(iii) dies;
(iv) is guilty of any dishonesty in relation to the Company;
(v) is guilty of any breach of the Corporations Act;
(vi) for any reason ceases to be eligible to hold office as a director of the Company; or
(vii) being an employee of the Company, retires or resigns from that employment or has that employment terminated on account of:
(A) serious misconduct or fraud;
(B) any serious breach of faith, or serious neglect or default or wilful disregard of directions;
(C) the use or abuse alcohol or drugs to the extent he is no longer able to properly perform his functions under his contract of employment;
(D) he is convicted of an indictable or criminal offence;
then the Shareholder whose name appears along side the name of that person in Item 3 shall for the purposes of this clause and for the purposes of Schedule 2 be called "Transferring Shareholder";
(j) if a Shareholder becomes of unsound mind or is placed under the control of a committee or officer under a law relating to mental health (that Shareholder called here and in the Schedule 2 a "Transferring Shareholder").
13. TRANSFER TO THIRD PARTY
Where a Shareholder transfers part of its Shares to a third party with the consent of the other Shareholders or otherwise in compliance with this Deed, the incoming Shareholder and the then current Shareholders must before the incoming Shareholder's name is registered in the register of Shareholders execute a Deed of Accession by which the incoming Shareholder agrees to observe and be bound by this Deed as if it had executed this Deed as a party. The form of Deed of Accession is contained in Schedule 3.
14. DRAG ALONG OPTION
14.1 Drag Along Option
If at any time a Shareholder or Shareholders holding not less than 50% of the issued shares of the Company ("Majority Shareholders"), wish to transfer all the Shares held by them ("Sale Shares") and all other issued shares of the Company to any person ("Third Party") or wish to sell all or substantially all of the Assets to the Third Party, the Majority Shareholders shall have, subject to the terms of this clause 14 and its compliance with the provisions of this clause 14, the option ("Drag Along Option") of requiring all the other Shareholders ("Minority Shareholders") to:
(a) transfer to the Third Party or as the Third Party directs, all of the Shares held by the Minority Shareholders in accordance with this clause in which case it shall be entitled to transfer the Sale Shares to the Third Party without compliance with clause 11.2; or
(b) join in the sale of the Assets.
14.2 Substantial Sale Notice
If the Majority Shareholders propose to sell the Sale Shares, or the Assets, as the case may be under this clause, the Majority Shareholders must give a notice of its intention to the Company and the Minority Shareholders with reasonable particulars of the main commercial terms of the proposed sale including the proposed form of consideration ("Substantial Sale Notice").
14.3 Right of first refusal
Prior to the sale the subject of the Substantial Sale Notice proceeding, the Minority Shareholders will have a first right of refusal to acquire all of the Sale Shares or the Assets as the case may be at the price and on the terms agreed to by the third party. This right of refusal may be exercised by the Minority Shareholders at any time up to 7 days after the date of the Substantial Sale Notice. It will be a condition of any such sale to the Minority Shareholders that the Minority Shareholders will, with effect from the date of the sale, obtain the release of any and all guarantees given by the Majority Shareholders in support of the Company or the Business.
14.4 Exercise of Drag Along Option
If the Minority Shareholders have not exercised their right of first refusal in accordance with clause 14.3, the Majority Shareholders may exercise the Drag Along Option:
(a) within 60 days after the date of the Substantial Sale Notice;
(b) by giving notice ("Drag Along Notice") to that effect to the Minority Shareholders stating that the Minority Shareholders are required to transfer their Shares or join in the sale of the Assets accompanied by a copy of the latest version of any sale agreement to which the Minority Shareholders will be a party conforming with clause 14.5.
14.5 Agreement to be signed
Any agreement required to be signed by the Minority Shareholders must:
(a) not impose obligations upon the Minority Shareholders more onerous than the Majority Shareholders;
(b) not require joint and several obligations of the Minority Shareholders and Majority Shareholders, but instead their obligations shall be in proportion to their shareholding in the Company at the time; and
(c) not include a restraint of trade or similar upon the activities of the Minority Shareholders more onerous than under clause 15 of this Deed.
14.6 Execution of Agreement
At any time after the expiration of 14 days after giving the Drag Along Notice, the Majority Shareholders may sign an agreement to sell all the issued shares of the Company, or the Assets, as the case may be, to the Third Party providing the agreement complies with clause 14.3 and no material change has occurred to the latest version of the agreement provided under clause 14.4(b) of which the Minority Shareholders have not received 7 days prior notice.
14.7 Sale of Shares
If the Drag Along Notice refers to the sale of all the issued shares of the Company:
(a) the Minority Shareholders are only obliged to sell their shares at the same price per share payable by the Third Party to the Majority Shareholders in respect of the Sale Shares and providing:
(i) the Minority Shareholders receive the equivalent consideration which the Majority Shareholders are to receive (but taking into account their respective Shareholding) or cash only if the Minority Shareholders have elected to receive cash by notice in writing within 7 days after the date of the Drag Along Notice; and
(ii) the Majority Shareholders do not receive any material additional benefit not offered to the Minority Shareholders other than under commercial arrangements on arms length terms.
(b) the Majority Shareholders are empowered to sign the sale agreement on their own behalf and on behalf of the Minority Shareholders and the Minority Shareholders are bound by the agreement in respect of their shares providing the agreement is consistent with the terms of this clause 14;
(c) each Shareholder must immediately make available the certificates for its shares for delivery to the Third Party on completion and sign all documents required to complete the sale;
(d) each Shareholder and the Company appoints the Board and each member of the Board severally its attorney to sign any documents and issue any replacement share certificates required to complete the sale if a Shareholder fails to comply with clause 14.6(c);
(e) the sale consideration to be received by the Minority Shareholders for their issued shares must be paid or satisfied simultaneously with the transfer of the Minority Shareholders shares (subject to any adjustments or deferred consideration equally applicable to the Majority Shareholders);
(f) the Minority Shareholders shall in proportion to the percentage of the shares they hold in the Company at the time shall pay the Majority Shareholders that proportion of the reasonable costs and expenses of the sale and such costs and expenses shall be deducted from the sale consideration payable to the Minority Shareholders.
14.8 Sale of Assets
If the Drag Along Notice refers to the sale of the Assets:
(a) the Minority Shareholders are bound by the decision on behalf of the Company to enter into the agreement, and the Majority Shareholders are empowered to sign the agreement on behalf of the Company; and
(b) the Shareholders must, at the request of any Shareholder after the completion of the sale, pass a special resolution on short notice to wind up the Company to enable the distribution of the net proceeds of sale to the Shareholders.
14.9 Irrevocable
A Drag Along Notice, once given, is irrevocable but both the notice and all obligations under the Notice will lapse if for any reason the Majority Shareholders do not transfer the Sale Shares, or sell the Assets, as the case may be, to the Third Party or as the Third Party directs.
15. RESTRAINT OF TRADE
15.1 Restraint whilst a Shareholder
Subject to clause 15.2 each Shareholder agrees for the benefit of the other Shareholders that while the Shareholder (or a person or body corporate related to that Shareholder) is a Shareholder, (except with the prior written consent of the other Shareholders) it shall not either directly or indirectly:
(a) carry on, engage in or be concerned in a business the same as or similar to the Business conducted within Australia and New Zealand, whether on its own account or as a consultant or other contractor to or a partner, agent, employee, shareholder or director of any other person;
(b) provide financial or other assistance, to any person carrying on, engaged in or concerned with such business within Australia and New Zealand.
15.2 Exception
Nothing in clause 15.1 or 15.3 will prevent a Shareholder from:
(a) holding up to 20% of the voting shares in any public company listed on the Australian Stock Exchange Limited; or
(b) continuing to conduct its existing business activities as conducted as at the Commencement Date.
15.3 Restraint when ceasing to be a Shareholder
Upon a Shareholder transferring all its Shares, except where all the Shareholders agree otherwise, the following restrictions shall apply for a period of two years from the date of the transfer of the Shares:
(a) that Shareholder shall not seek to solicit the services of, or offer employment to, any person employed by the Company;
(b) that Shareholder shall not solicit or attempt to solicit business or custom from any person who is then, or was at any time during the previous two years, a client or customer of the Company or with whom the Company has had dealings during the previous two years or induce or try to induce any such person to withdraw custom from the Company.
16. TERMINATION
The carrying on of the Business by the Company and the relationship between the Shareholders as detailed in this Deed shall terminate only upon the mutual consent of the Shareholders IN WHICH CASE unless determined otherwise by a shareholder holding not less than fifty (50) per centum of the issued shares in the Company, the Company shall be wound-up.
17. SETTLEMENT OF DISPUTES AND DIFFERENCES
17.1 Resolution
Any dispute or difference arising between any of the Shareholders or between the Company and any Shareholders either during or after the termination, abandonment, or breach of this Deed as to its construction or any matter or thing of whatsoever nature arising under this Deed or in connection with it shall be attempted to be resolved by mediation.
17.2 Mediation
If anyone wishes to take any dispute or difference to mediation, it shall give to the others written notice of the dispute or difference, and at the expiration of (seven) 7 days from receipt of that notice, the parties shall meet to appoint a mediator and set the guidelines of the mediation. If the parties cannot agree on the mediator, the mediator shall be appointed by the President for the time being of the Victorian Chapter of the Institute of Arbitrators and Mediators Australia ("IAMA") and the mediation shall be conducted in accordance with and subject to IAMA Rules. The costs of the mediator shall be borne by parties to the mediation in equal shares and proportions.
17.3 Continuing obligations
The obligations of the parties under this Deed shall not cease or be suspended by reason of commencement of any mediation, arbitration or litigation and each party agrees to continue to perform the terms of this Deed notwithstanding the existence of a dispute or difference.
18. ASSURANCES
18.1 Give effect to Deed
�� Each party shall exercise all powers as are available, do all acts and things and sign, execute and deliver all documents and instruments necessary or reasonably required to give effect to this Deed.
18.2 Warranty
Each party warrants for the benefit of the others that it is empowered to enter this Deed and all instruments required or contemplated by this Deed and to give effect to each and every of its obligations undertaken or to be undertaken under this Deed or in or pursuant to those instruments.
19. GENERAL
19.1 Binding effect
The obligations, liabilities, rights and benefits of each party are binding on and enure to each and their respective legal personal representatives, successors in title, transferees and permitted assigns however those obligations, liabilities, rights and benefits cannot be sold, assigned, transferred or otherwise dealt with or disposed of by anyone other than in accordance with the terms and conditions of this Deed.
19.2 Costs
Each Party shall pay its own fees and expenses incidental to the negotiation, preparation and execution of this Deed, including the fees and disbursements of its lawyers and accountants.
19.3 Headings
The headings are not part of the agreement of the parties and are irrelevant to construction of this Deed.
19.4 Amendments
This Deed may not be amended, modified or supplemented except by a written instrument executed by Persons duly authorised on behalf of the Parties.
19.5 Waiver
No waiver by any Party of any default in the strict and literal performance of or compliance with any provision, condition or requirement herein shall be deemed to be a waiver of strict and literal performance of and compliance with any other provision, condition or requirement herein nor to be a waiver of or in any manner release any Party from strict compliance with any provision, condition or requirement in the future nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
19.6 Notices
Any notice or demand required to be given under this Deed shall be sufficiently served if in writing and sent by prepaid postage, hand or facsimile, posted, delivered or sent as the case may be to the address appearing in Item 1.
A notice or communication is deemed served if sent by:
(a) prepaid postage - on the third day following the date of posting;
(b) facsimile transmission and sent during normal office hours on a Business Day.
All other means of service allowed by law are permitted.
19.7 Counterparts
This Deed may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
19.8 Severance
If any provision of this Deed or any part is held or declared to be a violation of public policy, illegal, unenforceable, void, voidable, or invalid at law or in equity, or to be in breach of an Act of Parliament, a rule, regulation, ordinance or by-law, that provision or part shall be severable and of no force or effect and be deemed omitted from this Deed without affecting the validity of the remaining provisions and parts which other provisions and parts shall remain in full force and effect.
19.9 No assignment independent of sale of Shares
If a Shareholder transfers all of its Shares it must also assign or transfer its interest in, or its rights or obligations under, this Deed to the transferee of the Shares. A Shareholder has no right to assign or transfer its interest in, or its rights or obligations under, this Deed independently of the sale of its Shares.
19.10 Deed prevails
If there is any inconsistency between this Deed and the Constitution, the terms of this Deed prevail and each party shall use all its powers and rights to amend the inconsistent document or documents to accord with the terms of this Deed and shall procure that the Board of the Company vote in favour of all resolutions required to facilitate the amendment.
19.11 Governing law
This Deed shall be governed by and construed in accordance with the laws for the time being in force in Victoria and the parties irrevocably submit to the jurisdiction of the Courts of Victoria and Courts having appellate jurisdiction from the Courts of Victoria.
20. ADDITIONAL PROVISIONS
The Special Conditions shall be read and construed as if part of this Deed. If there is any inconsistency between the Special Conditions and any other term of this Deed, the Special Conditions shall prevail to the extent of the inconsistency.
EXECUTED AS A DEED
SIGNED by NATHAN JOHN STEWART )
In the presence of:
EXECUTED by FUTURE NOW INC in accordance with section 127(1) of the Corporations Act: | ) ) ) | |
| | | |
| | | |
Director/Chief Executive Officer | |
|
| | | |
| | | |
Name (please print) | |
Name (please print) |
EXECUTED for and on behalf of ALKEMI INTERNATIONAL PTY LTD by persons authorised to do so: | ) ) ) | |
| | | |
| ____________________________________ | | ____________________________________S |
| Signature of authorised person | | Signature of authorised person |
| | | |
| | | |
Name & position of signatory (please print) | |
Name & position of signatory (please print) |
SCHEDULE 1 - DETAILS
Item 1: Addresses:
(clause 19.6)
NATHAN JOHN STEWART
Address: Level 1, 1 Queens Road, Melbourne Victoria 3004, Australia
Facsimile: (61 3) 8640 0541
Attention: Nathan Stewart
FUTURE NOW INC
Address: 2401 East 23rd Street, Brooklyn, New York USA
Facsimile:
Attention: Jeffrey Eisenberg
ALKEMI INTERNATIONAL PTY LTD
Address: Level 1, 1 Queens Road, Melbourne Victoria 3004, Australia
Facsimile: (61 3) 8640 0541
Attention: Nathan Stewart
Item 2: Principal
(clause 1.1)
| | Name of Person(s) | Shareholder |
| | | |
| | Nathan John Stewart | Nathan John Stewart |
| | | |
| | Jeffrey Eisenberg | FutureNow |
Item 3: Special Conditions
(clause 1.1)
SC.1 The use of the ‘Alkemi International’ name
If Nathan Stewart ceases to hold in aggregate at least 50% of all shares issued in the capital of the Company, the Company shall upon the earlier of:
(a) �� the date six months after such cessation; or
(b) the date on which a third party acquires Shares whether by allotment or by transfer;
change its name to a name which does not include "Alkemi".
SCHEDULE 2 - SHARE TRANSFER
1.1 Procedure
Upon:
(A) a Transferring Shareholder issuing a Transfer Notice to the Company in accordance with clause 11.2, the Company shall notify the other Shareholders (the other Shareholders being referred to in this clause as the"Acquiring Shareholders") of that fact and the number of the Shares held by the Transferring Shareholder; or
(B) the Company becoming aware of the occurrence of an Event, the Company shall notify the Transferring Shareholder and the other Shareholders (the other Shareholders being referred to in this clause as the"Acquiring Shareholders") of that fact and the number of the Shares held by the Transferring Shareholder which notice shall constitute a Transfer Notice deemed given by the Transferring Shareholder on the day the Company gives the notice; or
and thereupon the Acquiring Shareholders shall have the option to acquire the Shares of the Transferring Shareholder ("Sale Shares") on the following terms and conditions:
(a) Company as agent the Company shall be deemed appointed agent of the Transferring Shareholder for the purposes of the transfer of the Sale Shares and the Transferring Shareholder shall be deemed to have irrevocably appointed the Acquiring Shareholders jointly and severally to be its attorney to prepare, complete and execute all forms of transfer and removal and other documents required to properly effect its obligations pursuant these provisions.
(b) Option Period each of the Acquiring Shareholders shall have an option to acquire the Sale Shares exercisable by delivery of an Option Notice to the Company (as agent for the Transferring Shareholder ) within 30 days of the Transfer Notice ("Option Period").
(c) Pro rata entitlement unless otherwise agreed by the Acquiring Shareholders, where there is more than one who has delivered an Option Notice each shall only be permitted to exercise its option in respect of the Sale Shares in the ratio that its Shareholding, at the time of the delivery of the Transfer Notice, bears to the aggregate Shareholdings of all Acquiring Shareholders who have delivered an Option Notice.
(d) Obligation to acquire all where there is only one Acquiring Shareholder who has delivered an Option Notice that Acquiring Shareholder shall be obliged to exercise its option in respect to all Sale Shares.
(e) Notification of purchasers within seven days of the conclusion of the Option Period, the Company shall notify in writing the Transferring Shareholder of those of the Acquiring Shareholders who have given the Company an Option Notice.
(f) Determination of purchase price upon delivery of the notice referred to in clause 1.1(e) of this Schedule, the Transferring Shareholder and those of the Acquiring Shareholders who have delivered an Option Notice shall agree the purchase price to be paid for the Sale Shares and failing agreement within seven days, at a price which the Valuer certifies in writing to be in the Valuer’s opinion the fair value of the Sale Shares based on the fair value of the Company as a going concern.
The Valuer must value the Company as an undivided whole and then calculate the value of the Sale Shares as that proportion of the value the Company which is the number of Sale Shares bears to the total number of issued Shares, and must not have regard to whether the Sale Shares to be valued constitute a controlling interest or a minority interest.
The Valuer must determine a single value and not a range of values and must carry out the valuation with proper care and professional responsibility.
The Valuer, in certifying the value of Sale Shares acts as an expert and not as an arbitrator and no arbitration legislation applies.
The Company must arrange for the Valuer's certificate of the value of the Sale Shares to be obtained within 30 days after the Transfer Notice is deemed given and to be notified promptly to the Transferring Shareholder and the Acquiring Shareholders.
The Valuer shall act as an expert and not as an arbitrator and the determination of the purchase price made pursuant to this clause shall be final and binding on the Transferring Shareholder and the Acquiring Shareholders who have given an Option Notice. The fees of the Valuer shall be paid by the Transferring Shareholder and in default of payment shall be a debt due to the Company.
(g) Right to withdraw each Acquiring Shareholder who has given an Option Notice may within seven days of receipt of the valuation from the Company withdraw its Option Notice by written notice given to the Company ("withdrawing purchaser"), in which case:
(i) the withdrawing purchaser shall have no obligation to proceed with its purchase;
(ii) the Company shall notify the Transferring Shareholder and the remaining purchasers of the withdrawal;
(iii) each remaining purchaser may within seven days of receipt of notification from the Company of the withdrawal, withdraw its Option Notice by written notice given to the Company in which case that purchaser shall have no obligation to proceed with its purchase and upon the conclusion of the seven day period, each purchaser who has not withdrawn its Option Notice in the prescribed manner shall be deem to have accepted to purchase (in proportion to their respective holdings of the Shares) additional Shares equivalent to those that were to be purchased by the purchasers who withdrew their Option Notices at the valuation established in accordance with clause 1.1(f) of this Schedule.
(h) Notification of purchasers within seven days of conclusion of time period specified in clause 1.1(g) of this Schedule, the Company shall notify the Transferring Shareholder of the purchasers of the Sale Shares in which case ("Purchaser Notice"), subject to clause 2 of this Schedule 2:
(i) within a further period of 21 days those of the Acquiring Shareholders bound to purchase the Sale Shares shall pay the purchase price to the Transferring Shareholder; and
(ii) the Transferring Shareholder shall be bound upon payment of the purchase price determined in accordance with this Schedule to transfer the appropriate Sale Shares to the relevant purchaser.
(i) Failure to transfer if the Transferring Shareholder fails to transfer any of the Sale Shares, the Company shall receive the purchase money, enter the name of the purchaser in the register of members, cancel and issue certificates and hold the purchase money for the Transferring Shareholder. The receipt by the Company for the purchase money shall be a good discharge to the purchaser and after entry in the register of members the validity of the registration of the transfer shall not be questioned by any person.
1.2 Resignation
Upon payment of the total purchase price for the whole of the Sale Shares, the Transferring Shareholder shall deliver to the Company resignations of the Directors representing it on the Board, and any employees holding office with the Company who are representatives of the Transferring Shareholder.
1.3 Common law rights remain
Where a Shareholder does not exercise its option to require the transfer of the Transferring Shareholder's Shares pursuant to the preceding sub-clauses, then nothing herein shall restrict the rights of that Shareholder to exercise its common law or statutory rights against the Transferring Shareholder in respect of any Event.
1.4 Further Assurances
Each Shareholder shall do all acts, matters and things and execute documents in order to give effect to the right of a Acquiring Shareholder to acquire the Sale Shares.
1.5 Option of Transferring Shareholder
Where a Transfer Notice has been delivered to the Company pursuant to clause 1.1(A) of this Schedule and no Acquiring Shareholder delivers an Option Notice (in the time stipulated in clause 1.1(b) of this Schedule) or should the Sale Shares not be acquired by the other Shareholders, the Acquiring Shareholders shall be deemed to have collectively elected to terminate this Deed and resolved to windup the Company ("Deemed Event") in which case the Transferring Shareholder shall have the option to acquire the Acquiring Shareholders' Shares and the provisions of clauses 1.1 and 1.2 of this Schedule shall apply mutatis mutandis to such option except that:
(a) the Transferring Shareholder shall be required to deliver the Option Notice within 14 days of date of the Deemed Event; and
(b) if the purchase price of the Sale Shares was originally determined by a Valuer pursuant to clause 1.1(f) of this Schedule, the value of the Acquiring Shareholders' Shares shall be determined by that same Valuer, if available to do so.
Should the Transferring Shareholder not exercise its option to acquire the Acquiring Shareholder's Shares, the Transferring Shareholder shall be entitled to transfer its Shares to any person approved by the Acquiring Shareholders. If no transferee is approved by the Acquiring Shareholders within 60 days of delivery of the Transfer Notice the Shareholders shall be deemed to have unanimously resolved to terminate this Deed and windup the Company.
SCHEDULE 3
DEED OF ACCESSION
Date:
PARTIES:
# [INSERT NAMES AND ADDRESSES OF THE SHAREHOLDERS AS AT DATE OF DEED OF ACCSESSION] (the "Current Shareholders")
# INSERT NAME AND ADDRESS OF COMPANY]
[ ] having its registered office at #
(the "Incoming Shareholder")]
BACKGROUND
A. The Current Shareholders are parties to a Shareholders Deed dated # (the "Deed").
B. Under the Deed the Incoming Shareholder is required to execute this deed prior to its name being entered in the register of Shareholders.
BY THIS DEED the parties agree as follows:
1. With effect from # (the "Effective Date") the Incoming Shareholder:
(a) becomes a party to the Deed as if it had been named as a party to the Deed and had executed it; and
(b) must observe and perform all of the obligations of a Shareholder contained in the Deed to be performed and observed by a Shareholder and will be bound by the terms of the Deed.
2. The Current Shareholders agree with the Incoming Shareholder that each of them will observe and perform their respective obligations under the Deed and will be bound by the terms of the Deed.
EXECUTED AS A DEED by:
SHAREHOLDERS DEED
BETWEEN
NATHAN JOHN STEWART
FUTURE NOW INC
AND
ALKEMI INTERNATIONAL PTY LTD
LARDNERS SOLICITORS
55 Mount Eliza Way
MOUNT ELIZA VIC 3930
AUSTRALIA
DX 93002 MOUNT ELIZA
Tel: 61 3 9787 4511
Fax: 61 3 9787 9799
E-mail: info@lardnerwhite.com.au
