EXHIBIT 10.3
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES
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1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In these Terms unless the context otherwise requires:
"Anniversary" means an anniversary of the Issue Date;
"Business Day" means a day (except a Saturday, Sunday or a public
holiday) on which banks are open for business in Sydney;
"Conversion Date" means the date specified in a Conversion Notice as
being the date on which conversion of the relevant Notes is to occur
under clause 7;
"Conversion Factor" means the number as last determined in accordance
with clause 8;
"Conversion Notice" means a notice substantially in the form of schedule
3;
"Default Rate" means, on any day, the sum of 2% and the Interest Rate on
that day;
"Distribution" means:
(a) a dividend (which, without limitation, includes an issue of shares
in lieu of a cash dividend and credited as fully or partly paid
out of profits or reserves); or
(b) any other distribution (which, without limitation, includes a
capital distribution, a cash distribution, a distribution of
property or rights or any other benefit whatever),
given or made available to any Shareholder in its capacity as such by
the Issuer or any other person and made, paid or credited in respect
of any Shares;
"Early Redemption Event" means:
(a) if the Issuer fails to pay within 20 Business Days after notice
any amount (including any interest) which is due and payable by it
under a Note;
(b) if the Issuer fails to perform any material provision of these
Terms (other than a failure referred to elsewhere in this
definition or, in the case of a breach of clause 15.3(a), where
security is granted to the Noteholders in accordance with clause
15.3(b)) and that failure is incapable of remedy or, if capable of
remedy, continues for 20 Business Days after the Issuer has
received notice of that failure (including, for example, if the
Issuer fails to issue any conversion Shares within 20 Business
Days as required by these Terms);
(c) if a Winding Up occurs;
(d) if a receiver, receiver and manager, or any analogous person is
appointed to any property of the Issuer; and
(e) if, prior to Listing, a change of control of the Issuer occurs
and, for this purpose a change of control shall only be taken to
have occurred at the time when all or any of the Nominated
Shareholders cease to hold beneficially, in aggregate, 50.1% of
all the issued Shares;
"Face Value" means $0.46 per Note;
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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"Galore Shareholders Deed Poll" means the deed poll so entitled and
entered into before the Issue Date by certain Shareholders;
"Interest Payment Date" means the first day after the last day of each
Interest Period, being either 30 June, 31 December or the date on which a
Note is repaid in full or converted (as applicable);
"Interest Period" means, for each Note:
(a) the period from and including the Issue Date to, but excluding, 30
June 1997 or (if earlier) the date on which that Note is repaid in
full or converted; and
(b) each subsequent period of 6 months from and including an Interest
Payment Date to, but excluding, the next Interest Payment Date or
(if earlier) the date on which that Note is repaid in full or
converted;
"Interest Rate" means 10.25% per annum;
"Issue Date" means the date of issue of the Notes;
"Issuer" means The Galore Group Limited ACN008577759;
"Listing" means one or both of the following:
(a) the listing of the Shares on the Stock Exchange; or
(b) the listing of shares or other securities in an entity other than
the Issuer on the Stock Exchange where those shares or other
securities represent all or substantially all of the economic
value of the Issuer and each Subsidiary;
"Nominated Shareholders" means each person (other than the Issuer) who
has entered into the Galore Shareholders Deed Poll;
"Note Certificate" means a certificate substantially in the form of
schedule 1 issued by the Issuer in accordance with these Terms evidencing
that the person named in it is the holder of the number of Notes shown in
it;
"Noteholder" means a person whose name is for the time being entered in
the Register as the holder of a Note;
"Notes" means the convertible notes issued by the Issuer on terms and
conditions identical to these Terms and evidenced by a Note Certificate;
"Principal Outstanding" means, in respect of a Note, at any time, the
amount of the Principal Sum remaining outstanding on that Note at that
time;
"Principal Sum" means in respect of a Note the total amount paid up on
the issue of the Note (being its Face Value);
"Redemption" means redemption of the Notes in accordance with clause 6;
"Redemption Date" means, in respect of the redemption of any Notes, the
date on which the Notes are redeemed under clause 6;
"Repayment Notice" means a notice substantially in the form of
schedule 2;
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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"Register" means the register of Noteholders kept and maintained in
accordance with clause 13;
"SBC Warburg" means SBC Warburg Australia Limited ACN008582705;
"Senior Indebtedness" means secured obligations of the Issuer ranking
ahead of the Notes in favour of:
(a) the Senior Creditor; and
(b) in relation to any assets of the Issuer or any Subsidiary located
in the United States, Merrill Lynch Business Financial Services
Inc. (or any related entity of Merrill Lynch).
"Senior Creditor" means Australia and New Zealand Banking Group Limited
ACN005357522 and ANZ Capel Court Limited or any bank or other major
financial institution which provides secured finance to the Issuer in
order to refinance the amount owing to Australia and New Zealand Banking
Group Limited and as notified by the Issuer to the Noteholders;
"Share" means an issued ordinary share in the capital of the Issuer;
"Shareholder" means each holder of a Share;
"Stock Exchange" means any recognised stock exchange or securities market
in the United States, Australia or any other country approved by SBC
Warburg;
"Subsidiary" means a subsidiary of the Issuer, determined in accordance
with the Corporations Law;
"Terms" means these terms and conditions;
"Unpaid Amount" means an amount which is not paid on the day on which it
is due and payable under these Terms, other than an amount deferred in
accordance with clause 5.2; and
"Winding Up" means:
(a) an order being made that the Issuer or any Subsidiary should be
wound up;
(b) a liquidator, an official manager or an administrator being
appointed in respect of the Issuer or any Subsidiary;
(c) a provisional liquidator being appointed in respect of the Issuer
or any Subsidiary and the provisional liquidator being ordered or
required to admit all debts to proof or pay all debts capable of
being admitted to proof proportionately;
(d) the Issuer or any Subsidiary entering into or resolving to enter
into a scheme of arrangement, deed of company arrangement, or
composition or assignment for the benefit of all or any class of
its creditors; or
(e) the Issuer or any Subsidiary being otherwise wound up or otherwise
dissolved or liquidated,
other than for the purposes of or as part of a solvent reconstruction of
the capital of the Issuer or any Subsidiary (as applicable).
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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1.2 Interpretation
In these Terms, unless the contrary intention appears:
(a) a reference to any legislation or legislative provision includes
any statutory modification or re-enactment of, or legislative
provision substituted for, and any subordinate legislation under,
that legislation or legislative provision;
(b) the singular includes the plural and vice versa;
(c) a reference to an individual or person includes a corporation,
firm, partnership, joint venture, association, authority,
trust, state or government and vice versa;
(d) a reference to any gender includes all genders;
(e) a reference to a clause or schedule is to a clause or schedule in
these Terms,
(f) a schedule forms part of these Terms;
(g) a reference to any agreement or document is to that agreement or
document (and; where applicable, any of its provisions) as
amended, novated, restated or replaced from time to time;
(h) a reference to any person includes that person's executors,
administrators, substitutes, successors and permitted assigns;
(i) where an expression is defined, another part of speech or
grammatical form of that expression has a corresponding meaning;
and
(j) "$" means Australian dollars.
1.3 Headings
In these Terms, headings are for convenience of reference only and do not
affect interpretation.
1.4 Business Day
If the day on which any act, matter or thing is to be done under or
pursuant to these Terms is not a Business Day, that act, matter or thing:
(a) if it involves a payment, other than a payment which is due on
demand, shall be done on the preceding Business Day; and
(b) in all other cases, shall be done no later than the next Business
Day.
2. ACKNOWLEDGMENT OF DEBT
The Issuer acknowledges in respect of each Note:
(a) that it has received from the Noteholder the Principal Sum; and
(b) that it is indebted to the Noteholder to the extent of the
Principal Sum.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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3. TITLE
3.1 Certificate
The Issuer must give a Note Certificate to each Noteholder when Notes are
issued.
3.2 Transfer of Title
Title to a Note passes when it is registered in the name of the
transferee in the Register.
3.3 Interests in Notes
Except as required by law, the Issuer:
(a) may treat the Noteholder as the absolute owner of the Notes
entered in the Register in the Noteholder's name (notwithstanding
any notice or writing on the Note or any notice of previous loss
or theft or of any trust or any other interest);
(b) is not required to obtain any proof of ownership and is not
required to verify the identity of the Noteholder; and
(c) is not required to recognise or give effect to any legal or
equitable interest in any Note not entered on the Register even if
it has actual or constructive notice of that interest.
4 STATUS AS CREDITORS
4.1 Status - No Shareholder Rights
The Notes confer rights in the Noteholders as creditors of the Issuer and
do not confer on Noteholders any right to receive Distributions or to
attend or vote at general meetings of the Issuer.
4.2 Noteholder Obligations
Each Noteholder by accepting an issue or transfer of Notes:
(a) agrees to be bound by these Terms;
(b) acknowledges that it is a creditor of the Issuer and that the
Notes do not confer rights as a Shareholder; and
(c) shall be taken to have agreed to sell, without any further action
required to be taken by the Noteholder, the Noteholder's Notes in
accordance with clause 2 of the Galore Shareholders Deed Poll.
4.3 Ranking
The Notes are unsecured and unsubordinated obligations of the Issuer
ranking, on a Winding Up:
(a) ahead of Shares;
(b) at least equally with all other unsecured and unsubordinated
creditors of the Issuer; and
(c) behind the Senior Indebtedness.
TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
4.4 Specialty Debt
The debt created by these Terms and the Notes is for all purposes a
specialty debt.
5. INTEREST
5.1 Payment of Interest
(a) Interest accrues on a daily basis on the outstanding principal
amount of each Note, from and including the first day of each
Interest Period and up to the last day of that Interest Period, at
the Interest Rate for that Interest Period, calculated on the basis
of the actual number of days elapsed and a 365 day year.
(b) Subject to Clause 5.2, the Issuer shall pay the interest which
accrues on a Note in arrears on each Interest Payment Date.
5.2 Deferral of Interest Payments
(a) If:
(i) the payment of interest on an Interest Payment Date under
clause 5.1(b) would cause the Issuer to be in breach of any
financial covenant given in favour of the Senior Creditor;
or
(ii) the Issuer is otherwise in breach of any financial covenant
given in favour of the Senior Creditor,
the Issuer must, unless the Senior Creditor otherwise consents,
defer the payment of interest under clause 5.1(b) until the earlier
of:
(iii) the date on which the deferred interest amount (and any
interest thereon) can be paid without causing the Issuer to
be in breach of any financial covenant given in favour of
the Senior Creditor and the Issuer is not otherwise in
breach of any financial covenant; and
(iv) the date on which the Notes in respect of which interest is
deferred are redeemed or converted.
(b) Any amount of interest (the "Deferred Interest Amount") which is
not paid on an Interest Payment Date and in respect of which
payment is deferred in accordance with paragraph (a), will itself
accrue additional interest at the Interest Rate, capitalised on a 6
monthly basis. Such additional interest must be paid when the
Deferred Interest Amount is due to be paid in accordance with
paragraph (a).
(c) The deferral of the payment of interest in accordance with this
clause 5.2 will not constitute an Early Redemption Event.
5.3 Overdue Interest
(a) Default interest accrues on a daily basis on each Unpaid Amount,
from and including the date on which it fell due for payment to but
excluding the date on which the Unpaid Amount is paid in full, at
the Default Rate, calculated on the basis of the actual number of
days elapsed and a 365 day year.
(b) The Issuer shall pay the default interest which accrues under
paragraph (a) on the date on which the Unpaid Amount is paid in
full.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
6. REDEMPTION
6.1 Partial Repayment Option
(a) At least 120 days prior to the 5th Anniversary, the 6th
Anniversary and the 7th Anniversary, the Issuer must notify
the Noteholder of its partial repayment rights under
paragraphs (b), (c) and (d) respectively.
(b) By giving the Issuer a Repayment Notice at least 90 days
prior to the 5th Anniversary, the Noteholder may require the
Issuer to repay up to a maximum of 25% of the Principal
Outstanding on each Note held by the Noteholder on the 5th
Anniversary.
(c) By giving the Issuer a Repayment Notice at least 90 days
prior to the 6th Anniversary, the Noteholder may require the
Issuer to repay up to a maximum of 33.3% of the Principal
Outstanding on each Note held by the Noteholder on the 6th
Anniversary.
(d) By giving the Issuer a Repayment Notice at least 90 days
prior to the 7th Anniversary, the Noteholder may require the
Issuer to repay up to a maximum of 50% of the Principal
Outstanding on each Note held by the Noteholder on the 7th
Anniversary.
(e) If the Issuer has received a Repayment Notice in accordance
with paragraphs (b), (c) or (d), the Issuer must repay the
percentage of the Principal Outstanding on each Note as
specified in the relevant Notice on the applicable
Anniversary.
(f) Any partial repayment of Notes under this clause 6.1 does not
extinguish the Noteholder's right to convert those Notes into
fully paid Shares under clause 7.1 provided that the partial
repayment proceeds received by the Noteholder are paid to the
Issuer at the time that a Conversion Notice is given. The
preservation of the Noteholder's right to convert following
partial repayment under this clause 6.1 does not apply in the
case of redemptions made in accordance with clauses 6.2, 6.3
and 6.4.
6.2 Final Redemption
On the 8th Anniversary the Issuer must repay the Principal Outstanding
on each Note (which has not been converted or redeemed).
6.3 Early Redemption Event
(a) If an Early Redemption Event occurs, the Issuer must, within
20 Business Days after a resolution of Noteholders requiring
early redemption has been passed, redeem all Notes by
repaying the outstanding principal amount for each Note. A
Noteholder may not take action against the Issuer to enforce
early redemption of the Notes following an Early Redemption
Event until 20 Business Days after a resolution of
Noteholders requiring early redemption has been passed.
(b) Without prejudice to the Issuer's obligations, the Issuer
must give a copy of any resolution under paragraph (a) to the
Senior Creditor.
6.4 Issuer Redemption on Listing
(a) If Listing is to occur and:
(i) the subscription or sale price per Share is at least
$0.55 (or the equivalent in US dollars), escalated
at 10% per annum and compounded annually after the
Issue Date (the "Minimum Application Price"); or
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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(ii) the subscription or sale price per Share is less than
the Minimum Application Price, but the existence of
the Notes will be a material impediment to the
Listing occurring; or
(iii) a resolution of Noteholders is passed to the effect
that the Issuer may give a notice under paragraph
(A).
the Issuer may redeem all the Notes on the date of Listing
provided that:
(A) the Issuer has given the Noteholders written notice
at least 90 days prior to the date of Listing that it
intends to enforce its rights under this clause and
of the proposed subscription or sale price per Share
(the "Specified Application Price");
(B) the actual subscription or sale price per Share is at
least equal to the Specified Application Price; and
(C) Listing occurs within 120 days after the Issuer has
given notice under this clause.
(b) If the Issuer gives a notice under paragraph (A), any
Noteholder may convert some or all of the Notes held by that
Noteholder provided that the Noteholder gives a Conversion
Notice within 30 days after receiving the notice from the
Issuer. The conversion will occur (if at all) on the date of
Listing and conversion is subject to:
(i) the actual subscription or sale price per Share being
at least equal to the Specified Application Price;
and
(ii) Listing occurring within 120 days after the Issuer
has given notice under paragraph (A).
6.5 Certificates
(a) On final redemption of a Note at any time, the Noteholder must
deliver the Note Certificate for the Note to the Issuer for
cancellation.
(b) On partial repayment of a Note at any time, the Noteholder
must deliver the Note Certificate for the Note to the Issuer
for cancellation and the Issuer must issue a new Note
Certificate for that Note which states the amount of the
Principal Outstanding at that time.
7. CONVERSION
7.1 Noteholder Conversion
The Noteholder may at any time after the 1st Anniversary but before
the 8th Anniversary, upon giving at least 3 Business Day's notice to
the Issuer, convert some or all of its Notes (including any Notes that
have been partially repaid under clause 6.1) into fully paid Shares by
delivering to the Issuer a duly completed Conversion Notice.
7.2 Conversion Mechanics
(a) On the Conversion Date, the Issuer must:
(i) redeem the Notes specified in the Conversion Notice
and represented by Note Certificates delivered to
the Issuer;
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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(ii) subject to clause 7.2(c), issue to the Noteholder or
its nominee the number of fully paid Shares having the
same par value as fully paid ordinary shares then on
issue in the Issuer) determined in accordance with the
formula:
S = N x CF
where:
S is the number of fully paid Shares to be
issued;
N is the number of Notes being converted; and
CF is the Conversion Factor as at the Conversion
Date;
(iii) on behalf of the Noteholder, apply the proceeds of
redemption (together with any further amount paid in
accordance with clause 6.1(f)) as follows:
(A) first, towards the par value of the Shares
until those Shares are paid up to the same
extent as Shares on issue immediately prior
to the Conversion Date; and
(B) second, in payment of the premium payable in
respect of those Shares; and
(iv) pay to the Noteholder any accrued but unpaid interest
on the Notes.
(b) If not previously delivered to the Issuer, on the Conversion
Date, the relevant Noteholder must deliver to the Issuer the
Note Certificates for the Notes to be converted and notify to
whom statements of shareholding are to be sent.
(c) If on conversion the aggregate number of Shares to which a
Noteholder is entitled includes a fraction of a Share, that
fraction must be disregarded and the Noteholder has no further
claim or right to that fraction of a Share.
(d) Subject to the Issuer's articles of association and any
applicable laws or regulations, the Issuer must within 15
Business Days of the relevant Conversion Date dispatch, free
of charge, to the person nominated under clause 7.2(b)
statement of shareholding for the Shares issued on conversion.
(e) Shares issued under this clause 7 rank equally and form one
class with the Shares on issue on the Conversion Date.
(f) If Listing has occurred, the Issuer must apply for official
quotation on the Stock Exchange of Shares issued under this
clause 7 forthwith after the issue of those Shares.
7.3 First Right of Refusal
Subject to clause 7.3A, the Issuer and, failing the Issuer, each
Nominated Shareholder (pro rata to their respective shareholdings)
has, subject to compliance with the Corporations Law, a first right of
refusal over all the Shares issued under this clause 7. Accordingly:
(a) the Noteholder (in its capacity as a Shareholder) cannot
transfer all or any of its Shares issued under this clause 7
(Transfer Shares") unless it has first given the Issuer at
least 2 Business Days prior notice of the proposed transfer,
including details of the transfer price ("Transfer Price") and
the transfer date ("Transfer Date");
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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(b) the Noteholder (in its capacity as a Shareholder) must
transfer the Transfer Shares at the Transfer Price on the
Transfer Date to the Issuer or any person notified in writing
by the Issuer (as directed by a majority of Nominated
Shareholders) at least 1 Business Day prior to the Transfer
Date; and
(c) if the Issuer has not notified of a person to acquire the
Transfer Shares or if the person notified by the Issuer does
not acquire the Transfer Shares on the Transfer Date, the
Noteholder (in its capacity as a Shareholder) may transfer the
Transfer Shares, subject to the option referred to in clause
7.4, to any other person at the Transfer Price on or after the
Transfer Date.
7.3A Conditions
The right of first refusal of the Issuer and each Nominated
Shareholder under clause 7.3 will be of no force and effect if the
existence of such right would prohibit or restrict a Noteholder
converting its Notes by reason of the acquisition of a Share resulting
from the conversion of the Note being in contravention of Chapter 6 of
the Corporations Law.
7.4 Option over Shares
If Listing has not occurred by the 8th Anniversary, the Issuer and,
failing the Issuer, each Nominated Shareholder (pro rata to their
respective shareholdings) has an option to buy all the Shares issued
under this clause 7 on the following terms:
(a) the option must be exercised by the Issuer giving the
Noteholder (or any transferee of the Shares), written notice
at least 30 days prior to the 8th Anniversary;
(b) unless the Noteholder (or transferee) and the Issuer otherwise
agree, the price per Share will be the fair market value of
the Shares, as determined by an independent professional
valuer appointed by, and at the cost of, the Issuer and
approved by the Noteholder (or transferee) or, if not
approved, an independent professional valuer appointed by the
President for the time being of the Institute of Chartered
Accountants in Australia; and
(c) the completion date for the sale of the Shares will be the
later of:
(i) the 8th Anniversary; and
(ii) the date 5 Business Days after receipt of the
valuation referred to in paragraph (b).
8. CONVERSION FACTOR
8.1 Initial Entitlement
Subject to the adjustments provided for in this clause 8, the
Conversion Factor for each Note is 1.
8.2 Consideration and Sub-Division
If at any time prior to the Conversion Date the nominal (par) value of
the issued Shares is reconstructed as a result of consolidation or
sub-division, then immediately after that consolidation or
sub-division, the Conversion Factor must be adjusted in accordance
with the following formula:
CF = VB x CFB
--
VA
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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where:
CF is the Conversion Factor immediately after the consolidation or
sub-division;
VB is the nominal value of a Share before the consolidation or
sub-division;
VA is the nominal value of a Share after the consolidation or
sub-division; and
CFB is the Conversion Factor immediately before the consolidation or
sub-division.
9 ADDITIONAL ENTITLEMENTS
9.1 Options and Rights
(a) Subject to paragraph (c), if at any time prior to the Conversion Date
the Issuer grants any options, rights or placements to any Shareholders
entitling them to subscribe for or purchase any securities (in this
clause 9 called "Additional Share Securities"), then as and from the
date that the entitlement to the grant of those options, rights or
placements is determined, each Noteholder is entitled to be granted
options, rights or placements in the form of or in respect of Notes (in
this clause 9 called "Additional Note Securities") at such prices and
on such terms and conditions (taking into account the relevant
Conversion Factor) as the auditor of the Issuer determines to be as
equivalent as practicable to those offered to the Shareholders and the
number of Additional Note Securities offered to each Noteholder must be
calculated in accordance with the following formula:
N = S x Z
--
NS
where:
N is the number of Additional Note Securities to be offered to each
Noteholder;
NS is the total number of Shares on issue as at the date the
entitlement to the issue of Additional Share Securities is
determined;
S is the total number of Additional Share Securities offered to
Shareholders; and
Z is the number of Notes held by that Noteholder immediately before
the entitlement to that Additional Share Security arose:
(b) For the purposes of this clause 9, the auditor acts as expert and not
as arbitrator and its determination is final and binding upon the
Issuer and the Noteholders.
(c) Paragraph (a) does not apply to the grant of options to employees of
the Issuer or any Subsidiary for up to a maximum of 3,700,000 unissued
Shares.
9.2 Bonus Issues
(a) If at any time prior to the Conversion Date the Issuer capitalizes any
amount of profits or reserve and applies that amount in paying up in
full the nominal value of any Shares to be issued to all Shareholders,
the Issuer must as at the date of issue of the additional Shares, at
no cost to the Noteholder, issue to each Noteholder the number of
additional Notes, credited as fully paid out of profits or appropriate
reserves, calculated in accordance with the following formula:
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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S
N = -- x Z
NS
where:
N is the number of Notes to be issued to each Noteholder;
S is the total number of Shares issued to Shareholders
pursuant to the bonus issue;
NS is the total number of Shares on issue as at the date the
entitlement to the issue of Shares is determined; and
Z is the number of Notes held by that Convertible Noteholder
immediately before the entitlement to that issue of Shares
arose.
(b) Clause 9.2(a) does not apply to Shares issued in lieu of a cash
dividend credited as fully paid out of profits or reserves.
(c) The Issuer may not prior to the Conversion Date capitalise any
amount of profits or reserve and apply that amount in paying up in
full the nominal value of any Shares unless such Shares are to be
issued to all Shareholders.
9.3 Placement
Prior to the Conversion Date the Issuer may not make a placement of any
securities to a person who is not a Shareholder without the prior consent
of the Noteholders which consent may not be unreasonably withheld. It is
reasonable for the Noteholders to withhold their consent if the placement
would diminish the relative values of the Notes and the Shares.
9.4 Fractions
Where the number of Notes or other securities to which a Noteholder is
entitled under this clause 9 is a number which includes a fraction of a
Note or security, that fraction must be disregarded and the Noteholder
has no further claim or right to that fraction of a Note or security.
10. PAYMENTS
(a) Manner of Payment
All payments to be made by the Issuer in relation to any Note will
be made:
(i) without any deduction or withholding for or on account of
Australian taxes unless such withholding and deduction is
required by law; and
(ii) by cheque drawn on a bank and mailed to the Noteholder or
to the first named of joint holders of such Note at its
address appearing in the Register, unless the Noteholder
nominates an account with a bank into which such payments
are to be made in which case payments will be made by bank
transfer of cleared funds into that bank account.
(b) Withholding Taxes
The Issuer must pay and must indemnify the Noteholder for any
amounts payable by the Noteholder in respect of Australian taxes
where that amount has been deducted by the Issuer but not paid or
remitted to the Commissioner for Taxation within the period that
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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the Issuer is obliged under Australian law to pay or remit that
amount, including any amounts of additional tax by way of penalty.
Where such withholding or deduction is required by law the Issuer
will pay the relevant amounts to the Commissioner of Taxation and
promptly deliver a copy of the receipt of such payment to the
Noteholder.
11. CALCULATIONS
(a) Unless otherwise specified, any calculations which are required to
be made for the purposes of those Terms will be made by the
auditors of the Issuer for the time being and will, in the absence
of manifest error be final, conclusive and binding on the
Noteholders.
(b) The Issuer must notify each Noteholder of any adjustments made to
the Conversion Factor under clause 8 within 10 Business Days of
the date of the adjustment.
12. TRANSFER
12.1 Transfer
(a) Subject to paragraphs (b) and (c), the Noteholder may transfer all
or any of its Notes to any person if the Noteholder has lodged
with the Issuer a duly signed, stamped and completed instrument
of transfer.
(b) The Issuer has a first right of refusal over all the Notes.
Accordingly:
(i) the Noteholder cannot transfer all or any of its Notes
("Transfer Notes") unless it has first given the Issuer at
least 5 Business Days prior notice of the proposed
transfer, including details of the transfer price
("Transfer Price") and the transfer date ("Transfer Date");
(ii) the Noteholder must transfer the Transfer Notes at the
Transfer Price on the Transfer Date to any person nominated
in writing by the Issuer at least 1 Business Day prior to
the Transfer Date; and
(iii) if the Issuer has not nominated a person to acquire the
Transfer Notes or if the person nominated by the Issuer
does not acquire the Transfer Notes on the Transfer Date,
the Noteholder may transfer the Transfer Notes to any other
person at the Transfer Price on or after the Transfer Date.
(c) Following Listing, the Noteholder may not transfer all or any of
its Notes except with the prior consent of the Issuer, such
consent not to be unreasonably withheld.
12.2 Registration
Where the Issuer receives an instrument of transfer in accordance with
clause 12.1, the Issuer must enter the named transferee into the Register
and re-issue Note Certificates for the relevant Notes in the name of that
transferee.
12.3 Owner
The transferor remains the owner of the Notes the subject of a transfer
until the name of the transferee is notified by the transferor to the
Issuer and entered into the Register.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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13. REGISTRATION
13.1 Issuer to Maintain a Register
The Issuer must establish and maintain a register of the Notes. The
Issuer may establish and maintain a branch Register at such places as the
Issuer may determine.
13.2 Issuer to Update Register
The Issuer must enter on the Register in respect of each Noteholder:
(a) the name and address;
(b) the number of Notes held;
(c) the Principal Outstanding in respect of each Note; and
(d) the date of transfer (if any) of the Notes to or from the
Noteholder.
13.3 Noteholders to Notify Issuer of Changes in Details
A Noteholder must promptly give notice to the Issuer of any change of its
name or registered address accompanied by such evidence as the Issuer may
reasonably require.
13.4 Joint Holders
The Issuer's obligations to registered joint holders of any Notes may be
effectively discharged by performance to any one or more of those
registered joint holders.
14. FORM OF NOTE CERTIFICATES
14.1 Form
The form of the Note Certificates will be substantially as set out in
schedule 1.
14.2 Execution of Note Certificates
A Note Certificate must be executed by the Issuer, its attorney or such
other person authorised by the directors of the Issuer.
14.3 Replacement Note Certificates
The Issuer may issue replacement Note Certificates in replacement of
any worn-out, defaced, lost or destroyed Note Certificates upon proof
of that to the satisfaction of the Issuer and upon receiving such
indemnity as the Issuer may require to be given.
15. OBLIGATIONS OF THE ISSUER
15.1 Shareholder Documents
The Issuer will procure that at all times the Noteholders are given
copies of all documents sent by the Issuer to the Shareholders (whether
in connection with a general meeting of Shareholders or otherwise).
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
15.2 Negative Pledge
Except with the approval of the director of the Issuer who was nominated
by SBC Warburg (if appointed), prior to the date of Listing the Issuer
must not:
(a) (Senior Indebtedness) incur any prior ranking financial
indebtedness (excluding any liability under a finance lease and
any liability under a letter of credit, bank guarantee, foreign
exchange, interest rate swap or other derivative product or
transactional banking arrangement, in each case incurred or
entered into in the ordinary course of the Issuer's trading
business) in excess of $52 million (in this regard, the
Noteholders acknowledge that the Senior Creditor may take security
over assets in the US after the Issue Date);
(b) (Distributions) make Distributions in any financial year in excess
of 55% of the lower of:
(i) PAT; and
(ii) Free Cash Flow after CAPEX,
where:
PAT is the consolidated net profit after tax of the Issuer and its
Subsidiaries for that financial year; and
Free Cash Flow after CAPEX is the consolidated free cash flow of
the Issuer and its Subsidiaries for that financial year less the
consolidated capital expenditure by the Issuer and each Subsidiary
for that financial year not funded "off-balance sheet" and, if
required by SBC Warburg, classified by the auditor of the Issuer
as capital expenditure; and
(c) (asset transfers) transfer any assets of the Issuer or any
Subsidiary to any person other than:
(i) in the ordinary course of business;
(ii) to a wholly owned Subsidiary;
(iii) if the assets are shares in, or assets owned by, Pricotech
Leisure Brands Pty Limited ACN 002 060 273 or are assets
which are related to the business conducted by that
company;
(iv) if the assets are shares in Bromic Pty Limited ACN 001 648
979; or
(v) any other assets during any rolling 12 month period which
have an aggregate value of less than 5% of the aggregate of
the shareholders funds of the Issuer and each Subsidiary
provided that those assets are not transferred to an
associate of a Nominated Shareholder.
15.3 Total Liabilities Undertaking
(a) The Issuer must ensure that as at the end of any financial year or
half-year prior to the date of Listing:
(i) the ratio of Total Liabilities to Total Tangible Assets
does not exceed 0.75:1; and
(ii) the ratio of Trade Creditors to Total Sales does not exceed
0.15:1,
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
where:
"GAAP" means Australian Accounting standards or generally accepted
accounting principles;
"Total Intangible Assets" means, at any time, the aggregate of all
items treated as intangible assets under GAAP at that time in relation
to the Issuer and each Subsidiary other than:
(i) any items listed as intangibles in the audited balance sheet of
the Issuer for the financial year ending on 30 June 1996; and
(ii) any intangibles incurred by the Issuer in acquiring the minority
interests in The Galore Group (U.S.A.), Inc.;
"Total Liabilities" means, at any time, the aggregate of all items
treated as liabilities under GAAP at that time in relation to the
Issuer and each Subsidiary (including the liabilities of the Issuer
under the Notes);
"Total Sales" means, at any time, the aggregate of all items treated
as sales under GAAP at that time in relation to the Issuer and each
Subsidiary;
"Total Tangible Assets" means, at any time, the aggregate of all
items treated as assets under GAAP at that time in relation to the
Issuer and each Subsidiary less Total Intangible Assets; and
"Trade Creditors" means, at any time, the aggregate of all items
treated as trade creditors under GAAP at that time in relation to the
Issuer and each Subsidiary.
(b) A failure by the Issuer to comply with paragraph (a) will not
constitute an Early Redemption Event if, within 20 Business Days of
such failure occurring either:
(i) the failure is remedied; or
(ii) the Issuer grants in favour of all Noteholders first or second
ranking security or, in the case of any assets in the USA, first,
second or third ranking security, over all its assets and all the
assets of each Subsidiary, and appropriate priority arrangements
are entered into, in each case in a form reasonably acceptable to
the Noteholders (such acceptance to be given by a resolution of
Noteholders) and the Senior Creditor. It is intended that the
form of the security will not give the Noteholders any greater
rights, other than rights as secured, rather than unsecured,
creditors and will not contain early redemption events which are
more extensive than the Early Redemption Events. The Noteholders
and the Senior Creditor must accept or enter into a security and
appropriate priority arrangements (as applicable) if they are in
a form which is reasonably acceptable to them. Following
execution, stamping and registration of such security and
appropriate priority arrangements, the Noteholders will be taken
to have waived any breach of clause 15.3(a).
15.4 Listing other than the Issuer
If the Shares are not listed on the Stock Exchange but the Issuer procures
the listing on the Stock Exchange of shares or other securities in another
entity and those shares or other securities represent all or substantially
all of the economic value of the Issuer and each Subsidiary, the Issuer
must procure that each Noteholder is entitled to convert its Notes into
those shares or other securities, as if those shares or other securities
were Shares and on the basis that each
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Page 16 of 27
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
Noteholder is no worse off than it would have been if the Shares had been
listed on the Stock Exchange.
15.5 Meetings of Noteholders
Meetings of Noteholders must be convened and conducted as set out in
schedule 4.
15.6 Financial Accounts
The Issuer must ensure that:
(a) its financial accounts and the financial accounts of each Subsidiary
are audited by external auditors; and
(b) copies of the audited consolidated financial accounts of the Issuer
and its Subsidiaries are delivered to each Noteholder as soon as
possible, and in any event within 120 days, after the end of each
financial year-end.
16. ROLE OF SBC WARBURG
(a) The Issuer and the Noteholders acknowledges that SBC Warburg:
(i) is entitled to nominate a person to be a director of the
Issuer in accordance with the Galore Shareholders Deed Poll;
(ii) will facilitate any discussions and meetings between
Noteholders and the Issuer in relation to these Terms and the
Galore Shareholders Deed Poll; and
(iii) will otherwise undertake the roles and activities where SBC
Warburg is specifically referred to in these Terms and the
Galore Shareholders Deed Poll,
but in doing so, SBC Warburg will not be acting as a trustee, agent
or fiduciary for any person.
(b) In consideration for SBC Warburg undertaking the roles specified in
paragraph (a), the Issuer will pay SBC Warburg a non-refundable fee
of $15,000 in advance on the Issue Date and each Anniversary until
all the Notes have been redeemed or converted.
(c) Other than a claim relating to fraud by SBC Warburg, the Issuer and
the Noteholders are not entitled to make any claim against, and
irrevocably waive any right to make any claim against, SBC Warburg
for any act or inaction by SBC Warburg in undertaking the roles
specified in paragraph (a).
17. NOTICES
Unless expressly provided otherwise all consents, approvals and notices
from one party to another must be in writing and addressed to the
recipient as follows:
(a) in the case of the Issuer, to its registered office (with a copy to
the Senior Creditor); and
(b) in the case of a Noteholder, its address in the Register (with a copy
to SBC Warburg),
or at such other place as the recipient from time to time notifies the
sender by notice in writing.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
Notices are deemed to be served on the third day (seventh day, if
overseas) after they have been mailed by certified or registered mail by
placing in a post box or posting at a post office under the control of
Australia Post.
18. GOVERNING LAW
These Terms are governed by the laws of the Australian Capital Territory.
The Issuer and each Noteholder submits to the non-exclusive jurisdiction
of courts exercising jurisdiction there.
19. DUTIES AND TAXES
The Issuer must bear any stamp duty payable on or in connection with the
issue of the Notes or these Terms but the Issuer is not responsible for
any duties or taxes which may subsequently become payable in connection
with the transfer, conversion, redemption or any other dealing with the
Notes or the payment of interest in accordance with these Terms.
20. AMENDMENT
These Terms may only be amended or supplemented by a resolution of the
Noteholders and with the prior written consent of the Issuer and the
Senior Creditor.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
SCHEDULE 1
FORM OF NOTE CERTIFICATE
THE GALORE GROUP LIMITED
ACN 008 577 759
CONVERTIBLE NOTES
Noteholder : (Name of Noteholder]
Issue Price per Note : $0.46
No. of Notes : [No. of Notes]
Principal Amount : $[Total Subscription Price]
Principal Outstanding : $[Principal Outstanding]
Terms : See attached Terms
Issue Date : [Date of Issue]
EXECUTED as a deed in Canberra.
SIGNED, SEALED AND DELIVERED for and )
on behalf of THE GALORE GROUP LIMITED )
by its attorney in the presence of: )
....................................... .....................................
Witness Signature
Name (printed): Name (printed):
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
SCHEDULE 2
REPAYMENT NOTICE
To: The Directors
The Galore Group Limited
ACN 008 577 759
(the "Issuer")
We [NAME OF NOTEHOLDER] of [ADDRESS OF NOTEHOLDER], registered as the holder of
[ ] Convertible Notes (the "Notes"), give notice under clause 6.1 of the Terms
of the Notes that we wish to be repaid [SPECIFY %] of the principal amount of
each Note on the next Anniversary, being [ ].
Definitions in the Notes apply in this notice.
DATED 199
SIGNED for and on behalf of [NAME OF )
NOTEHOLDER] by its authorised )
representative in the presence of: )
.................................... ......................................
Witness Signature
Name (printed): Name (printed):
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
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SCHEDULE 3
CONVERSION NOTICE
To: The Directors
The Galore Group Limited
ACN 008 577 759
(the "Issuer")
We [NAME OF NOTEHOLDER] of [ADDRESS OF NOTEHOLDER], registered as the holder of
Convertible Notes (the "Notes"), give notice that we wish to convert [ ]
Notes to [ ] Shares on [ ], in accordance with the
Terms of the Notes. We agree to accept the Shares to be issued on the conversion
of these Notes.
Attached are Note Certificates representing the Notes to be converted.
Definitions in the Notes apply in this notice.
DATED 199
SIGNED for and on behalf of [NAME OF )
NOTEHOLDER] by its authorised )
representative in the presence of: )
.................................. .................................
Witness Signature
Name (printed): Name (printed):
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------
SCHEDULE 4
MEETINGS OF NOTEHOLDERS
1. DEFINITIONS
In this schedule, unless the context requires otherwise,
"representative" includes a duly appointed attorney.
2. CONVENING MEETINGS
2.1 Entitlement to Convene a Meeting
(a) The Issuer may convene a meeting of Noteholders in accordance
with clause 2.2 of this schedule.
(b) The Issuer, if required to do so in writing by at least 10
Noteholders or by a Noteholder or Noteholders holding in
aggregate at least 50% of the outstanding principal amount of
Notes, shall convene a meeting of Noteholders in accordance
with clause 2.2 of this schedule.
(c) The Issuer must convene a meeting of Noteholders whenever
an Early Redemption Event occurs and otherwise whenever
required to do so by law.
2.2 Method of Convening a Meeting
(a) The Issuer may convene a meeting of Noteholders by notice
given in accordance with clause 17 of these Terms at least 10
Business Days before the date for the meeting.
(b) A notice under paragraph (a) must:
(i) state the date, commencement time and location of the
meeting;
(ii) describe the nature of the business to be considered;
and
(iii) provide that Noteholders may attend personally or
through a representative or proxy appointed and
notified to the Issuer in accordance with clause 3.2
of this schedule.
(c) A copy of any notice given to convene a meeting to consider an
Early Redemption Event must be given, at the same time, to the
Senior Creditor.
2.3 Failure to Notify Noteholder need not Invalidate a Meeting
A meeting may be validly convened notwithstanding:
(a) any accidental omission to give notice to, or the non-receipt
of notice by, any person other than the Issuer; or
(b) any change in the identity of Noteholders (as shown in the
Register or otherwise) from that shown in the Register on the
Business Day before the notice of meeting is given.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
2.4 Noteholders may Waive Requirement of Notice
The Noteholders may unanimously waive the requirement that they be given
notice of a meeting:
(a) by a statement or statements to that effect signed by them; or
(b) by unanimous resolution (including, without limitation, at that
meeting).
3. ATTENDANCE AT MEETINGS
3.1 Issuer
The Issuer (through its representatives or legal advisers) and its
financial and legal advisers and, in relation to any Early Redemption
Event, the Senior Creditor (through its representatives or legal
advisers), may attend and speak at any meeting of Noteholders.
3.2 Noteholders
(a) A Noteholder (whether it received notice of the meeting or not)
may attend, and speak and vote at, a meeting either personally or
through its representative or proxy appointed and notified to the
Issuer in accordance with this subclause.
(b) A Noteholder that is a body corporate, by an instrument under its
common seal, may authorise a person specified in the instrument to
act as its representative at a specified meeting, or at meetings
generally, of Noteholders.
(c) A Noteholder (whether a body corporate or not), by an instrument:
(i) if a body corporate, under its common seal;
(ii) if a natural person, under the Noteholder's hand; or
(iii) in either case, under the hand of its attorney,
may appoint a proxy to attend, speak and vote on the Noteholder's
behalf at a specified meeting, or at meetings generally, of
Noteholders.
(d) An instrument appointing a representative or a proxy must be:
(i) in a form acceptable to the Issuer;
(ii) lodged with the Issuer at least 48 hours before the
meeting, adjourned meeting or taking of a poll at which it
is to be relied on; and
(iii) in the case of an instrument appointing a proxy which is
under the hand of an attorney, accompanied by proof
acceptable to the Issuer of the attorney's authority.
(e) The Issuer may in its sole discretion waive any of the
requirements in relation to the appointment of a representative or
a proxy and approve as valid any instrument appointing a
representative or proxy notwithstanding that it does not comply
with those requirements or is received or produced at the wrong
place or the wrong time.
(f) Unless the instrument provides otherwise, an instrument appointing
a representative or a proxy is valid for the meeting to which it
relates and for any adjournment of that meeting.
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
(g) A representative or proxy need not be a Noteholder.
(h) Action taken at a meeting, adjourned meeting or on the taking of
a poll by a representative or proxy appointed and notified to
the Issuer in accordance with this subclause is valid
notwithstanding:
(i) any death, unsoundness of mind or dissolution of the
Noteholder;
(ii) any revocation of the instrument of appointment (or of
the authority under which it was executed); or
(iii) any transfer of the Note in respect of which the
appointment was made,
unless the Issuer is made actually aware of this before the
meeting or adjourned meeting commences.
(i) Subject to paragraph (j), only the person registered in the
Register as the Noteholder of a Note and no other person may be
treated as the legal owner of that Note, whether that person is
the beneficial owner of that Note or not, and only that person
is entitled to vote (in person or by representative or proxy) in
respect of that Note.
(j) If a Note is registered in the names of more than one person,
those persons taken together count as a single Noteholder in
respect of that Note. Without limiting this, only the vote of
the most senior such person who tenders a vote (whether in
person or by representative or proxy) may be accepted as a vote,
to the exclusion of any attempted votes of the other joint
holders of that Note (which may not be regarded as valid votes
for any purpose). For this purpose, seniority is determined by
the order in which names are recorded in the Register in respect
of that Note.
(k) An objection may only be raised to the entitlement of a person
to attend or vote at a meeting of Noteholders at the meeting (or
adjournment of it) in question. Any such objection is to be
considered by the chairman of the meeting whose decision will be
final and conclusive.
3.3 Attendance by Telephone
If the Issuer so determines, a person (or its representative or proxy)
entitled to attend a meeting of Noteholders may do so by telephone or
other instantaneous means of conferring (or by any combination of
those means), provided that those means allow each person entitled to
attend and speak at the meeting to hear and be heard by each other
person attending the meeting, and a person entitled to attend and
speak at the meeting who can so hear and be heard is to be taken for
all purposes to be present at that meeting. In the case of a vote by a
show of hands, a person attending the meeting may indicate by voice
whether his hand is raised or not, and is to be counted accordingly. 4
4. PROCEDURE AT MEETINGS
4.1 Quorum
(a) No business may be transacted at a meeting of Noteholders unless
a quorum is present at the time the meeting proceeds to business.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
(b) The quorum for a meeting of Noteholders, which is to be
calculated by reference to Noteholders who:
(i) are present in person or by representative or proxy
(even if by the same representative or proxy); and
(ii) are entitled to vote at that meeting,
is not less than 40% in number of the Noteholders who between
them hold not less than 50% of the outstanding principal
amount of Notes.
(c) If a quorum is not present within 15 minutes of the announced
commencement time for a meeting, the meeting:
(i) if convened pursuant to clause 2.1(b) of this
schedule, is dissolved; or
(ii) in any other case, stands adjourned to such day, and
to such time and place, as the Issuer determines and
notifies in accordance with clause 2.2(a) of this
schedule to the persons entitled to attend.
4.2 Chairman
(a) The Issuer may appoint a person to be chairman at a meeting
of Noteholders.
(b) If the Issuer does not appoint a person to be chairman of a
meeting, or the person is not present within 15 minutes of
the announced commencement time for a meeting or is unwilling
to act the Noteholders shall appoint a person by resolution
to be chairman of that meeting.
(c) The chairman need not be a Noteholder.
(d) The chairman does not have a casting vote.
4.3 Voting Procedure
(a) Every question submitted to a meeting must be decided in the
first instance by a show of hands of Noteholders or their
representatives or proxies. Unless a poll is demanded in
accordance with this subclause, a declaration by the chairman
that a resolution has been carried, carried by a particular
majority, lost or not carried is conclusive evidence of that
fact without proof of the number or proportion of the votes
recorded in favour of or against that resolution.
(b) Each of:
(i) the chairman;
(ii) the Issuer;
(iii) any 10 or more Noteholders (or their representatives
or proxies); or
(iv) a Noteholder or Noteholders holding in aggregate at
least 50% of the outstanding principal amount of
Notes (or its or their representatives or proxies),
may call for a poll on a resolution before or on the declaration of the
result of the show of hands. A demand for a poll may be
withdrawn.
Page 25 of 27
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TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
(c) A poll on the election of a chairman or a question of
adjournment must be taken immediately. A poll on other matters
must be taken in the manner, at the time and in the place
determined by the chairman. The result of a poll is to be
taken to be the resolution of the meeting at which the poll
was demanded, passed on the day the poll is taken.
(d) The demand for a poll may not prevent the continuance of a
meeting for the transaction of any business other than the
question on which the poll has been demanded.
(e) In the case of a vote:
(i) on a show of hands, each person present and entitled to
vote has one vote; and
(ii) on a poll, each person who is present and entitled to
vote has one vote in respect of each $1,000
outstanding principal amount of Notes of which that
person is the Noteholder or in respect of which that
person is otherwise entitled to vote.
Without prejudice to the obligations (if any) imposed by a
Noteholder on its representative or proxy, any person entitled to
more than one vote need not exercise all those votes in the same
way.
(f) The Issuer is not entitled to vote, whether on a show of hands
or on a poll, even if a Noteholder.
4.4 Resolutions
(a) A resolution may only be passed by an affirmative vote by at
least 50% of the votes able to be cast by those present and
entitled to vote except that any resolution in relation to an
Early Redemption Event may only be passed at a meeting of
Noteholders and by an affirmative vote by Noteholders who between
them:
(i) hold not less than 50.1% of the outstanding principal
amount of all the Notes; and
(ii) constitute not less than 50.1% in number of all the
Noteholders.
(b) A resolution passed at a meeting of Noteholders convened and held
in accordance with this schedule binds all Noteholders whether
present at the meeting or not.
(c) A resolution passed at a meeting may be reconsidered at that
meeting and rescinded by another resolution.
(d) Notwithstanding anything to the contrary in these Terms
(including this schedule), the Noteholders do not have the power
(whether by special resolution or otherwise):
(i) to change the rate at which interest accrues on the
Notes;
(ii) to bring forward the date on which any amount of
interest or principal is payable on the Notes;
(iii) to amend clause 20; or
(iv) to require a Noteholder to covert its Notes.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF CONVERTIBLE NOTES (cont'd)
- --------------------------------------------------------------------------------
(e) The Issuer;
(i) shall give effect to any resolution passed at a
meeting of Noteholders convened and held in
accordance with this schedule; and
(ii) will be taken for all purposes to have been
authorised to give effect to that resolution by all
Noteholders and will have no liability to any
Noteholder for any act or omission done or omitted in
the course of doing so,
unless:
(iii) to do so would be unlawful;
(iv) the resolution contravenes paragraph (d); or
(v) the resolution would require the Issuer to breach a
provision of these Terms.
4.5 Adjournment
(a) Each of:
(i) the chairman; or
(ii) the Noteholders (or their representatives or proxies)
by resolution,
may adjourn a meeting (including an adjourned meeting) to such
time and place as the chairman or that resolution (as
appropriate) determines. The only business which may be
transacted at an adjourned meeting is business which might
lawfully have been transacted at the meeting from which the
adjournment took place.
(b) Except as provided in clause 4.1(c)(ii) of this schedule, it
is not necessary to give notice of an adjourned meeting.
(c) A resolution passed at an adjourned meeting is to be taken to
be passed on the day it is actually passed.
5. MINUTES OF MEETINGS
5.1 Issuer to Keep Minutes
The Issuer shall keep minutes of all meetings of Noteholders.
5.2 Minutes Conclusive
The minutes of a meeting of Noteholders as kept by the Issuer, if
signed by the chairman of that meeting or the chairman of the next
succeeding meeting of Noteholders, are conclusive evidence, unless the
contrary is proved, that the meeting was duly convened and held and
that the resolutions and other business to which it refers were duly
passed or transacted.
Page 27 of 27
1996
---------------------------------
GALORE SHAREHOLDERS DEED POLL
---------------------------------
BLAKE DAWSON WALDRON
Solicitors
Grosvenor Place
225 George Street
SYDNEY NSW 2000
Tel: (02) 9258 6000
Fax: (02) 9258 6999
Ref: DSE 468819
DEED POLL
CONTENTS
Clause Page
1. INTERPRETATION............................................ 1
1.1 Definitions......................................... 1
1.2 General............................................. 3
1.3 Headings............................................ 3
1.4 Business Day........................................ 3
1.5 Inconsistency with Articles......................... 4
2. UNDERTAKINGS BY EACH SHAREHOLDER.......................... 4
2.1 Sale of Shares...................................... 4
2.2 Terms of Offer to Buy Notes......................... 4
2.3 Noteholders Obliged to Accept Offer................. 4
2.4 Determination of Note Sale Price.................... 4
3. RIGHT TO APPOINT A DIRECTOR............................... 5
4. UNDERTAKING BY THE ISSUER................................. 6
5. NO LISTING BY 5TH ANNIVERSARY............................. 6
6. TERMINATION............................................... 6
6A. WARRANTY AND INDEMNITY.................................... 6
7. NOTICES................................................... 7
7.1 Method of Giving Notices............................ 7
7.2 Time of Receipt..................................... 7
7.3 Address for Notices................................. 7
8. LAW AND JURISDICTION...................................... 7
8.1 Governing Law....................................... 7
8.2 Submission to Jurisdiction.......................... 8
9. COSTS..................................................... 8
ii.
Clause Page
10. GENERAL................................................... 8
10.1 Amendment........................................... 8
10.2 No Assignment or Security Interests................. 8
10.3 Severability........................................ 8
10.4 Counterparts........................................ 9
10.5 Attorneys........................................... 9
SCHEDULE
1. NOMINATED SHAREHOLDERS.................................... 11
DEED POLL made 1996
BY:
(1) EACH PERSON LISTED IN SCHEDULE 1 (each a "Nominated Shareholder");
and
(2) THE GALORE GROUP LIMITED ACN 008 577 759 (the "Issuer").
IN FAVOUR OF:
EACH NOTEHOLDER
RECITALS:
A. The Shareholders are shareholders in the Issuer.
B. The execution of this deed is a condition precedent to the issue of the
Notes.
OPERATIVE PROVISIONS:
1. INTERPRETATION
1.1 Definitions
Definitions in the Note Subscription Agreement and in the terms of the
Notes (which are set out in annexure A to the Note Subscription Agreement)
apply in this deed and, unless the context otherwise requires:
"Change of Control" means a change of control of the Issuer prior to
Listing and, for this purpose, a change of control shall only be taken to
have occurred at the time when all or any of the Shareholders cease to hold
beneficially, directly or indirectly, in aggregate, 50.1% of all the issued
Shares;
"Note Subscription Agreement" means the agreement so entitled dated 25
October 1996 between SBC Warburg and the Issuer;
"Noteholder" means, at any time, each person who is registered at that time
as the holder of Notes;
"Related Party" means, in relation to any Shareholder:
(a) if the Shareholder is an individual:
(i) a spouse or de facto spouse of such Shareholder;
(ii) a parent, son or daughter of such Shareholder, spouse or
de facto spouse;
(iii) a brother or sister of such Shareholder; and
2.
(iv) an entity over which:
(A) a person of a kind referred to in paragraph (i), (ii) or (iii)
has control; or
(B) 2 or more such persons together have control; and
(b) if the Shareholder is a body corporate, a related party of such
Shareholder within the meaning of the term "related party" in section
243F of the Corporations Law (for this purpose, assuming that such body
corporate is a public company),
and for the purposes of this definition the definitions and interpretation
provisions contained in sections 243C, 243D and 243F of the Corporations Law
shall apply;
"SBC Warburg" means SBC Warburg Australia Limited ACN 008 582 705;
"Security Interest" means:
(a) a mortgage, pledge, lien, charge. assignment by way of security,
hypothecation, secured interest, title retention arrangement (other
than a title retention arrangement which does not constitute a charge),
preferential right, trust arrangement or other arrangement (including,
without limitation, any set-off or "flawed-asset" arrangement) having
the same or equivalent commercial effect as a grant of security; or
(b) an agreement to create or give any arrangement referred to in paragraph
(a) of this definition;
"Shareholder" means:
(a) each Nominated Shareholder; and
(b) each Related Party of any Nominated Shareholder which, either:
(i) held shares prior to the date of this deed; or
(ii) acquires Shares after the date of this deed,
and in each case, has executed a deed in the same terms as this deed
and has delivered a stamped executed original to SEC Warburg; and
"Tax" means any present or future tax, levy, impost, deduction, charge, duty,
compulsory loan or withholding (together with any related interest, penalty,
fine or expense in connection with any of them) levied or imposed by any
government agency, other than any imposed on overall net income.
3.
1.2 General
In this deed, unless the context otherwise requires:
(a) a reference to any legislation or legislative provision
includes any statutory modification or re-enactment of, or
legislative provision substituted for, and any subordinate
legislation under, that legislation or legislative provision;
(b) the singular includes the plural and vice versa;
(c) a reference to an individual or person includes a corporation,
firm, partnership, joint venture, association, authority, trust,
state or government and vice versa;
(d) a reference to any gender includes all genders;
(e) a reference to a recital, clause, schedule or annexure is to a
recital, clause, schedule or annexure of or to this deed;
(f) a recital, schedule or annexure forms part of this deed;
(g) a reference to any agreement or document is to that agreement or
document (and, where applicable, any of its provisions) as
amended, novated, restated or replaced from time to time;
(h) a reference to any party to this deed or any other document or
agreement includes that party~s executors, administrators,
substitutes, successors and permitted assigns; and
(i) where an expression is defined, another part of speech or
grammatical form of that expression has a corresponding meaning.
1.3 Headings
In this deed, headings are for convenience of reference only and do not
affect interpretation.
1.4 Business Day
If the day on which any act, matter or thing is to be done under or
pursuant to this deed is not a Business Day, that act, matter or thing:
(a) if it involves a payment, other than a payment which is due on demand,
shall be done on the preceding Business Day; and
(b) in all other cases, shall be done no later than the next Business Day.
4.
1.5 Inconsistency with Articles
In the event of any conflict or inconsistency between any of the provisions
contained in the articles of association of the Issuer and the provisions
of this deed, the provisions of this deed shall prevail and the
Shareholders must cause the articles to be amended, if necessary, so as to
remove the conflict or inconsistency.
2. UNDERTAKINGS BY EACH SHAREHOLDER
2.1 Sale of Shares
A Shareholder (the "Vendor") may only agree to sell, assign, declare a
trust of or otherwise dispose of any Shares (the "Sale Shares") if:
(a) it is to a bona fide, arms length third party (other than another
Shareholder) (the "Purchaser") and completion of that sale is
conditional on the Vendor procuring the Purchaser to buy all the Notes
held by each Noteholder; or
(b) if the completion of the sale of the Sale Shares would not result in a
Change of Control.
Once a Change of Control has occurred, this clause does not apply to any
subsequent sale of Shares.
2.2 Terms of Offer to Buy Notes
Unless a Noteholder otherwise consents, any acquisition of the Notes
required by clause 2.1 must be on terms including terms to the effect that:
(a) completion of the sale of all the Notes must occur on or before
the completion of the sale of the Sale Shares; and
(b) the sale price for each Note (the "Note Sale Price") must be
equivalent having regard to the prevailing Conversion Factor, to the
sale price for each Sale Share, as determined in accordance with
clause 2.4.
2.3 Noteholders Obliged to Accept Offer
By the terms of the Notes, each Noteholder is obliged to sell its Notes to
the Purchaser in accordance with this clause 2.
2.4 Determination of Note Sale Price
(a) Unless the Noteholders and the Purchaser otherwise agree, the Note
Sale Price will be determined by an independent accountant (the
"Independent Accountant") nominated by the Vendor and approved by the
Noteholders, or if not approved by the Noteholders, by an independent
accountant nominated by the President for the time being
5.
of the Institute of Chartered Accountants in Australia. Subject to
paragraph (c), the determination of the Note Sale Price will be based
simply on an arithmetic calculation of an equivalent price.
(b) The Vendor must notify each Noteholder and SBC Warburg of the
determination of the Note Sale Price (the "First Determination").
(c) If the Noteholders resolve that they do not consider that the
Purchaser is a bona fide, arms length third party within 5 Business
Days of receiving notification of the First Determination, the Vendor
must require a further determination of the Note Sale Price to be made
by the Independent Accountant, this time on the basis of a fair and
reasonable price for each Note. In determining a fair and reasonable
price the Independent Accountant must have regard to the valuation
principles set out by the Australian Securities Commission in Policy
Statement 75 and Practice Note 43 (or any Policy Statement or Practice
Note which is issued by the Australian Securities Commission in place
of Policy Statement 75 or Practice Note 43).
(d) The Vendor must notify each Noteholder and SBC Warburg of the further
determination of the Note Sale Price (the "Second Determination").
(e) For the purposes of clause 2.2(b), the Note Sale Price will be:
(i) if paragraph (c) does not apply, the price per Note specified
in the First Determination; and
(ii) if paragraph (c) applies, the price per Note specified in the
Second Determination.
(e) The Independent Accountant will act as an expert and not as an
arbitrator and the First Determination or the Second Determination (as
applicable) of the Note Sale Price will be final and conclusive.
(f) The Shareholders must pay the costs of the Independent Accountant.
3. RIGHT TO APPOINT A DIRECTOR
Until all the Notes have been repaid in full or converted, each Shareholder
and the Issuer shall ensure that:
(a) SBC Warburg is at all times entitled to have one person nominated
by it from time to time as a director of the Issuer; and
(b) if the person nominated by SEC Warburg from time to time is
approved by each Shareholder (such approval not to be unreasonably
withheld or delayed), such person is appointed as a director of
the Issuer.
6.
4. UNDERTAKING BY THE ISSUER
The Issuer shall procure that the Shareholders comply with the terms of
this deed.
5. NO LISTING BY 5TH ANNIVERSARY
If Listing has not occurred by the 5th Anniversary and SBC Warburg makes a
proposal reasonably acceptable to the Issuer for a Listing at a price per
Share of $0.55 escalated annually after the Issue Date at 10% per annum
compound (the "Listing Proposal"), the Shareholders must use their best
endeavurs to effect a Listing in accordance with the Listing Proposal.
6. TERMINATION
(a) Subject to paragraphs (b) and (c) but despite any other provision in
this deed, the obligations of each Shareholder and the Issuer under
this deed terminate once Listing has occurred.
(b) Termination of the obligations of each Shareholder and the Issuer
under paragraph (a) does not affect any rights of the Noteholders
which have arisen due to a breach of this deed prior to the date of
Listing.
(c) The indemnity given by the Issuer pursuant to clause 6A is a
continuing obligation, separate and independent from the other
obligations of the Issuer under this deed, and survives termination of
the obligations of the Issuer under paragraph (a).
6A. WARRANTY AND INDEMNITY
(a) The Issuer Represents and warrants that the rights of each Noteholder
to convert Notes into unissued Shares in accordance with the terms of
the Notes are not void by virtue of section 216 of the Corporations
Law.
(b) Notwithstanding that the Issuer may not be obliged to issue any Shares
to the Noteholders under clause 7 of the terms of the Notes due to
section 216 of the Corporations Law, the Issuer indemnifies each
Noteholder on demand against any liability or loss the Noteholder
incurs or suffers as a result of:
(i) the representation and warranty given in paragraph (a) being
false;
(ii) the Issuer not issuing Shares to the Noteholder in accordance
with the terms of the Notes; or
(iii) the Noteholder forfeiting or otherwise not enjoying the benefit
of any Shares issued to it under clause 7 of the Notes due to
section 216 of the Corporations Law.
7.
7. NOTICES
7.1 Method of Giving Notices
A notice, consent, approval or other communication (each a "Notice") under
this deed shall be in writing, signed by or on behalf of the person giving
it, addressed to the person to whom it is to be given and:
(a) delivered;
(b) sent by pre-paid mail; or
(c) transmitted by facsimile,
to that person's address.
7.2 Time of Receipt
A Notice given to a person in accordance with this clause is treated as
having been given and received:
(a) if delivered, on the day of delivery if delivered before 4:00 pm
(local time in the place of receipt) on a Business Day, otherwise on
the next Business Day;
(b) if sent by pre-paid mail, on the day of actual delivery if delivered
before 4:00 pm (local time in the place of receipt) on A Business Day,
otherwise on the next Business Day; and
(c) if transmitted by facsimile and the transmission report states that it
was sent in full and without error, on the day of transmission if that
report states that the transmission was completed before 4:00 pm
(local time in the place of receipt) on a Business Day (or the
equivalent in another time zone), otherwise on the next Business Day.
7.3 Address for Notices
For the purposes of this clause, a person (the "sender") may take the
address and facsimile number of another person (the "recipient") to be:
(a) the address and number set out below in schedule 1; or
(b) where the recipient notifies the sender of another address or number,
the last address or number so notified to it.
8. LAW AND JURISDICTION
8.1 Governing Law
This deed is governed by the law in force in the Australian Capital
Territory.
8.
8.2 Submission to Jurisdiction
The parties submit to the non-exclusive jurisdiction of the courts
exercising jurisdiction in the Australian Capital Territory and any courts
that may hear appeals from those courts in respect of any proceedings in
connection with this deed.
9. COSTS
Each Shareholder indemnifies each Noteholder against, and shall pay each
Noteholder on demand the amount of, all losses, liabilities, costs and
expenses (including, without limitation, Legal expenses on a full indemnity
basis) and Taxes in connection with:
(a) the negotiation, preparation, execution and stamping of this deed;
(b) the administration, enforcement or attempted enforcement or
preservation or attempted preservation of any rights under this deed;
(c) any amendment to, or any consent, approval, waiver, release or
discharge of or under, this deed; and
(d) in the case where a Shareholder is a Vendor in accordance with clause
2, negotiation, preparation, execution and stamping of any documents
required by a Purchaser of any Notes, where the purchase is made in
accordance with clause 2.
10. GENERAL
10.1 Amendment
This deed may only be amended or supplemented in writing signed by the
parties.
10.2 No Assignment or Security Interests
(a) Each Shareholder may not assign or transfer all or any part of its
rights or obligations under this deed without the prior consent of
each Noteholder.
(b) Each Shareholder may not grant, create or suffer to exist a Security
Interest in any Shares without the prior consent of SBC Warburg unless
the holder of the Security Interest executes a deed in substantially
the same terms as this deed and has delivered a stamped executed
original to SBC Warburg.
10.3 Severability
Any provision in this deed which is invalid or unenforceable in any
jurisdiction is to be read down for the purposes of that jurisdiction, if
possible,
9.
so as to be valid and enforceable, and is otherwise capable of being
severed to the extent of the invalidity or unenforceability, without
affecting the remaining provisions of this deed or affecting the validity
or enforceabilitv of that provision in any other jurisdiction.
10.4 Counterparts
The deed may be executed in any number of counterparts and all of those
counterparts taken together constitute one and the same instrument.
10.5 Attorneys
Each attorney who executes this deed on behalf of a party declares that the
attorney has no notice of any revocation, suspension or variation of the
power of attorney under the authority of which the attorney executes this
deed.
10.
EXECUTED as a deed poll.
THE COMMON SEAL of THE ) [COMMON SEAL OF THE GALORE GROUP
GALORE GROUP LIMITED was ) LIMITED A.C.N. APPEARS HERE]
affixed in the presence of, and the )
sealing is witnessed by: )
/s/ Robert B. Gavshon
/s/ David M. Glaser ----------------------------------
- ---------------------------------- Director
Secretary Name (printed): ROBERT B. GAVSHON
Name (printed): DAVID M. GLASER
THE COMMON SEAL of WISPJUNE ) [COMMON SEAL OF WISPJUNE PTY. LTD.
PTY LIMITED was affixed in the ) APPEARS HERE]
presence of, and the sealing is )
witnessed by: )
/s/ Robert B. Gavshon
/s/ Sam R. Linz ----------------------------------
- ---------------------------------- Director
Director Name (printed): ROBERT B. GAVSHON
Name (printed): SAM R. LINZ
THE COMMON SEAL of GEBLON ) [COMMON SEAL OF GEBLON PTY. LIMITED
PTY LIMITED was affixed in the ) A.C.N. APPEARS HERE]
presence of, and the sealing is )
witnessed by: )
/s/ Sam R. Linz
/s/ Robert B. Gavshon ----------------------------------
- ---------------------------------- Director
Director Name (printed): SAM R. LINZ
Name (printed): ROBERT B. GAVSHON
11.
THE COMMON SEAL of SARWILL ) [COMMON SEAL OF SARWILL PTY. LIMITED
PTY LIMITED was affixed in the ) A.C.N. APPEARS HERE]
presence of, and the sealing is )
witnessed by: )
/s/ Robert B. Gavshon
----------------------------------
/s/ Janet E. Shields Director
- ---------------------------------- Name (printed): Robert B. Gavshon
Secretary
Name (printed): JANET E. SHIELDS
SIGNED SEALED AND DELIVERED ) /s/ Sam R. Linz
by SAM LINZ in the presence of: ) ----------------------------------
/s/ Janet E. Shields
- ----------------------------------
Witness
Name (printed): JANET E. SHIELDS
SIGNED SEALED AND DELIVERED ) /s/ Robert B. Gavshon
by ROBERT GAVSHON in the ) ----------------------------------
presence of:
/s/ Janet E. Shields
- ----------------------------------
Witness
Name (printed): JANET E. SHIELDS
12.
SIGNED SEALED AND DELIVERED ) /s/ John Price
by JOHN PRICE in the ) ----------------------------------
presence of:
/s/ Janet E. Shields
- ----------------------------------
Witness
Name (printed): JANET E. SHIELDS
SIGNED SEALED AND DELIVERED ) /s/ Sydney Selati
by SYDNEY SELATI in the ) ----------------------------------
presence of:
/s/ Clement H. Porter
- ----------------------------------
Witness
Name (printed): CLEMENT H. PORTER
13.
SCHEDULE 1
NOMINATED SHAREHOLDERS
Name Address
Sam Linz 20B New South Head Road, Vaucluse, NSW 2030
Fax: 9704 4170
Robert Gavshon 67 Portland Street, Dover Heights, NSW 2030
Fax: 9704 4170
John Price 19 Beatty Street, Balgowlah Heights, NSW 2093
Fax: 9704 4170
Wispjune Pty Limited Level 10, l Market Street, Sydney, NSW 2000
ACN 061 285 854 Fax: 9704 4170
Geblon Pty Limited Level 10, l Market Street, Sydney, NSW 2000
ACN 002 495 561 Fax: 9704 4170
Sarwill Pty Limited Suite 6, 10-12 Woodville Street, Hurstville, NSW 2000
ACN 002 412 795 Fax: 9388 2060
Sydney Selati 1265 La Jolla Rancho Road, La Jolla, California 92037
Fax: 0011 l 714 581 4822