CHINA BCT PHARMACY GROUP, INC.
INDEPENDENT DIRECTOR AGREEMENT
This INDEPENDENT DIRECTOR AGREEMENT
(the “Agreement”) is made and entered into as of this
5th day of June, 2010, effective as of June 5, 2010 (the
“Effective Date”), by and between China BCT Pharmacy
Group, Inc. , a Delaware corporation whose shares are
publicly traded (the “Company”), and Man Wai Chiu a
citizen of the United Kingdom, with the following
address: Unit D, 20/F, Yip Shing Industrial Center, 19
Yip Shing Street, Kwai Chung, Hong Kong (the “Independent
Director”).
WHEREAS, the Company desires to engage the
Independent Director, and the Independent Director desires to
serve, as a non-employee director of the Company, subject to the
terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein, the receipt of which is
hereby acknowledged, the Company and the Independent Director,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
(a) “Corporate
Status” describes the capacity of the Independent Director
with respect to the Company and the services performed by the
Independent Director in that capacity.
(b) “Entity”
shall mean any corporation, partnership, limited liability company,
joint venture, trust, foundation, association, organization or
other legal entity.
(c) “Proceeding”
shall mean any threatened, pending or completed claim, action,
suit, arbitration, alternate dispute resolution process,
investigation, administrative hearing, appeal, or any other
proceeding, whether civil, criminal, administrative or
investigative, whether formal or informal, including a proceeding
initiated by the Independent Director pursuant to Section 12 of
this Agreement to enforce the Independent Director’s rights
hereunder.
(d) “Expenses”
shall mean all reasonable fees, costs and expenses, approved by the
Company in advance and reasonably incurred in connection with any
Proceeding, including, without limitation, attorneys’ fees,
disbursements and retainers, fees and disbursements of expert
witnesses, private investigators, professional advisors (including,
without limitation, accountants and investment bankers), court
costs, transcript costs, fees of experts, travel expenses,
duplicating, printing and binding costs, telephone and fax
transmission charges, postage, delivery services, secretarial
services, and other disbursements and expenses.
(e) “Liabilities”
shall mean judgments, damages, liabilities, losses, penalties,
excise taxes, fines and amounts paid in settlement.
(f) “Parent”
shall mean any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities ending with
the Company, if each of the corporations or entities, other than
the Company, owns stock or other interests possessing 50% or more
of the economic interest or the total combined voting power of all
classes of stock or other interests in one of the other
corporations or entities in the chain.
(g) “Subsidiary”
shall mean any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities beginning
with the Company, if each of the corporations or entities, other
than the last corporation or entity in the unbroken chain, owns
stock or other interests possessing 50% or more of the economic
interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in
the chain.
2. SERVICES
OF INDEPENDENT DIRECTOR. While this Agreement is in effect, the
Independent Director shall perform duties as an independent
director and/or a member of the committees of the Board, be
compensated for such and be reimbursed expenses in accordance with
the Schedule A attached to this Agreement, subject to the
following.
(a) The
Independent Director will perform services as is consistent with
Independent Director’s position with the Company, as required
and authorized by the By-Laws and Articles of Incorporation of the
Company, and in accordance with high professional and ethical
standards and all applicable laws and rules and regulations
pertaining to the Independent Director’s performance
hereunder, including without limitation, laws, rules and
regulations relating to a public company.
(b) The
Independent Director is solely responsible for taxes arising out of
any compensation paid by the Company to the Independent Director
under this Agreement, and the Independent Director understands that
he/she will be issued a U.S. Treasury form 1099 for any
compensation paid to him/her by the Company. The
Independent Director acknowledges and agrees that because he is not
an employee of the Company the Company will not withhold any
amounts for taxes from any of his payments under the
Agreement.
(c) The
Company may offset any and all monies payable to the Independent
Director to the extent of any monies owing to the Company from the
Independent Director.
(d) The
rules and regulations of the Company notified to the Independent
Director, from time to time, apply to the Independent Director.
Such rules and regulations are subject to change by the Company in
its sole discretion. Notwithstanding the foregoing, in the event of
any conflict or inconsistency between the terms and conditions of
this Agreement and rules and regulations of the Company, the terms
of this Agreement control.
3. REQUIREMENTS
OF INDEPENDENT DIRECTOR. During the term of the Independent
Director’s services to the Company hereunder, Independent
Director shall observe all applicable laws and regulations relating
to independent directors of a public company as promulgated from to
time, and shall not: (1) be an employee of the Company or any
Parent or Subsidiary; (2) accept, directly or indirectly, any
consulting, advisory, or other compensatory fee from the Company
other than as a director and/or a member of a committee of the
Board; (3) be an affiliated person of the Company or any Parent or
Subsidiary, as the term “affiliate” is defined in 17
CFR 240.10A-3(e)(1), other than in his capacity as a director
and/or a member of a committee of the Board; (4) possess an
interest in any transaction with the Company or any Parent or
Subsidiary, for which disclosure would be required pursuant to 17
CFR 229.404(a), other than in his capacity as a director and/or a
member of a committee of the Board committees; (5) be engaged in a
business relationship with the Company or any Parent or Subsidiary,
for which disclosure would be required pursuant to 17 CFR
229.404(b), except that the required beneficial interest therein
shall be modified to be 5% hereby.
4. REPORT
OBLIGATION. While this Agreement is in effect, the Independent
Director shall immediately report to the Company in the event: (1)
the Independent Director knows or has reason to know or should have
known that any of the requirements specified in Section 3 hereof is
not satisfied or is not going to be satisfied; and (2) the
Independent Director simultaneously serves on an audit committee of
any other public company.
5. TERM
AND TERMINATION. The term of this Agreement and the Independent
Director’s services hereunder shall be for one (1) year from
the Effective Date, unless terminated as provided for in this
Section 5. This Agreement and the Independent Director’s
services hereunder shall terminate upon the earlier of the
following:
(a) Removal
of the Independent Director as a director of the Company, upon
proper Board or stockholder action in accordance with the By-Laws
and Articles of Incorporation of the Company and applicable
law;
(b) Resignation
of the Independent Director as a director of the Company upon
written notice to the Board of Directors of the Company;
or
(c) Termination
of this Agreement by the Company, in the event any of the
requirements specified in Section 3 hereof is not satisfied, as
determined by the Company in its sole discretion.
6. LIMITATION
OF LIABILITY. In no event shall the Independent Director be
individually liable to the Company or its shareholders for any
damages for breach of fiduciary duty as an independent director of
the Company, unless the Independent Director’s act or failure
to act involves intentional misconduct, fraud or a knowing
violation of law.
7. AGREEMENT
OF INDEMNITY. The Company agrees to indemnify the Independent
Director as follows:
(a) Subject
to the exceptions contained in Section 8(a) below, if the
Independent Director was or is a party or is threatened to be made
a party to any Proceeding (other than an action by or in the right
of the Company) by reason of the Independent Director’s
Corporate Status, the Independent Director shall be indemnified by
the Company against all Expenses and Liabilities incurred or paid
by the Independent Director in connection with such Proceeding
(referred to herein as “INDEMNIFIABLE EXPENSES” and
“INDEMNIFIABLE LIABILITIES,” respectively, and
collectively as “INDEMNIFIABLE AMOUNTS”).
(b) Subject
to the exceptions contained in Section 8(b) below, if the
Independent Director was or is a party or is threatened to be made
a party to any Proceeding by or in the right of the Company, to
procure a judgment in its favor by reason of the Independent
Director’s Corporate Status, the Independent Director shall
be indemnified by the Company against all Indemnifiable
Expenses.
(c) For
purposes of this Agreement, the Independent Director shall be
deemed to have acted in good faith in conducting the
Company’s affairs as an independent director of the Company
and/or a member of a committee of the Board of the Company, if the
Independent Director: (i) exercised or used the same degree of
diligence, care, and skill as an ordinarily prudent man would have
exercised or used under the circumstances in the conduct of his own
affairs; or (ii) took, or omitted to take, an action in reliance
upon advise of counsels or other professional advisors for the
Company, or upon statements made or information furnished by other
directors, officers or employees of the Company, or upon a
financial statement of the Company provided by a person in charge
of its accounts or certified by a public accountant or a firm of
public accountants, which the Independent Director had reasonable
grounds to believe to be true.
8. EXCEPTIONS
TO INDEMNIFICATION. Director shall be entitled to indemnification
under Sections 7(a) and 7(b) above in all circumstances other than
the following:
(a) If
indemnification is requested under Section 7(a) and it has been
adjudicated finally by a court or arbitral body of competent
jurisdiction that, in connection with the subject of the Proceeding
out of which the claim for indemnification has arisen, (i) the
Independent Director failed to act in good faith and in a manner
the Independent Director reasonably believed to be in or not
opposed to the best interests of the Company, (ii) the Independent
Director had reasonable cause to believe that the Independent
Director’s conduct was unlawful, or (iii) the Independent
Director’s conduct constituted willful misconduct, fraud or
knowing violation of law, then the Independent Director shall not
be entitled to payment of Indemnifiable Amounts
hereunder.
(b) If
indemnification is requested under Section 7(b) and
(i) it
has been adjudicated finally by a court or arbitral body of
comp
