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Free Sample Shareholder Loan Agreement

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A shareholder agreement is a document stating that a """"new shareholder"""" has been officially adapted as a member of the current body of shareholders. It contains the names of the signatory of the Deed, if there authorized representative, the official name of the company and its office address. By affixing the signature into this writing, both parties are now bound by the terms and provisions that are stipulated in the merger agreement. There is a complementary agreement that is separately documented from this specific form, which may be annexed to this agreement. There may also be mutual agreement that are not stipulated in this deed. However,this contract supersedes them in part as serves as the seal of all the negotiations and mutual tests that were or may have been executed prior to the founding of the agreement. A document such as this does not necessarily require the material presence of both the signing parties. It may be delivered to office by the each of the issuer's legal representative.""

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									THIS IS NOT A DRAFT AGREEMENT, IT IS A SAMPLE OF THE TYPES OF PROVISIONS THAT CAN
BE INCLUDED IN A SHAREHOLDER’S AGREEMENT. BUY/SELL FUNDING ARRANGEMENTS ARE
 COMMONLY DEALT WITH IN A SEPARATE DOCUMENT AND OFTEN THE CLAUSES SET OUT IN
THIS DOCUMENT DEALING WITH THE EVENT OF DEATH OR DISABILITY ARE TRANSFERRED TO
                           THE SEPARATE DOCUMENT.




                        DATE:




______________________________________________________________________

                         NEW CO PTY LIMITED
                               ACN


                     SHAREHOLDERS AGREEMENT

______________________________________________________________________
                        SAMPLE SHAREHOLDER AGREEMENT                                       COMMENTS


                           THE PARTIES & INTRODUCTION

THIS AGREEMENT is made this                                2002                            Date of
                                                                                           Agreement
BETWEEN      SHAREHOLDER ‘A’
             of                                             (Shareholder A);               Parties to
                                                                                           Agreement
AND          SHAREHOLDER ‘B’
             of                                             (Shareholder B).

             (jointly and severally called Shareholders)


RECITALS:

A     The Shareholders between them hold all the issued shares in the capital of the New   General
      Co Pty Limited (ACN                              ) (the “Company”), are the          description of
      Directors of the Company and each hold the following number of ordinary shares of    agreement
      $1.00:                                                                               between the
                                                                                           parties.
      Member                        Number of Shares Held
                                                                                           Number of
      Shareholder ‘A’                ##     ( Shareholder ‘A’ Shares)                      shares held by
      Shareholder ‘B’                ##     (Shareholder ‘B’ Shares)                       each party.

B     The Shareholders wish to regulate their respective rights as shareholders on the
      following terms and conditions.

                          DEFINITIONS & INTERPRETATION

NOW THE PARTIES AGREE AS FOLLOWS:

1     DEFINITIONS AND INTERPRETATION

1.1   In this Agreement (including the recitals), unless a contrary intention appears:

      Accounting Standards means the Australian Accounting Standards and, if and to All definitions
      the extent that any matter is not dealt with in the Australian Accounting Standards, can be altered
      means generally accepted accounting principles.                                      to suit your
                                                                                           requirements
      Address for Service means, in relation to each Shareholder, the postal and
      electronic mail addresses and the facsimile numbers shown below for that
      Shareholder (or any other address or number notified in writing to the Company by
      that Shareholder):

      Name              Address                  Email                         Fax No
              SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS

Adverse Trading Event means any of the following events:

(a)    At the end of any financial year (starting with the financial year ending 30
       June ____) the cumulative Free Cash Flow from Operations (calculated
       from the beginning of the ____/____ financial year) adversely varies by
       more than ____ % from the cumulative amount forecast in the Business
       Plan for the corresponding period;
                                                                                  Cash Flow
(b)    At the end of any financial year, the Free Cash Flow from Operations for significantly
       that financial year, as stated in the Management Accounts, is at least ___ different from
       % less than the forecast Free Cash Flow from Operations for that financial that forecasted
       year as set out in the Annual Operating plan;

(c)    At the end of any financial year, the Operating Expenditure for that financial   Operating
       year, as stated in the Management Accounts, is at least ___ % more than          Expenditure is
       the forecast Operating Expenditure for that financial year as set out in the     significantly
       Annual Operating Plan;                                                           different from
                                                                                        that forecasted
(d)    The Management Accounts for any month project a negative Free Cash
       Flow from Operations within the next __ month period, which cannot be met        Projected
       from the Company’s existing sources of committed finance.                        negative Cash
                                                                                        Flow

Agreement means this agreement, and includes all the schedules to this
agreement.

Annual Operating Plan means a plan setting out the forecast financial
performance of the Company for a financial year including the following information
on a month by month basis:

(a)    profit and loss account, balance sheet and cash flow projections; and

(b)    detailed sales projections and operating and capital expenditure budgets.

Board means the Board of Directors of the Company from time to time.

Business Day means any day other than a Saturday or Sunday on which
Australian banks are generally open for business in Sydney.

Business Plan means a business plan incorporating an Annual Operating Plan to
be prepared within [3] months of the date of this Agreement by Management and
approved by the Board and thereafter, as amended from time to time and approved
in accordance with this Agreement.

Note: this could be amended to require Shareholder approval - see clause 5(a) in
      this regard.

Chairman means the Chairman of the Board.

Company means New Co Pty Limited (ACN                       ) of
[Registered address]

Confidential Information means:

(a)    all ideas, concepts and information concerning the business and affairs of
       the Company, including software codes, specifications and details of
       functionality, drawings, designs, models and plans whether in tangible form
                                               3
                 SAMPLE SHAREHOLDER AGREEMENT                                           COMMENTS
       or not;

(b)    all financial or other business information about the Company;

(c)    the identity of the clients of the Company; and

(d)    research and development information, financial data and information
       business plans, marketing materials and strategies and any other
       information about the Company or its services,

other than information which is generally available in the public domain, except
where that is as a result of disclosure in breach of this Agreement.

Confidentiality Undertaking means the document by that name to be signed by
senior employees of the Company (as defined by the Board from time to time), and
which is in the form approved by the Board from time to time.

Note: Alternatively, we can draft a standard Confidentiality Undertaking and
      annexe it to this Agreement – see clause 17.

Constitution means the constitution of the Company as set out in the Company’s
original articles of association, as amended.

Control, in respect of a Shareholder which is or may in the future be a corporation,
and in relation to its Controlling Party, means:

(a)    the beneficial ownership (directly or indirectly) of more than one half of the
       issued equity share capital of that Shareholder;

(b)    the ability to procure the passing of ordinary resolutions of that
       Shareholder; or

(c)    the right to appoint more than one half of the directors of that Shareholder,

and controlling has a corresponding meaning.

Corporations Act means the Corporations Act 2001 (Cth).

Deed of Restraint means the document by that name to be signed by the persons
identified in clause 18(b).

Note: Again, we can draft a standard Deed of Restraint and annex it to this
      Agreement – see clause 18.

Director means a director of the Company.

Entity means entity as defined in section 64A of the Corporations Act.

Externally-Administered Body Corporate has the meaning defined in Section 9
of the Corporations Act.

Free Cash Flow from Operations means aggregate net cash provided by
operating activities of the Company for a financial period minus aggregate net cash
used in investing activities for the same period, calculated in accordance with
Accounting Standards and in particular AASB 1026.


                                               4
               SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS

majority of Shareholders means a simple majority in number unless otherwise
specified.

Management means the senior executive staff of the Company.

Management Accounts means financial accounts of the Company and its related
bodies corporate prepared monthly by Management in accordance with generally
accepted accounting principles in a form approved by the Board from time to time
and will include monthly projections of Free Cash Flow from Operations and
Operating Expenditure for the following twelve (12) months.

Operating Expenditure, in relation to a particular financial period, means the
aggregate amount expended by the Company on operating activities during that
period.

Shareholder means a shareholder in the Company.

Shareholder ‘A’ Director means a Director nominated by Shareholder ‘A’.



Shareholder ‘B’ Director means a Director nominated by Shareholder ‘B’.


Shareholder’s controlling party in respect of:

(a)    a corporate Shareholder means (whether or not acting as trustee of a trust):

       (i)     any party which holds the beneficial ownership (directly or indirectly)
               of one half or more of the issued equity share capital of that
               Shareholder;
       (ii)    any party which has the ability to procure the passing of ordinary
               resolutions of that Shareholder; or
       (iii)   any party which has the right to appoint more than one half of the
               directors of that Shareholder;

(b)    a Shareholder which holds Shares as trustee of a trust means:

       (i)     if a unit trust:

               (A)   any party which holds the beneficial ownership (directly or
                     indirectly) of one half or more of the issued equity units in the
                     trust; or

               (B)   any party which has the ability to procure the passing of
                     ordinary resolutions of the unit holders;

       (ii)    any party has the power to remove, replace or appoint the trustee of
               the trust or whose consent is required to do so.

Shares means, unless otherwise expressly stated in this Agreement, ordinary $1
par value shares in the capital of the Company.

Transfer means give, sell, assign, transfer, convey, exchange, mortgage, grant a
security interest in, encumber, pledge, hypothecate or otherwise dispose of
                                               5
                      SAMPLE SHAREHOLDER AGREEMENT                                            COMMENTS
      whether directly or indirectly, voluntarily, involuntarily or by operation of law.

1.2   In this Agreement, unless the context indicates otherwise:

      (a)     reference to a party includes that party's successors and permitted
              assigns;

      (b)     words expressed in the singular include the plural and vice versa;

      (c)     words expressed in any gender include every gender;

      (d)     if any word or phrase is given a defined meaning, any other part of speech
              or grammatical form in respect of that word or phrase has a corresponding
              meaning;
      (e)     headings are inserted for convenience only and do not affect interpretation;

      (f)     the words “person” includes a partnership and a body whether corporate or
              otherwise;

      (g)     all references to dollars are to Australian dollars;

      (h)     reference to any statute, statutory provision or other legislation (whether
              primary or subordinate) is to a statute or other legislation as amended or
              replaced from time to time;

      (i)     the Schedule and any attachments form part of this Agreement;

      (j)     if any conflict arises between the terms and conditions contained in the
              clauses of this Agreement and any part of the Schedule (and attachments if
              any), the terms and conditions of the clauses prevail;

      (k)     if any conflict arises between any part of the Schedule and any part of an
              attachment, the Schedule prevails;

      (l)     reference to the Schedule (or an attachment) is a reference to the Schedule
              (or an attachment) to this Agreement, including as amended or replaced
              from time to time by agreement in writing between the parties; and

      (m)     any term or item which is defined in the Recitals or elsewhere in this
              Agreement will have the meaning there defined.



1.3   Headings and underlinings are for the purpose of identifying sections and must be
      disregarded in the construction of this Agreement.

                   FUNDING OF THE COMPANY & USE OF FUNDS

2     FUNDING OF THE COMPANY and ADVERSE TRADING EVENTS

2.1   Any capital or other funds required for the financial operations of the Company will    Capital funds
      as far as possible be borrowed from financiers which are prepared to provide funds      borrowed -
      or facilities to the Company and the Shareholders will co-operate in the provision of   shareholders
      the funding or facilities (including the giving of whatever security, guarantees        to give security
      and/or undertakings may be reasonably necessary to complete the additional              if necessary
      funding or facility).

                                                        6
                      SAMPLE SHAREHOLDER AGREEMENT                                           COMMENTS
       Note: Alternatively you may exclude any obligation to give any security,
             guarantee and/or undertaking.

2.2    If the Company makes a loss in any financial year or there is an Adverse Trading      Financial
       Event then unless the Shareholders all agree to liquidate the Company, the            losses –
       Shareholders will, within one (1) month of the accounts being prepared, lend to the   shareholders
       Company an amount of money equal to the amount of the loss. The amount to be          to contribute =
       contributed by each Shareholder will be in proportion to his/her percentage           loss, in
       Shareholding in the Company. For the purposes of this Agreement, this amount          proportion to
       will not be treated as due or owing to the Company by any Shareholder who does        shareholding
       not pay it when requested to do so.

2.3    In the event that:

       (a)    one or more of the Shareholders agree to or is required to contribute or
              lend money to the Company; and

       (b)    one or more of the Shareholders fails to contribute the amount of their
              agreed or required loan; and

       (c)    one or more of the Shareholders is obliged to or agrees to contribute more
              than his/her agreed or required amount,
                                                                                            Excess loan by
      then, to the extent that a Shareholder or Shareholders has to make up the shareholder
      deficiency of the others agreed or required contributions, that amount will be repaid given priority
      to the contributing Shareholder by the Company in priority to repayment of any repayment
      contributions or other loan funds due to the other Shareholders.
                                                                                            OR
Note: Alternatively, you could provide that “to the extent that a Shareholder or
      Shareholders make up the deficiency of another’s agreed or required contribution,     Excess loan by
      that amount will be treated as a loan by the contributing Shareholder(s) to the       shareholder
      defaulting Shareholder(s) and that amount will be repayable on demand and will        treated as loan
      carry interest calculated at a rate which is one percent (1%) above the rate being    by other
      paid by the contributing Shareholder(s) for the funds and if those funds have not     shareholders
      been borrowed by the contributing Shareholder(s) then at a rate which is one
      percent (1%) above the rate the contributing Shareholder(s) would be paying if the
      money had been borrowed from the Company's bank at overdraft rates. Interest
      will be calculated and adjusted monthly and paid monthly on the date on which the
      funds were advanced to the Company.”

2.4    The Shareholders will procure that the Company pay interest on all and any money Interest
       lent to it by any Shareholder. That interest will be calculated and payable monthly payable on
       and the interest rate will be:                                                        shareholder
                                                                                             loans:
       (a)      a rate agreed by all the Shareholders from time to time, but, in the absence - as agreed; or
                of agreement;

       (b)    a rate which is one percent (1%) above the rate being paid by the - 1% above
              contributing Shareholder(s) for the funds and, if those funds have not been own interest
              borrowed by the contributing Shareholder(s), then a rate calculated as one  rates
              percent (1%) above the rate the contributing Shareholder(s) would have      payable, or
              had to pay if they had borrowed it from the Company's bank at overdraft     1% above
              rates. Interest will be calculated and adjusted monthly and paid monthly on Company
              the day of the month on which the funds were advanced to the Company.       overdraft
                                                                                          rates

2.5    If any of the Shareholders or their controllers provide goods or services to the
       Company:                                                                         Shareholders
                                                     7
                     SAMPLE SHAREHOLDER AGREEMENT                                          COMMENTS
                                                                                           providing
       (a)    those parties must render an invoice to the Company within fourteen (14)     goods or
              days of the end of the month in which the goods or services were provided,   services to the
              and failure to do so will disentitle the claim;                              company –
                                                                                           invoice
       (b)    all invoices which are received by the Company in accordance with 2.5(a) rendered, paid
              and are approved by the Board as legitimate claims within the terms of the in normal
              party’s contract with the Company will be paid in the normal course except course.
              that, if the Company has insufficient funds to pay that invoice, the sum due
              will be recorded as a loan owed to the Shareholder and will be payable If co. can’t pay
              when the Board determines the Company has sufficient funds available to invoice– loan
              pay the amount due. When funds become available to pay those sums, all to Shareholder
              Shareholders who are owed money for the provision of goods and services
              will be paid equal pari passu instalments.

                                                                                          Employ
2.6    The Company may only employ a person or contract the services of a person persons only
       (including the Shareholders and their controllers) pursuant to a written agreement by approved
       in a form approved by the Board.                                                   written
                                                                                          agreement

3      USE OF FUNDS

3.1    The parties must procure that the Company utilises any equity capital subscribed    Must apply
       by any party, investment funds, joint venture funds and any loans funds in          funds in
       accordance with the Business Plan and the relevant Annual Operating Plan. This      accordance
       will include:                                                                       with Business
                                                                                           Plan &
       (a)    recruitment and salary of staff;                                             Operating
                                                                                           Budget
       (b)    research and development expenses;

       (c)    operating expenses; and

       (d)    payment of amounts outstanding to creditors.

3.2    The Shareholders agree that the most important long term priority of the Company This type of
       is                              .                                                   provision is
                                                                                           optional. You
       Eg:   The diversification and development of its business operations.               may include an
                                                                                           outline of
3.3    The parties agree that the most important short term priorities of the Company are: agreed
                                                                                           medium & long
       (a)   __________;                                                                   term goals eg;
                                                                                           JV’s, sale of
       (b)   __________.                                                                   shares, float.


                     DIRECTORS & SHAREHOLDER MEETINGS
                                                                                       All provisions
4      MEETINGS - DIRECTORS & SHAREHOLDERS                                             are by way of
                                                                                       example only
Composition of Board                                                                   and can be
                                                                                       deleted or
                                                                                       varied to suit
4.1  For a period of twenty-eight (28) days from the date of this Agreement or for any
                                                                                       your particular
     longer period a majority of the Shareholders may agree, the Board will comprise
                                                                                       requirements
     Shareholder ‘A’ and Shareholder ‘B’ and an independent Chairperson, after which
                                                    8
                     SAMPLE SHAREHOLDER AGREEMENT                                             COMMENTS
      period the following provisions will apply.                                             or concerns.

4.2   The Board will comprise a maximum of ___ Directors.                                  They have
                                                                                           been drafted
4.3   Initially, the Board will comprise:                                                  provocatively
                                                                                           to demonstrate
                                                                                           how you may
      (a)       up to     [2] unanimously agreed Directors who are not Shareholders and
                                                                                           ‘play around’
                who are not representatives of any Shareholder, one of whom will be the
                                                                                           with what
                Chairman with a term of two (2) years unless the Shareholders from time to
                                                                                           many investors
                time in general meeting determine otherwise;
                                                                                           assume are
                                                                                           inflexible
                                                                                           standards.
      (b)    up to [2] nominees of Shareholder ‘A’;



      (c)    up to [2] nominees of Shareholder ‘B’; and



      (d)    the Company’s Chief Executive Officer from time to time, the first of whom
             will be              [name],



      and each Shareholder agrees that each Director will be chosen or nominated only
      after consultation with the other Shareholders and Chief Executive Officer.


4.4   The Shareholders in general meeting must unanimously approve any changes to
      the Directors referred to in clause 4.3(a).



4.5   Shareholder ‘A’ and Shareholder ‘B’ must approve the appointment of the
      Chairman.



4.6   Shareholder ‘A’ and Shareholder ‘B’ may, from time to time, by written notice to the
      Company require any of its nominee Directors to be removed as a Director and
      nominate a replacement Director, but only after consultation with the other
      Shareholders.


4.7   A quorum of the Board will comprise at least       [3] Directors, one of whom
      must be a Shareholder ‘A’ Director and one of whom must be a Shareholder ‘B’
      Director. Shareholder ‘A’ and Shareholder ‘B’ will also have the right to appoint
      one (1) observer to attend any Board meeting.

4.8   A Shareholder ‘A’ Director, and a Shareholder ‘B’ Director will have the right to
      appoint an alternate Director to attend, participate in and vote at board meetings in
      his or her place.

4.9   Unless otherwise specified in this Agreement, decisions of the Board will be by

                                                      9
                      SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
       simple majority vote. The Chairman will [not] have a casting vote.
Board Meetings

4.10   The Board will hold meetings every three (3) months (or at any other shorter These rules
       intervals it may determine) at the Company's registered office or at any other are detailed.
       convenient place nominated by the Secretary of the Company.                          They can be
                                                                                            varied as to
4.11   The Secretary of the Company or his/her delegate will procure that at least detail, or some
       fourteen (14) days notice of the time, date and venue of every Board meeting is or all can be
       given to all Directors together with an agenda and, if appropriate, the available removed.
       information and background relating to any matter to be considered at such
       meeting.                                                                             Some
                                                                                            companies
4.12   Clause 4.11 does not apply if all of the Directors consent to a meeting of the Board prefer to allow
       to be convened and held on short notice, or no notice, and with some or none of the board to
       the information referred to in clause 4.11.                                          determine how
                                                                                            it manages its
       Note: This could be changed to require a majority of all Directors or simply all business whilst
               those present at the meeting if they constitute a quorum.                    others prefer
                                                                                            minimum
                                                                                            standards to
4.13   The Secretary of the Company will convene a special meeting of the Board in the
                                                                                            be specified.
       manner specified in clause 4.11 at the request of any Director promptly after
       having received a request.


4.14   No business will be transacted at any Board meeting unless a quorum of Directors
       is present in person at the time the meeting proceeds to business and is present at
       all times during that meeting.

4.15   If within thirty (30) minutes after the time appointed for the meeting a quorum is not
       present the meeting will stand adjourned for the same day in the following week at
       the same venue and time and, if at the adjourned meeting a quorum is not present
       within thirty (30) minutes after the time appointed, the Directors present will then
       constitute a quorum.


Minutes of Board meetings

4.16   (a)    The Chairman will arrange for minutes to be kept of all proceedings of
              Board meetings.

       (b)    A copy of the minutes will be provided to each Director within thirty (30)
              days after each Board meeting for approval or disapproval by the Directors
              who were present at the Board meeting.

       (c)    Any Director who fails to indicate his disapproval of the minutes prepared
              for any Board meeting at which he was present within seven (7) days after
              the date of service will be deemed to have approved them.

       (d)    Approval or disapproval of the minutes of any Board meeting will not affect
              the validity of any decisions duly made.

Shareholders Meetings

4.17   For the purpose of considering matters arising under this Agreement:


                                                      10
                     SAMPLE SHAREHOLDER AGREEMENT                                           COMMENTS
       (a)    the Chairman or any Shareholder may upon giving reasonable notice to          Shareholders
              Shareholders, convene a meeting of Shareholders.                              to elect a
                                                                                            Chairman – no
       (b)    Shareholders must from time to time elect a person to act as chairman of      casting vote
              their meetings and, until otherwise agreed, the chairman of Shareholders’
              meetings will be the Chairman. The chairman of a Shareholders meeting
              will [not] have a casting or second vote at any meeting.

              Note: Alternatively, the Chairman may be given the power to have a
                    casting or second vote.

       (c)    A quorum at a Shareholders meeting will comprise at least [2]
              Shareholders, one of whom must be Shareholder ‘A’ or Shareholder ‘B’.

              Note: Optional: Each Shareholder (whether their nominee is attending in
                    person or by proxy) will also have the right to appoint one (1)
                    observer to attend any Shareholders meeting.

       (d)    Unless otherwise specified in this Agreement, decisions of meetings of the Shareholder
              Shareholders must be by majority of Shareholders present and voting decisions by
              whether in person or by proxy. Any Shareholder or their representative majority
              may call for a poll when the result of a vote is declared, and if a poll is
              called each Shareholder present and voting will be entitled to one vote for
              each share held and a poll will be determined by majority. In all other
              respects a poll will be conducted in accordance with the provisions of the
              Constitution.

              Note: This can be changed to require a unanimous agreement or
                    alternatively, 75% agreement or any other percentage you desire.

       (e)    To the extent that an inconsistency occurs between this clause and the This
              provisions of the Constitution, the provisions of this Agreement will prevail. Agreement
                                                                                             prevails over
       (f)    Clauses 4.14, 4.15 and 4.16 will apply to Shareholders meetings as if the Company’s
              reference to Board Meetings therein were a reference to Shareholders Constitution
              meetings and reference to the Chairman of the Board therein were a
              reference to the chairman of Shareholders meetings.

Note: As currently drafted Clause 4 only regulates issues arising under this Agreement.
      Other shareholder issues are left to be regulated by the company’s Constitution.
      Most of these meeting provisions are already covered by the Constitution in
      substantially the same form, although the question of quorum and use of the
      chairman’s vote are 2 examples of variation from the Constitution.

       They are included here so the shareholders have a single document they can refer
       to. Some companies prefer not to duplicate satisfactory provisions and leave it to
       the Constitution, or merely include those provisions which make changes eg; re
       chairman’s casting vote and quorum

                     CONTROL OF BOARD BY SHAREHOLDERS

5      MATTERS REQUIRING SHAREHOLDERS APPROVAL

5.1   A majority of the Shareholders must approve in writing before any of the following Matters which
      matters are agreed or given effect to:                                             MUST be
                                                                                         approved by
Note: This could be changed to require a resolution of the Shareholders. As resolutions Shareholders:

                                                    11
              SAMPLE SHAREHOLDER AGREEMENT                                             COMMENTS
are passed by those present at a meeting, the necessary number of shareholders
giving approval may be less than is required by reference to a majority of all the
Shareholders. Again, you can refer to a simple majority (ie. 50:50) or a special
majority (ie. 75%) or any other percentage.

(a)    the adoption by the Board of any Annual Operating Plan, or Business Plan;   - Business
                                                                                     Plans
(b)    subject to clauses 4.5, 4.6, 4.7 & 4.8, the appointment or removal of any - Appointment/
       Directors (including the Chairman);                                           Removal
                                                                                     Directors
(c)    remuneration or other compensation payable to the Chairman, all Directors - Wages
       and the top [three (3)] executives, and any changes to this remuneration or
       compensation;

(d)    the issue of any new Shares, options or other securities in the Company - Issue of
       including employee share incentive plans (unless that issue is specifically shares
       contemplated in the Business Plan current at that time);

(e)    any amendment to the rights of existing Shares or any change to the capital - Change
       structure of the Company;                                                     capital
                                                                                     structure
(f)    any borrowing by the Company (unless the borrowing is specifically - Company
       contemplated in the Annual Operating Plan current at that time);              loans

(g)    the Company granting any mortgage, charge or other encumbrance over all - Company
       or any of its assets (unless that mortgage, charge or other encumbrance is    securities
       specifically contemplated in the annual Operating Plan current at that time);

                                                                                       - Significant
(h)    any transaction or dealing where the value exceeds $        ;
                                                                                         transactions

(i)    the acquisition or disposal by the Company of securities in any other Entity;   - Company
                                                                                         securities

(j)    the Company entering into or terminating any joint venture or strategic
       alliance (unless that course of action is broadly contemplated in the - Joint venture
       Business Plan current at that time);

(k)    the merger or amalgamation of the Company or any of its related bodies - Merger
       corporate with any other Entity;
                                                                              - Annual
(l)    the adoption of the annual accounts of the Company;                      accounts

(m)    any material change to the accounting principles applied in the preparation - Accounting
       of the accounts of the Company or its related bodies corporate;               principles

(n)    the winding up or appointment of a controller, receiver or administrator to - Winding up
       the Company or any of its related bodies corporate;

(o)    the commencement or settlement of any litigation, arbitration or other legal - Litigation
       proceedings to which the Company or any of its related bodies corporate is
       a party and which is material to the business of the Company or any of its
       related bodies corporate;

                      (p) the provision of any loan, guarantee or indemnity by the - Provision
                          Company or any of its related bodies corporate;            loans, etc.
                      (q)

                                              12
                      SAMPLE SHAREHOLDER AGREEMENT                                             COMMENTS
       (q)    the adoption or amendment of any employee incentive scheme which - Employee
              involves shares in the capital of the Company or options;                    incentive
                                                                                           schemes
       (r)    the cessation of any material aspect of the business of the Company or any - Material
              other material change to the business of the Company;                        change to
                                                                                           business
       (s)    other than expressly provided for in this Agreement, any amendment to the - Amending
              Constitution.                                                                Constitution

5.2    The above sub-clause applies no matter what is stated elsewhere in this
       Agreement or in the Constitution.

Note: Under the Corporations Act, shareholders have very little control over the day-to-
      day activities of the board. Their rights are mainly limited to hiring and firing
      directors and other limited rights exercisable at AGM’s or Extraordinary General
      Meetings.

       In two principal ways this Agreement overrides those restrictions and provides
       shareholders a more direct say in what occurs. The first way is to allow certain
       shareholders to nominate and change directors, the second is to require certain
       issues to be referred to the shareholders for approval - akin to a veto vote. This
       clause contains the second such control. Again it is optional, and again it can be
       varied in any way you desire.


                    RESTRICTIONS ON DEALINGS WITH SHARES
                                                                                          No share
6      SHARE TRANSFERS                                                                    disposal
                                                                                          unless in
6.1    A Shareholder may only Transfer all or any part of their Shares as set out in this accordance
       Agreement.                                                                         with this
                                                                                          agreement
6.2    No transfer of any Share will be registered unless the proposed transferee has
                                                                                               New share
       entered into a deed in the form of Annexure A agreeing to be bound by the terms
                                                                                               holders must
       of this Agreement as amended from time to time (or an agreement in substantially
                                                                                               sign Deed of
       the same terms as this Agreement), as if the transferee had been a party to this
                                                                                               Adherence
       Agreement (“Deed of Adherence”).

                                                                                               All
6.3    If a Shareholder (Offeror) wishes to Transfer all or part of their Shares (Offered
                                                                                               shareholders
       Shares) the Offeror will first offer them to the other Shareholders (Remaining
                                                                                               have first right
       Shareholders) by delivering to the Remaining Shareholders a written notice
                                                                                               of refusal to
       (Transfer Notice) specifying the number of Offered Shares and the price payable
                                                                                               purchase
       for them (Transfer Price). The Transfer Price will be determined as follows:
                                                                                               shares
       (a)    where the Offeror has received a bona fide offer (the onus of proving which
              will be on the Offeror) from a non-Shareholder to purchase his or her Price of shares
              Shares - the price specified in that bona fide offer;                          as per valid
                                                                                             offer or in
       (b)    otherwise, a sum per share calculated in accordance with the formula set accordance
              out in clauses 8.2 and 8.3, except that reference to the date of the Right with formula in
              Notice in clause 8.4 will, for the purpose of this clause, be read as the date 8.2 and 8.3
              of the Transfer Notice.
       The Remaining Shareholders will have thirty (30) days after the Transfer Notice is      No notice =
       deemed to be delivered to elect to accept Transfer of the Offered Shares at the         deemed
       price set out in the Transfer Notice. Any Shareholder that fails to deliver notice of   rejection of
       acceptance to the Offeror within the thirty (30) day period will be deemed to have      offer
                                                     13
                        SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
      rejected the offer.
6.4   If more than one of the Remaining Shareholders elect to accept the Transfer of the
                                                                                         Right to
      Offered Shares, then the number of Shares that each Remaining Shareholder will
                                                                                         acquire is
      be entitled to acquire will be X. Where X is calculated according to the formula:
                                                                                         proportional
               X= NxY

                        Z

      Where:         N = the number of Shares shown in the Transfer Notice.

                     Y = the number of Shares held by the Remaining Shareholder as at
                         the date of the Transfer Notice.

                     Z = the total number of Shares owned by all Remaining Shareholders
                         electing to accept transfer as at the date of delivery of the Transfer
                         Notice.


New shareholder qualification

6.5   If the Remaining Shareholders do not elect to accept, either individually or       If all
      together, transfer of all of the Offered Shares, the Offeror may, for a period of  Shareholders
      ninety (90) days immediately following the expiration of the thirty (30) day perioddon’t take up
      specified in clause 6.3, Transfer all of the Offered Shares as follows:            right to acquire
                                                                                         – can transfer
      (a)      where the Offeror has received a bona fide offer from a non-Shareholder - to an approved
               to that non-Shareholder;

      (b)      in any other case - to any other person,

      BUT ONLY, in either case, if the Remaining Shareholders have first aproved the
      transferee pursuant to clause 6.6 (which approval will not be unreasonably
      withheld) and ONLY, in either case, if the price paid by the transferee is no less
      than the price specified in the Transfer Notice.
      Note: Default provision: this is a ‘drop dead’ solution that is designed to promote a
            negotiated solution. You might prefer another alternative such as locking
            the shareholder in.

               Re: 3rd party offers: You might prefer to remove reference to 3rd party offers
               in this clause and deal with them separately eg; with the provisions dealing
               with ‘majority sales’ - see clause 11.

Provisions Qualifying Proposed New Shareholders                                        Where
                                                                                       approval is
                                                                                       sought for third
6.6   An Offeror which seeks the Remaining Shareholders’ approval of a party which
                                                                                       party
      may take a transfer of any Shares pursuant to this Agreement, must submit to the
                                                                                       purchaser,
      Remaining Shareholders a written request for approval together with:
                                                                                       must give
                                                                                       details of the
                                                                                       third party.
      (a)      If the proposed transferee or one of the proposed transferees as the case
               may be (Purchaser) is a natural person, the following:


               (i)      name, address and principal occupation or business activity of the

                                                        14
               SAMPLE SHAREHOLDER AGREEMENT                                            COMMENTS
               Purchaser;

       (ii)    any other reasonable and relevant information the Remaining
               Shareholders require, including, but without limitation, financial
               statements, credit references, business and personal references
               and qualifications of the Purchaser;                               Incoming
                                                                                  Purchaser to
       (iii)   a deed of agreement in the form required by the Remaining enter into a
               Shareholders signed sealed and delivered by the Purchaser and the Deed of
               Offeror by which:                                                  Agreement to
                                                                                  pay all moneys
               (A)     the Purchaser covenants to enter into the Deed of due to
                       Adherence; and                                             Company
               (B)    the Purchaser and the Offeror covenant to pay the Company
                      or the Remaining Shareholders out of any money payable by
                      the Purchaser to the Offeror, any moneys then due to the
                      Company or the Remaining Shareholders by the Offeror.
(b)    In the case of the Purchaser or one of the Purchasers being a corporation,
       the following:

       (i)     name, address and principal occupation of each director, secretary
               and principal executive officer (if any) of that Purchaser;

       (ii)    the name, address and principal occupation of all shareholders and
               beneficial owners of shares in the Purchaser;
       (iii)   a deed in the form required by the Remaining Shareholders signed
               sealed and delivered by a person being a director of that Purchaser
               (with his successors called Principal) the Purchaser and the Offeror
               by which:
               (A)    the Purchaser covenants to enter into the Deed of
                      Adherence;

               (B)    the Purchaser and the Offeror covenant to pay the Company
                      or the Remaining Shareholders out of any money payable by
                      the Purchaser to the Offeror, any moneys then due to the
                      Company or the Remaining Shareholders by the Offeror;

               (C)    the Principal :

                       (aa)    agrees to guarantee the performance by the
                               Purchaser of its obligations under any agreement it
                               enters into with the Remaining Shareholders;
                       (bb)    agrees to indemnify the Remaining Shareholders in
                               respect of any breach by the Purchaser of that
                               agreement.
       (iv)    Any other reasonable and relevant       information the Remaining
               Shareholders require, including, but    without limitation, financial
               statements, credit, business and         personal references and
               qualifications as the case may be of     that Purchaser and of the
               Principal.
Note: These provisions have 2 purposes:
      1)    To provide a yardstick by which continuing shareholders might
            assess a proposed incoming shareholder in a case where a
            shareholder wishes to dispose of his/her shares.

                                             15
                     SAMPLE SHAREHOLDER AGREEMENT                                             COMMENTS
             2)      To assist a shareholder who wants to ‘get out’ by providing some
                     objective criteria by which he/she can satisfy remaining
                     shareholders that a sale should be approved.
                                                                                         Can’t purchase
      (c)    Except as otherwise agreed by the Remaining Shareholders in writing, a
                                                                                         the shares if
             person will not be eligible to be a Purchaser if:
                                                                                         you compete
             (i)    in the case of the Purchaser being a natural person, that person; or with the
                                                                                         Company
             (ii)    in the case of the Purchaser being a corporation, a person who is
                     the, or one of the, directors of the Purchaser:

                     (A)    is or may be in competition with the Company; or

                     (B)    is an associate of an industry player or competitor.

6.7   The Remaining Shareholders will (by notice in writing to the Offeror) grant or refuse   Existing
      their consent, within thirty (30) days of their receipt of the documents and            Shareholders
      information set out above and, if that notice is not given, their consent will be       to approve or
      deemed to have been refused.                                                            refuse the sale
                                                                                              to the third
                                                                                              party

6.8   At any time prior to the winding up of the Company as provided for in clause 6.9, if
      the Offeror fails to find an approved purchaser for its Shares and:
                                                                                           If Offeror can’t
      (a)      a Remaining Shareholder finds a purchaser for the Offeror's Shares; and     find a
                                                                                           Purchaser, but
      (b)      a majority of the Shareholders (excluding the Offeror) approve of the an existing
               purchase of the Offeror's Shares by the purchaser;                          Shareholder
                                                                                           finds a
      (c)      the purchaser agrees to pay the Offeror the price requested for its Shares, Purchaser,
               or in the absence of that agreement, a sum calculated in accordance with must transfer
               clauses 8.2 and 8.3; and                                                    the shares to
                                                                                           that Purchaser
      (d)     the purchaser enters into a deed under which it covenants:                   if reasonable
                                                                                           price.
              (i)       to enter into a Deed of Adherence; and

              (ii)     to pay the Company or the Remaining Shareholders out of any
                       money payable by the purchaser to the Offeror, any moneys then
                       due to the Company or the Remaining Shareholders by the
                       Offeror,

      the Offeror will Transfer its Shares to the purchaser and upon the purchaser
      tendering payment for or securing payment of the purchase price according to the
      provisions of this clause 6.8 to the reasonable satisfaction of the Offeror any
      obligation upon the remaining Shareholders to further comply with a notice issued
      pursuant to clause 6.6 will be at an end.

6.9   If only part of a shareholding is transferred, the Transferor and the Transferee must
      agree, before the Shares are transferred, on the number of Directors each will
      have the right to appoint to the Company and must inform the Company in writing
      of their decision. The total number of these Directors will not exceed the number of
      Directors which the Transferor is entitled to appoint under clause 4 of this
      Agreement.


                                                    16
                      SAMPLE SHAREHOLDER AGREEMENT                                             COMMENTS
                                                                                             If no suitable
6.10   If no suitable purchaser can be found for the Offered Shares pursuant to the
                                                                                             Purchaser can
       provisions of this clause or otherwise within seven (7) months of the service of the
                                                                                             be found, the
       Transfer Notice (the “Initial Period”) the Offeror may within twenty-one (21) days of
                                                                                             Offeror can
       the expiry of the Initial Period serve written notice on the Remaining Shareholders
                                                                                             request the
       requiring that:
                                                                                             sale of
       (a)    the assets and undertaking of the Company be sold within twelve (12) Company
              months of the date of service of the notice (with terms of sale to include the assets and for
              purchase price to be paid in cash on completion) and the Company be at the Company
              once wound up upon completion of the sale; or                                  to be wound
                                                                                             up.
       (b)    if the assets and undertaking of the Company are not sold within twelve
              (12) months that upon expiry of the twelve (12) month period the Company
              be at once wound up,

        and the Shareholders must do or cause to be done all things reasonably
        necessary to comply with that notice.

        PROVISIONS WHICH TRIGGER THE RIGHT OF SHAREHOLDERS TO                                  Compulsory
                 COMPULSORILY BUY OUT A SHAREHOLDER                                            sale of shares:

7       COMPULSORY BUY OUT TRIGGERS

7.1    A Shareholder will cease to be eligible to remain a Shareholder of the Company Can’t be a
       (Defaulting Shareholder) if the Shareholder, or, in the case of a corporate shareholder if:
       Shareholder, the Shareholder’s controlling party:

       (a)    is in breach of any provision of this Agreement, except where the breach is - breach of this
              capable of being remedied and is remedied within twenty-one (21) days of Agreement
              the Shareholder being served with a notice by the Board or a majority of the
              other Shareholders requiring it to provide the remedy;
                                                                                           -is insolvent
       (b)   (i)       enters into any form of insolvency administration whether
                       voluntarily or otherwise; or

             (ii)      appoints a controller (as that term is defined in the Corporations
                       Act) or Company entering into possession of any part of a
                       Shareholder’s or a Shareholder’s controlling party’s assets;

       (c)    is convicted of an indictable criminal offence which, in the reasonable          - is a criminal
              opinion of a majority of the remaining Shareholders, will adversely affect the
              business of the Company;
                                                                                           - dies
       (d)    where a Shareholder is an individual, dies or becomes mentally incapable;
              or                                                                           - becomes
                                                                                           insane
       (e)    where the Shareholder is a corporation, that Shareholder’s controlling party
              dies or becomes mentally incapable.

7.2    A majority of Shareholders (on a poll conducted in accordance with the
       Constitution allowing one (1) vote for each full paid ordinary share held but not
       including the defaulting Shareholder(s) in the calculation of the majority) may by
       notice (Default Notice) given to the other Shareholder(s) terminate this Agreement
       insofar as it applies to a Defaulting Shareholder(s).

Note: These provisions enable ongoing shareholders to compulsorily acquire the shares
      of a shareholder in certain circumstances. That is, the owner of the shares is
                                                     17
                         SAMPLE SHAREHOLDER AGREEMENT                                           COMMENTS
       forced to sell.

Additional Comments:
       1)     Compulsory acquisition of shares – The agreement can be altered to
              include a compulsory obligation on continuing shareholders to acquire
              shares of an outgoing shareholder in certain circumstances, eg. In the
              event of death or retirement.

               If you intend forcing ongoing shareholders to purchase shares then you
               must turn your mind to the funding of the acquisition. In the case of death,
               the purchase moneys could be funded by using the proceeds of a life policy
               set up for that purpose. If permanent disability were an issue this could
               also be insured against. In other cases you could build in an acceptable
               time payment arrangement, eg. 20% within 60 days of the event and the
               balance within 2 years or by instalment over ___ years.

       2)      As currently drafted, if continuing shareholders elect to acquire a defaulting
               shareholder out in circumstances where the buy out is triggered by a
               default (ie. Breach of agreement) the ongoing shareholders get to acquire
               the shares at a discount (See 8.1(a) below). We can also add a provision
               that in these circumstances ongoing shareholders also have time to pay.


      PROVISIONS DEALING WITH THE AMOUNT TO BE PAID FOR SHARES IF
           THEY ARE PURCHASED BY CONTINUING SHAREHOLDERS

8      PERCENTAGE ENTITLEMENT DEPENDING ON CIRCUMSTANCES GIVING
       RISE TO BUY OUT

8.1     Upon service of a Default Notice under clause 7, the non-defaulting Shareholders        Right to
        will have the right (Right) to purchase in the portions specified in clause 6.4, all    purchase
        the Defaulting Shareholder’s Shares (Right Shares) then for the time being              shares of
        beneficially owned by the Defaulting Shareholder at a price (in default of              Defaulting
        agreement between the parties) calculated as being equal to:                            Shareholders.

        (a)     where the Default Notice is issued consequent upon clause 7.1(a), (b) or
                (c), ___ percent (__%) of the value of that proportion of the Net Worth of
                the Company as the shareholding in question is in proportion to the total
                issued Shares in the Company at that time;

        (b)     in all other cases the value of that proportion of the Net Worth of the
                Company as the shareholding in question is in proportion to the total
                issued Shares in the Company at that time.

       Note: Full value is payable in some cases (eg; death) whereas less than the full
             value is payable if the buy out is necessitated by a default by a shareholder.




                                                      18
                     SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
Share Valuation Method

8.2   For the purpose of clause 8.1, Net Worth will be calculated in accordance with the Method of
      following formula:                                                                     calculating the
                                                                                             sum payable
              The value of the assets of the Company (including all borrowing by to a Defaulting
              Shareholders) minus liabilities of the Company (including all loans from Shareholder
              Shareholders);
                                                                                             Any formula
        WHERE:                                                                               can be
                                                                                             specified. This
              the value of “goodwill” as an asset is calculated by multiplying the           is a sample
              maintainable pre tax profits by a factor of ____.                              only to
                                                                                             provoke
8.3   When calculating the Net Worth of the Company, the multiplication factor used to thought.
      determine goodwill, the value of goodwill, the value of the assets of the Company
      and the market value of the business of the Company (in the absence of
      agreement between a majority of the Shareholders, but not including the Defaulting
      Shareholder in the calculation of the majority) will be the average value of three (3)
      valuations obtained from three (3) independent valuers, with experience in valuing
      businesses similar to the business of the Company, appointed by agreement
      between the Shareholders (or, failing agreement within fourteen (14) days,
      appointed by the President for the time being of the Institute of Chartered
      Accountants in Australia at the request of any Shareholder) acting as experts and
      not as arbitrators, that determination to be final and binding on the parties.

      Note: Alternatively, it can be left to agreement between the parties at the time and
            in default of agreement as determined by a independent expert or the
            average value of 3 independent experts.

Procedural Steps to Exercise Option - Notices etc.
                                                                                               Can purchase
8.4   The non-defaulting Shareholders may exercise their Right to acquire the Right            Defaulting
      Shares by giving written notice of that intention to the Defaulting Shareholders or      Shareholders
      to their personal legal representative (Right Notice), at any time before the            shares upon
      expiration of thirty (30) days from the date of service of the Default Notice referred   notice to them.
      to in clause 7.2. Upon receipt of the Right Notice, and upon payment of the              Upon payment
      determined value of the Right Shares, the beneficial owner(s) of those Shares will       the Defaulting
      at once execute and deliver (together with the relevant Share certificate) transfers     Shareholder
      of the Right Shares to the non-defaulting Shareholder in the numbers, and to the         must execute
      non-defaulting Shareholders as specified in the Right Notice. If the Defaulting          share
      Shareholder or his personal legal representative fails to execute and deliver the        certificates and
      certificates and transfers, the non-defaulting Shareholders will be empowered and        transfers. If
      authorised to execute those transfers as attorney(s) of the defaulting Shareholder.      not, the
      The Shareholders each covenant with each other that they will each do all things         existing
      and sign all things necessary to register the power of attorney granted if               shareholders
      registration is required by law.                                                         are authorised
                                                                                               to do it for
                                                                                               them.

8.5     If more than one of the Remaining Shareholders elect to purchase a portion of the Right to
        Right Shares then in absence of agreement, the number of Right Shares which acquire is
        each of the Remaining Shareholders will be entitled to acquire will be determined proportional.
        in accordance with the formula in clause 6.4.
                                                                                            If all shares
8.6     If the Remaining Shareholders fail to elect to purchase all the Right Shares within not purchased,
        thirty (30) days of the service of the Right Notice then the Defaulting Shareholder Defaulting
        or its personal legal representative or in the case of an individual, next of kin Shareholder
                                                     19
                      SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
        (whichever the case may be) shall be at liberty to sell the Right Shares to any can offer to
        person who is first approved by the Remaining Shareholders in accordance with third party
        and subject to clauses 6.2, 6.5, 6.6, 6.7 and 6.8.                              subject to
                                                                                        approval.

Terms of payment

8.7    Where one or more Shareholders exercise their right to acquire a Shareholder’s Terms of
       Shares or a portion of them pursuant to clause 6.4, each purchaser must, in the payment for
       absence of agreement, pay their respective purchase monies as follows:           shares being
                                                                                        transferred
       (a)     twenty percent (20%) of the purchase price within sixty (60) days of the from Offeror
                service of the relevant Right Notice; and

       (b)      the balance within twelve (12) months of the service of the relevant Right
                Notice.

                                                                                         Terms of
8.8    Where one or more Shareholders exercise their right to acquire a Shareholder’s
                                                                                         payment for
       Shares or a portion of them under clause 8.1, each purchaser must, in the absence
                                                                                         shares from a
       of agreement, pay their respective purchase monies as follows:
                                                                                         Defaulting
       (a)    twenty percent (20%) of the purchase price within sixty (60) days of the Shareholder
              service of the relevant Right Notice; and

       (b)    the balance within thirty-six (36) months of the service of the relevant Right
              Notice.
                                                                                                Interest is
                                                                                                payable
8.9    Moneys payable under clauses 8.7 or 8.8 will, until paid, carry interest calculated at
       a rate equal to the rate the Company would be paying if the money had been
       borrowed from the Company’s bank at overdraft rates. Interest will be calculated
       and adjusted on monthly rests and paid monthly on the date of service of the
       relevant Right Notice.



Alternate death provisions

8.10   The Shareholders may enter into a separate deed, which provides for insurance Insurance
       funded buy-outs in the event of the death of a Shareholder or Shareholder’s funded buy-
       controlling party.                                                            outs

       Note: Again, we can draft such a Deed and annexe it to this Agreement if
             required. In simple terms, each Shareholder is required to take out life
             insurance, the beneficiaries of which are the remaining Shareholders who
             use this money to purchase the deceased’s shares.

9       ASSIGNMENT                                                                         No assignment
                                                                                           of rights and
       The rights, liabilities and obligations conferred and imposed by this Agreement are liabilities
       personal to the parties and may not be assigned or transferred without the prior without written
       written consent of the parties. The transferee upon entering into any agreement or consent.
       other documentation referred to in clause 6.2, will be entitled to exercise all the
       rights of the transferor under this Agreement as though it were the transferor.


                                                      20
                      SAMPLE SHAREHOLDER AGREEMENT                                                 COMMENTS

        EVENTS TRIGGERING COMPULSORY ACQUISITION & INDEMNITIES                              Each
                                                                                            shareholder
10      SHAREHOLDER ELIGIBILITY & INDEMNITIES                                               indemnifies the
                                                                                            other against
        Each of the Shareholders indemnifies the other Shareholders against all losses breach
        and expenses resulting from or arising out of any breach by it, of any provision or
        condition of this Agreement or the Constitution.

                  PROVISIONS BINDING ALL PARTIES TO A SALE OF
             ALL SHARES TO A THIRD PARTY IF A MAJORITY WISH TO SELL

11     MAJORITY SALE
                                                                                           Offer to
11.1                                                                                       purchase ALL
       If at any time a written offer (Offer) is made by any other person (Offeror) to purchase
       all of the Shares in the Company, at a price and on terms and conditions which are  shares of the
                                                                                           company,
       acceptable to a majority of the Shareholders, (on a poll conducted in accordance with
       the Constitution allowing one (1) vote for each fully paid ordinary share held)     majority
                                                                                           agrees to sale
       (Majority), the Shareholder(s) not in favour of accepting the offer (Minority), will have
       an option to purchase (Purchase Option) the Shares held by the Majority, at the same– minority has
       price and on the same terms and conditions as are contained in the Offer.           the option of
                                                                                           purchasing all
11.2   The Purchase Option may be exercised by a Minority Shareholder giving notice of of the
       acceptance in writing to the Majority during the period within twenty-one (21) days majority’s
       after their receipt of a copy of the Offer (Option Period).                         shares on the
                                                                                           same terms as
                                                                                           the original
                                                                                           offer.

                                                                                                 Minority to give
11.3   Each Minority Shareholder must notify the Majority in writing of their acceptance or notice to
       rejection of the offer within the Option Period. If the Minority Shareholder fails to Majority that
       provide that notice, then it will be taken to have rejected the Offer.                    going to
                                                                                                 purchase
11.4   If a Purchase Option is exercised, completion of the sale will take place in
       accordance with the terms and conditions set out in the Offer or on any other terms Sale in
       all Shareholders may agree in writing. The Shareholders representing the Majority accordance
       will then transfer their shares in the Company to, or at the direction of, the Minority.  with terms of
                                                                                                 original offer.
11.5   If a Purchase Option is not exercised within the Option Period, the Minority will be
       obliged at the written request of the Majority to sell their Shares to the Offeror at the If Minority fail
       price and on the terms set out in the Offer, provided that the Majority sell their Shares to purchase,
       to the Offeror in the same manner.                                                        MUST sell
                                                                                                 their shares to
       Note: Compare to a situation if only one shareholder is offered money for his/her original offeror
                shares - see clause 6.3

12     OBLIGATIONS OF SHAREHOLDER ON TRANSFER

       (a)     On or before the day when it Transfers all its Shares, a Shareholder must:          Shareholder to
                                                                                                   cause
               (i)    cause any person solely appointed by it to resign from office as a           resignation of
                      Director or other officer of the Company and release the Company             its Directors
                      from all liability in relation to any office held by that person (except
                      for liability which has accrued before the date of resignation of the
                      officer);
                                                                                                   Return books
               (ii)   return to the Company all original books and records relating to the         and records
                                                       21
                      SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
                      Company, including any part or any copy which may have been               Shareholder
                      incorporated in an updated work for the Shareholder’s use; and            must cause
                                                                                                resignation of
              (iii)   at the Company’s request, provide the Company with written                Directors to
                      confirmation that it has complied with this clause.                       which it is no
                                                                                                longer entitled
       (b)    On or before the day on which it Transfers some but not all of its Shares, a
              Shareholder must, comply with the provisions of clause 6.9 and, if it is then
              no longer entitled to appoint as many Directors as are at that date appointed
              at its nomination, cause the requisite number of Directors appointed by it to:

              (i)     resign from office as a Director; and

              (ii)    release the Company from all liability in relation to Directorship
                      (except for liability which has accrued before the date of resignation
                      of the Director).


                          FINANCIAL MANAGEMENT ISSUES

13     REPORTING BUDGETS AND PLANS

13.1   The parties must ensure that:

       (a)    the Board causes Management Accounts to be prepared quarterly within Management
              fourteen (14) days after the end of each quarter to which they relate;       accounts to be
                                                                                           provided to
       (b)    each set of Management Accounts is accompanied by a commentary on the Directors
              accounts, a report from the general manager and any documentation of
              material significance to the Company's operations during the period to which
              the accounts relate; and

       (c)    the Management Accounts and the accompanying material referred to in
              paragraph (b) above are provided to each of the Directors not later than
              three (3) days before each Board meeting.

13.2   The parties must ensure that the Board causes an Annual Operating Plan to be             Annual
       prepared and updates the Business Plan by 31 May each year for the following             Operating Plan
       financial year and circulates the Annual Operating Plan and the updated Business         & Business
       Plan to the Board for discussion and approval at the meeting of the Board held in        Plan each year
       June of each year.

13.3   The parties must ensure that the Board promptly provides to each Director any Provided to
       information concerning the Company that a Director may, from time to time, Directors
       reasonably require.

14     DIVIDEND POLICY
                                                                                                Dividend policy
                                                                                                preference to
14.1   The Shareholders must, on or before 30 June each year, unanimously determine
                                                                                                be
       their preference for the Company’s dividend policy for the following financial year of
                                                                                                unanimously
       the Company, and must notify the Board of those preferences in writing, provided
                                                                                                determined by
       that the Board will be guided by, but is not bound to adopt the preferences so
                                                                                                Shareholders
       notified.
                                                                                                each year.

14.2   In default of agreement referred to in the sub-clause above, the dividend policy of If no
       the Company will be to distribute, in respect of each financial year of the Company, agreement,
       not less than the amount calculated in accordance with the following formula:        calculated by
                                                     22
                      SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
                                                                                                 formula
                      a       =              [75]% of [b - c]

       where          a       =       the minimum amount to be distributed

                      b       =       the profits of the Company in relation to the relevant
                                      financial year, as disclosed in the accounts of
                                      the Company for that year

                      c       =       any reasonable provision for working capital
                                      requirements the Board may consider appropriate

15     AUDITORS                                                                               Board to
                                                                                              ensure co.
       Unless the Shareholders all otherwise agree in writing, within thirty (30) days of the accounts are
       close of each financial year, the Board must ensure that the accounts of the audited each
       Company are audited for the financial year just ended.                                 year


                                     MISCELLANEOUS

16     GENERAL UNDERTAKINGS
                                                                                              Each
16.1   Each of the Shareholders agree to do all things necessary to give full effect to this Shareholder to
       Agreement.                                                                             do all things
                                                                                              necessary:
16.2   Without limiting the generality of the preceding clause, each Shareholder must:
                                                                                              - vote
       (a)    exercise the voting rights attached to the Shares held by it and ensure that
              its nominees on the Board (or their alternate directors) vote in a manner
              which gives full effect to and is consistent with the terms of this Agreement;
                                                                                              - pass
       (b)    if a corporation, pass all necessary resolutions of its directors or its          resolutions
              shareholders, duly execute all relevant documents and tender all
              appropriate monies in order to give full effect to the terms of this Agreement;

       (c)     ensure that all entities which it controls from time to time refrain from acting - ensure
               in a manner which hinders or prevents the Company from carrying on its             entities act
               business in a proper and reasonable manner; and                                    properly

       (d)     generally use its best endeavours to promote the business and interests of - use best
               the Company.                                                                 endeavours

16.3   Each Shareholder undertakes:

       (a)     to use its best endeavours to ensure it sends a person (authorised or - attend
               approved) to attend all general meetings of the Company and all meetings meetings
               of the Board, which have been properly convened, so that a quorum may be
               constituted;

       (b)     that the person notified by the party to the Company as representing the - rep’s have
               Shareholder at any general meeting or meeting of the Board, will have the   authority to
               power to act on their behalf, unless the Shareholder or that representative act
               specifies otherwise.

16.4   The Shareholders each agree to co-operate with each other and do all things and
       sign all documents necessary to give effect to the provisions of this Agreement, - cooperate
       including (but without limiting the generality of this obligation), causing the
                                                      23
                      SAMPLE SHAREHOLDER AGREEMENT                                             COMMENTS
       appointment or removal of directors as required and, causing any Director
       nominated by them to act in accordance with the terms set out in this Agreement.


             CONFIDENTIALITY RESTRAINTS & SERVICE AGREMENTS

17     CONFIDENTIALITY
                                                                                               Shareholders
17.1   Each of the Shareholders agree:                                                         to maintain
                                                                                               confidentiality
       (a)    to treat the Confidential Information as confidential;

       (b)    not to disclose to any person, other than those employees of the Company
              who need to have that information in order to carry out their duties on behalf
              of the Company, any of the Confidential Information; and

       (c)    not to use any of the Confidential Information for their own purposes, or for
              the benefit of any third party, except as expressly authorised by this
              Agreement or pursuant to any requirement of the Corporations Act.

17.2   The Shareholders must maintain absolute confidentiality concerning the terms of
       this Agreement, and no public announcement or communication relating to the
       negotiations of the parties or the terms of this Agreement may be made or
       authorised by a Shareholder without the prior approval of the Board.

17.3   Sub-clauses 17.1 and 17.2 will not prevent a Shareholder from disclosing
       information or material:

       (a)    to its professional advisers, bankers, financial advisers and financiers upon
              those persons undertaking to keep confidential any information so disclosed;
              or

       (b)    to comply with any applicable law or requirement of any regulatory body; or

       (c)    to its senior executives, provided they are the subject of a Confidentiality
              Undertaking.

17.4   The above provisions of this clause will continue to apply to a Shareholder Confidentiality
       notwithstanding that the Agreement has been terminated or the Shareholder has to be
       ceased to be a party to this Agreement.                                           maintained
                                                                                         even if
17.5   The Shareholders must ensure that each Director, alternate Director, company Agreement is
       Secretary, observer at Board meetings, employee and consultant of the Company terminated, or
       executes a Confidentiality Undertaking in a form first approved by the Board.     no longer a
                                                                                         party to it
       Note: Again, we can draft a standard Confidentiality Undertaking and annexe it to
              this Agreement.

18     POST TERMINATION RESTRAINTS

       Each of the Participating Parties must:

       (a)    execute a Deed of Restraint in a form approved by a majority of the
              Shareholders;

       (b)    ensure that each of the senior executives and employees of the Company
              enters into a Deed of Restraint in a form approved by a majority of the
              Shareholders; and
                                                      24
                      SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS

       (c)    if a body corporate, ensure that each of its officers and its senior executives
              and employees enter into a Deed of Restraint in a form approved by a
              majority of the Shareholders.

       Note: Again, we can draft a standard Deed of Restraint and annex it to this
             Agreement if required.

19     TERMINATION OF SERVICE AGREEMENTS                                               If
                                                                                       Shareholders
19.1   If any Shareholder enters into a service(s) agreement with the Company which is Service
       validly terminated by the Company then:                                         Agreement is
                                                                                       terminated:
       (a)      the Shareholder or its nominee (as the case maybe) will no longer be - cease to be
                eligible to serve as a Director; and                                      Director

       (b)    the Shareholder or its related Entity’s voting rights (as the case may be), in - voting rights
              relation to its Shares, will be suspended until the date on which the services   are
              or service agreement would have expired in the normal course.                    suspended


19.2   The provisions of the above sub-clause do not apply if the service(s) agreement is Doesn’t apply
       terminated:                                                                        if:
                                                                                          - cease due to
       (a)    by agreement between the Company and the Shareholder; or                       agreement
                                                                                          - Shareholder
       (b)    as a result of death, illness or injury.                                       dies

19.3   In the event of a dispute regarding the termination of a Shareholder’s voting rights, Parties to use
       the parties will use their best efforts to resolve that dispute within three (3) months best efforts to
       after it arises.                                                                        resolve dispute


                GENERAL PROVISIONS & BOILERPLATE PROVISIONS

20     CONSTITUTION

20.1   If there is any inconsistency between the provisions of this Agreement and the Agreement
       Constitution, the provisions of this Agreement will prevail.                           prevails over
                                                                                              Constitution –
20.2   To the extent necessary, the Shareholders must cause any necessary amendment can amend
       to the Constitution to be made to ensure that the Constitution is consistent with this Constitution
       Agreement and so that full effect can be given to the provisions of this Agreement.

21     TERM

21.1   This Agreement remains in full force and effect until the earlier of:      Agreement
                                                                                  stays on foot
       (a)    the times when all of the issued Shares are held by one person; or  until:
                                                                                  - one person
       (b)    the parties agree, in writing, to terminate this Agreement.         holds all
                                                                                  shares; or
21.2   Subject to the above sub-clause, the Shareholders agree that when a person - agreement
       ceases to be a Shareholder of the Company:

       (a)    this Agreement will, by that very fact, be terminated with respect to that Termination of
              former Shareholder;                                                        this Agreement
                                                                                         when person
                                                       25
                   SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
     (b)    this Agreement will continue, without termination, with respect to all the ceases to be a
            current Shareholders of the Company; and                                   Shareholder,
                                                                                       but will
     (c)    the rights and obligations between a former Shareholder and the other continue for
            Shareholders which accrued before the termination or are expressed to remaining
            apply after termination will continue to apply but otherwise the former Shareholders
            Shareholder(s) will cease to have any rights and obligations under this
            Agreement.

22   REPRESENTATIONS AND WARRANTIES

     Each Shareholder warrants and represents to each other Shareholder that:

     (a)    (Legally binding obligation): this Agreement constitutes a valid and legally
            binding obligation of that Shareholder in accordance with its terms;

     (b)    (Execution, delivery and performance): the execution, delivery and
            performance of this Agreement by that Shareholder does not breach or
            conflict with any statute or law, or any document or agreement (including
            where that Shareholder is a body corporate, its constitution, or other
            constituent documents) to which that Shareholder is a Shareholder, or which
            is binding on it or on any of its assets;

     (c)    (Authorisation): all consents, licences, approvals and authorisations of
            every government authority required to be obtained by that Shareholder in
            connection with the execution, delivery and performance of this Agreement
            have been obtained and are valid and subsisting;

     (d)    (Due registration): if a body corporate, it is duly registered or incorporated
            in its jurisdiction of registration or incorporation;

     (e)    (Corporate power): if a body corporate, it has the power, and has taken all
            corporate action required, to execute and deliver this Agreement, and
            perform its obligations under this Agreement;

     (f)    (No external administration): if a body corporate, it is not an Externally-
            Administered Body Corporate and to the knowledge of that Shareholder, no
            liquidator, receiver, receiver and manager, administrator or similar officer
            has been threatened to be, or has been, appointed to that Shareholder or
            any of its property;

     (g)    (No pending administration): if a body corporate, no event or conduct has
            occurred which could result in that Shareholder becoming an Externally-
            Administered Body Corporate;

     (h)    (No bankruptcy): if a natural person, that Shareholder has not committed
            an act of bankruptcy, no bankruptcy notice has been issued to that
            Shareholder, that Shareholder has not entered into any arrangement under
            Part X of the Bankruptcy Act 1966 (Cth), no petition has been presented for
            the making of a sequestration order against the estate of that Shareholder
            which has not been dismissed or withdrawn and/or no sequestration order
            against the estate of that Shareholder has been made and not been
            discharged or annulled; and

     (i)    (No insolvency): they are not, nor have been deemed under any applicable
            law to be, insolvent or unable to pay their debts as and when they become
            due and payable.

                                                   26
                      SAMPLE SHAREHOLDER AGREEMENT                                                COMMENTS
23     GOODS AND SERVICES TAX (GST)

       Any price or other specified amount which is payable under this Agreement is GST
       inclusive.

24     RELATIONSHIP, RIGHTS AND OBLIGATIONS

       The Shareholders agree that their rights and obligations under this Agreement are
       several and:

       (a)    nothing in this Agreement creates or constitutes a Shareholder the partner,
                                                                                                   Agreement not
              agent, employee or representative of any other Shareholder;
                                                                                                   to constitute
                                                                                                   partnership,
                                                                                                   agency etc.
       (b)    except as specifically provided in this Agreement:
                                                                                                   No authority to
                                                                                                   act for any
              (i)     no Shareholder may hold itself out as having authority to act on             other
                      behalf of any other Shareholder;                                             shareholder

              (ii)    no Shareholder may incur obligations on behalf of any other
                      Shareholder;

              (iii)   no Shareholder may assume any responsibility for any other
                      Shareholder;

       (c)    no Shareholder will be responsible for the performance by any other
              Shareholder of any obligation under this Agreement; and

       (d)    no Shareholder will be relieved of any of their obligations under this
              Agreement because any other Shareholder fails to perform their obligations.

25     WAIVER
                                                                                                   Failure or
       Any failure, delay or omission by a Shareholder to exercise a power or right                delay in
       conferred on them by this Agreement will not operate as a waiver of that power or           exercising
       right, and any single exercise of a power or right will not preclude another exercise       power does
       of that power, or the exercise of another power or right under this Agreement.              not mean
                                                                                                   cannot later
                                                                                                   exercise it

26     VARIATIONS                                                                                   Parties can
                                                                                                    modify this
       This Agreement may only be varied by a document signed by or on behalf of each Agreement,
       of the Shareholders.                                                                         but must be
                                                                                                    written and
                                                                                                    signed by all
                                                                                                    shareholders
27     SEVERABILITY
                                                                                                    If one clause is
27.1   Any provision in this Agreement, which is prohibited or unenforceable in any unenforceable,
       jurisdiction will, as to such jurisdiction, be ineffective to the extent of that prohibition void or
       or unenforceability without invalidating the remaining provisions or affecting the prohibited, this
       validity or enforceability of that provision in any other jurisdiction.                      does not mean
                                                                                                    that the rest of
27.2   If any offending provision is capable of being read down so that it will not be void, the Agreement
       voidable, unenforceable or illegal, that provision will be read down accordingly.            is also
                                                        27
                     SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
                                                                                               unenforceable,
                                                                                               prohibited or
                                                                                               void.

28     COUNTERPARTS                                                                  Every party
                                                                                     does not have
       This Agreement may be executed in any number of counterparts and all to sign the one
       counterparts when executed and taken together will constitute this Agreement. document,
                                                                                     they can each
                                                                                     sign their own
                                                                                     copy.
29     ENTIRE AGREEMENT

29.1   This Agreement and the Constitution and the other documents specifically referred       This
       to in this Agreement constitute the entire agreement between the Shareholders in        Agreement, its
       relation to the conduct and management of the Company and their relationship as         annexures and
       Shareholders and any warranty, representation, guarantee or other term or               the
       condition of any nature not contained or recorded in these documents is of no force     Constitution
       or effect.                                                                              make up the
                                                                                               whole of the
29.2   This Agreement replaces all prior agreements and understandings between the
       Shareholders or any of them concerning the matters referred to in this Agreement, agreements
       and, if the terms of this Agreement and the Constitution are inconsistent in any way, between the
       the provisions of this Agreement will prevail to the extent that law or equity permits. parties.

30     GOVERNING LAW

30.1   This Agreement is governed by and must be construed according to the laws in If need be, this
       effect in New South Wales.                                                      Agreement will
                                                                                       be interpreted
30.2   Each party submits to the non-exclusive jurisdiction of the courts of New South by NSW
       Wales in relation to all matters arising under or relating to this Agreement.   Courts

31     DISPUTE RESOLUTION

Court and arbitration proceedings

31.1  A Shareholder must follow all the dispute resolution procedures set out in this All dispute
      clause before commencing Court or arbitration proceedings relating to a dispute, resolution
      except where the Shareholder seeks urgent interlocutory relief.                      procedures
                                                                                           must be
Negotiation                                                                                followed
                                                                                           before
31.2 (a)     Any Shareholder seeking to resolve a dispute arising out of or relating to litigation or
             this Agreement must notify the other in writing, detailing the matters in arbitration,
             dispute and their suggested means of resolution.                              except seeking
                                                                                           injunction.
      (b)    Within fourteen (14) days of the date the notice is given under subclause (a)
             the Shareholders must meet to attempt to resolve the dispute. That meeting
             must be arranged by the Shareholder sending the Notice.

Mediation
                                                                                               Disputes are to
31.3   (a)    If the parties are unable to resolve the dispute by negotiation, as set out in   be mediated
              the above sub-clause, they must endeavour to settle it by mediation              by an agreed
              administered by the Australian Commercial Disputes Centre (“ACDC”)               independent
              before having recourse to arbitration or litigation.                             mediator

                                                    28
                       SAMPLE SHAREHOLDER AGREEMENT                                              COMMENTS
       (b)     The mediation must be conducted in accordance with ACDC Mediation
               Guidelines, which set out the procedures to be adopted, the process of
               selection of the mediator and the costs involved.

32     NOTICES

32.1   Notices under this Agreement may be given personally or by post, facsimile Notice may be
       transmission or electronic mail at the Address for Service of each Shareholder.            given
                                                                                                  personally or
32.2   If a notice is:                                                                            by post, fax or
                                                                                                  email at the
       (a)      personally served on the party or an officer of the party to whom it is given, it address or
                will be deemed to be received immediately upon delivery if delivered before number show
                5.00pm on a Business Day or on the next Business Day if delivered after in the
                5.00pm;                                                                           Definitions.

       (b)     mailed to the party, it will be deemed to be received on the second Business
               Day following the date of posting; or

       (c)     sent by facsimile or electronic mail, it will be deemed to be received on the
               date the facsimile machine or computer displays or records confirmation that
               despatch has been completed to the party to whom it was sent, unless the
               record shows a time later than 5.00pm on that date, when receipt will be
               deemed to be on the next Business Day.

33     COSTS AND EXPENSES

       The Shareholders acknowledge that they are jointly and severally liable for and
       agree to ensure that the Company pays the legal expenses incurred in connection
       with the negotiation, drafting and execution of this Agreement and all associated
       transaction documentation

34     STRATEGIES AND OBJECTIVES

       The parties agree that the first Business Plan reflects the strategies and objectives
       of the Company, namely to _________________ and ___________.

       Note: Can include objective to float or sell.


EXECUTED as an Agreement.

Signed for and on             )
behalf of the company         )
by its duly authorised        )
officer in the presence of    )       ……………………………………..


………………………………….
   Witness




                                                       29
SAMPLE SHAREHOLDER AGREEMENT

            ANNEXURE A




    DATE:                2002




     DEED OF ADHERENCE TO



      NEW CO PTY LIMITED

       (ACN              )

   SHAREHOLDERS AGREEMENT
SAMPLE DEED OF ADHERENCE


 CUNICH BUSINESS LAWYERS
      41 Market Street
  WOLLONGONG NSW 2500
     Tel: (02) 4229 5545
     Fax: (02) 4229 9688




           31
                                    SAMPLE DEED OF ADHERENCE



This Deed is made on the              day of

BETWEEN:

               ( “new shareholder”)

AND:

               ( “current shareholders”)



AND:           New Co. Pty Limited (ACN                      ) ( “company”).

WHEREAS:

A      The current shareholders are subject to and bound by the terms and provisions of the Shareholder
       Agreement dated             day of         2002 (“Shareholder Agreement”).

B      The new shareholder has recently acquired or will acquire [all]/[part of] the interests of Shareholder
       [ ] in the company.

C      The new shareholder and each of the current shareholders wish to preserve the benefits that accrue
       to each of them by reason of their interests in the company being held subject to the Shareholder
       Agreement.

Now in consideration of the parties executing this Deed and the exchange of mutual promises the parties
severally for themselves, their legal personal representatives, heirs, executors, administrators, beneficiaries,
successors and permitted assigns by this Deed agree as follows:

1      With effect from the date of this Deed the new shareholder acknowledges and agrees to be bound by
       the terms and provisions of the Shareholder Agreement as though and to the effect that the new
       shareholder originally executed that Agreement.



In witness to their agreement to the terms of this Deed the parties have signed sealed and delivered their
consent.



SIGNED SEALED AND DELIVERED by                 )

in the presence of:                            )     …………………………………………………

                                                     Signature of New Shareholder

……………………………………………..

Witness




                                                      32
                                     SAMPLE DEED OF ADHERENCE


THE COMMON SEAL of                           )

………………………………………………                           )

is affixed in accordance with its Articles   )

of Association                               )   ………………………………………………..

                                                 Signature of authorised person

………………………………………………

Witness




                                                  33

								
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