and all judgments, fines, amounts paid in
settlement and reasonable expenses, including attorney's fees incurred by the
Business Manager of the Corporation except to the extent that such action, suit
or proceeding results from willful misfeasance, bad faith or gross negligence on
the part of the Business Manager.
7. Term; Assignment.
(a) This Agreement shall be effective from the date hereof for a period of
five (5) years, superseding all previous agreements between the parties hereto
and thereafter this Agreement shall automatically be renewed for additional
consecutive five-year terms, until terminated by the any of the parties hereto
as provided herein. The Corporation and the Business Manager may each terminate
this agreement as of the last day of the five-year period on at least ninety
(90) days' written notice to the other party. No such termination will, however,
affect the liabilities or obligations of the parties under this Agreement
arising from transactions initiated prior to such termination..
(b) No party to this Agreement may assign right or delegate any obligation
arising under this Agreement without the prior written consent of the other
party hereto.
8. Independent Contractor Status. This Agreement shall not be construed to
constitute a partnership between the Business Manager and the Corporation. In
furnishing the services thereunder, the Business Manager shall for all purposes
herein be acting as an independent contractor, and nothing contained herein
shall be deemed to create an employer/employee relationship between the parties
hereto. Accordingly, the Business Manager shall have no authority to act for or
on behalf of the Corporation of to bind the Corporation in any way, except as
provided in this Agreement or as may otherwise be authorized by the Board of
Directors of the Corporation. Any office maintained by the Business Manager
shall not be considered an office of the Corporation.
9. Non-Exclusivity. Nothing in this Agreement shall limit or restrict the right
of any director, officer or employee of the Business Manager to engage in any
other business or to devote his time and attention in part to any other
business. Nothing in this Agreement shall limit or restrict the right of the
Business Manager to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
10. Notices. All notices, requests, demands and other communications provided
for under this Agreement shall be deemed delivered when sent if sent by telex or
facsimile or, if mailed, five Business Days after mailing by certified air mail,
postage prepaid, in all cases to party or parties at the following addresses:
If to the Corporation, then to:
Shimoda Resources Holdings, Inc.
c/o. Suite 230, 15 River Road,
Wilton, CT 06897,
USA
Telephone: (1203) 563-9430
Facsimile: (1203) 563-9832
If to the Business Manager, then to:
Shimoda Capital Advisors Limited.
69 Jennett Street,
George Town,
Grand Cayman,
Cayman Islands
Telephone: (345) 949-0050
Facsimile: (345) 949-8062
Attention: Mr.David Mapley
or as to each party, at such other address as shall be designated by such party
notice to the other parties complying as to delivery with the terms of this
Section 10.
11. Entire Agreement. This Agreement constitutes the entire Agreement of the
parties with respect to the subject matter hereof and supersedes all prior
written and oral agreements and understandings.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflicts of laws.
13. Disputes. Any claim, dispute or controversy arising out of or in connection
with or relating to this Agreement for the breach or alleged breach thereof
shall be submitted by the parties to such dispute initially to mediation in the
State of New York, before a single mediator agreeable to such parties. The
mediator shall convene both parties for such meetings as the mediator may
determine are necessary for the purposes of amicably resolving the dispute. If
the parties are unsuccessful in amicably resolving any such dispute through
mediation within forty-five days after the commencement of mediation then either
party or both of them may submit any such claim, dispute or controversy to
settlement by arbitration in the Cayman Islands before a panel of three
arbitrators, and the Award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.
14. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the dated herein above written.
SHIMODA RESOURCES HOLDINGS, INC.
By: /s/ Peter J Lazaro
------------------
Name: Peter Joseph Lazaro
Title: Secretary & Treasurer
SHIMODA CAPITAL ADVISORS LIMITED
By: /s/ David J Mapley
------------------
Name: David John Mapley
Title: Director