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EXHIBIT 2.5B
[BAKER & MCKENZIE LETTERHEAD]
SHAREHOLDERS DEED
between
ASIA ONLINE - AUSTRALIA PTY LIMITED
(ACN 089 444 691)
and
ASIA ONLINE, LTD.
and
THE PARTIES LISTED IN SCHEDULE 1
and
FLEX INFORMATION TECHNOLOGY PTY LTD
(ACN 089 587 753)
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[BAKER & MCKENZIE LETTERHEAD]
CONTENTS
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<CAPTION>
CLAUSE
NUMBER HEADING PAGE
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1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 4
2. COMMENCEMENT OF OBLIGATIONS ON CLOSING 5
3. THE BUSINESS 5
4. MANAGEMENT OF THE COMPANY 5
4.1 Appointment of directors 5
4.2 Manner of appointment 6
4.3 Resignation on disposal 6
4.4 Liability for removal 6
4.5 Meetings of the Board 6
4.6 Shareholders Meetings 7
4.7 Chairman 7
5. MATTERS REQUIRING UNANIMOUS CONSENT 7
5.1 Unanimous consent 7
6. TRANSFER OF SHARES 8
6.1 No dealing in Shares 8
6.2 Transfer to Related Body Corporate 8
6.3 Transfer Notice procedure 8
6.4 Allocation of Relevant Shares 9
6.5 Shares not purchased by Members 10
6.6 Registration of Transfers 10
6.7 Obligations of Transferor to Transfer 10
6.8 No Limitation 11
7. WARRANTIES 11
7.1 Warranties by the Members 11
7.2 Warranty by the "B" Shareholders 11
</TABLE>
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[BAKER & MCKENZIE LETTERHEAD]
<TABLE>
<S> <C> <C>
8. OPTIONS 11
8.1 Put and Call Options 11
8.2 Terms of exercise of put option 12
8.3 Terms of exercise of call option 12
8.4 Completion of Exercise of Option 13
8.5 US Securities Laws Representations and Undertakings 13
8.6 Restricted Securities 14
8.7 Legends 15
8.8 Lock Up 15
8.9 Definitions 16
8.10 Cash Election 16
9. PROMISE TO PAY 16
9.1 Asia Online to Pay 16
9.2 Limit on Payments 17
10. MUTUAL CO-OPERATION 17
10.1 Primary obligation 17
10.2 Obligations of members 17
11. NO PARTNERSHIP AND CONFLICT 17
11.1 No partnership 17
11.2 Conflict with Constitution 17
12. NOTICES 18
13. GENERAL PROVISIONS 20
13.1 Invalid or unenforceable 20
13.2 Waiver and exercise of rights 20
13.3 Amendment 20
13.4 Counterparts 20
13.5 Further assurances 20
13.6 Costs 20
13.7 Assignment 20
13.8 Non-merger 21
13.9 Entire Deed 21
13.10 Rights cumulative 21
13.11 Consents and Approvals 21
13.12 Jurisdiction and Governing Law 21
13.13 Dispute Resolution 21
13.14 Confidentiality 22
13.15 Exclusions 22
13.16 Restrictions on Announcements 23
SCHEDULE 1
"B" Shareholders
SCHEDULE 2
Deed of Adherence *
SCHEDULE 3
Exercise Price *
SCHEDULE 4
Business Plan *
</TABLE>
* Schedule omitted - will be provided supplementally to the Commission upon
request.
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SHAREHOLDERS DEED
THIS DEED is made on the 1999
BETWEEN
Asia Online - Australia Pty Limited ACN 089 444 691 of Level 26, 50 Bridge
Street, Sydney, New South Wales] ("Asia Online - Australia");
Asia Online, Ltd. a company incorporated in Delaware, of 23rd Floor, Citicorp
Centre, 18 Whitfield Road, Causeway Bay, Hong Kong ("Asia Online");
The Parties Listed in Schedule 1 (the ""B" Shareholders");
AND
Flex Information Technology Pty Ltd (ACN 089 587 753) of 97 Wattle Street,
Punchbowl, New South Wales ("the Company").
RECITALS
A. By a Share Purchase and Subscription Agreement dated on or about the
date of this Deed Asia Online - Australia has agreed to purchase and
subscribe for a total 51% shareholding in the Company.
B. The Members have entered into this Deed to set out the terms and
conditions on which the business of the Company will be managed and
operated and how each of their rights as members of the Company will be
governed.
OPERATIVE PROVISIONS
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1. DEFINITIONS AND INTERPRETATION
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1.1 DEFINITIONS
In this Deed, all terms defined in the Subscription Agreement shall have the
same meaning herein unless otherwise specified. Unless the context otherwise
requires, in this Deed:
""A" DIRECTOR" means a Director appointed from time to time by Asia Online -
Australia under clause 4.1;
""B" DIRECTOR" means a Director appointed from time to time by the "B"
Shareholders under clause 4.1
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""B" SHAREHOLDER" means a Member who holds "B" class shares in the Company;
"BOARD" means the Company's board of directors from time to time;
"BUSINESS" means those activities carried on by the Company from time to time;
"BUSINESS DAY" means a day, other than a Saturday, Sunday or public holiday, on
which banks are open for business in Sydney;
"BUSINESS PLAN" means the business plan as approved by the Board from time to
time (the first such plan being attached as Schedule 4);
"CASH ELECTION" means a unanimous election by the "B" Shareholders under clause
8.10 that the Exercise Price be paid in cash;
"CHAIRMAN" means the chairman of the Board from time to time;
"CONSTITUTION" means the constitution of the Company;
"CONTROL" has the same meaning as in s243E of the Corporations Law;
"DEED OF ADHERENCE" means a deed substantially in the form set out in Schedule 2
or any other form approved in advance by all of the Members under which a
transferee or allottee of Shares agrees to be bound by all the terms of this
Deed as if it had been one of the Members;
"DIRECTOR" means any director from time to time of the Company (or a duly
appointed alternate);
DISPUTE means a dispute arising out of or about this Agreement (including but
not limited to any dispute as to breach or termination of this Agreement or any
claim in tort, in equity or under any statute);
"EXERCISE PERIOD" means a period of 10 Business days from the date a recipient
receives a notification by Asia Online - Australia of the occurrence of a
Trigger Event;
"EXERCISE PRICE" means:
(a) if the "B" Shareholders make a Cash Election under clause 8.10, an
amount equivalent to the actual price at which the Asia Online Stock as
defined in clause 8.9 is to be issued in the initial public offering of
Asia Online on a US Stock Exchange multiplied by the total number of
Asia Online Class C Non-Voting Common Shares set out in Schedule 3; or
(b) in all other cases, the issue of that number of Asia Online Class C
Non-Voting Common Shares set out in Schedule 3 and offered by Asia
Online for subscription by the "B" Shareholders;
"MEMBER" means a registered holder from time to time of one or more Shares;
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"OFFERING MEMBER" means a Member who has served a Purchase Notice pursuant to
clause 6.3(d)
"OPTION NOTICE" means written notice served by Asia Online - Australia or the
"B" Shareholders notifying the other of its wish to exercise the relevant "put"
and "call" options under clause 8;
"PROPORTIONATE SHARE" in relation to a Member means the proportion that the
number of Shares from time to time held or beneficially owned by that Member
bears to the total number of Shares on issue from time to time;
"PROSPECTIVE PURCHASER" means a third party who has made a bona fide offer to
purchase some or all of the Shares of a Member under clause 6.3(a);
"PURCHASE NOTICE" means a written notice of acceptance served under clause
6.3(d);
"RELATED BODY CORPORATE" has the same meaning as in section 50 of the
Corporations Law;
"RELEVANT SHARES" means the number and class of Shares and any interest in them
which a Transferor may wish to transfer or dispose of;
"SECURITY INTEREST" means an interest in or over an asset which provides
security for, or protects against default by, a person for the payment or
satisfaction of a debt, obligation or liability including a mortgage, charge,
bill of sale, pledge, deposit, lien, encumbrance, hypothecation, or arrangement
for the retention of title;
"SHARE" means a share (of whatever class or denomination) in the capital of the
Company from time to time;
"SUBSCRIPTION AGREEMENT" means the Share Purchase and Subscription Agreement
dated on or about the date of this Deed between, among others, Asia Online -
Australia, the "B" Shareholders and the Company;
"THIRD PARTY INTEREST" means any Security Interest, lease, option, voting
arrangement, easement, covenant, notation, restriction, interest under any
agreement, interest under any trust, or other right, equity, entitlement or
other interest of any nature held by a third party;
"TRANSFER NOTICE" means a notice in writing under clause 6.3 that a Transferor
desires to sell, transfer or dispose of any Share or Shares;
"TRANSFEROR" means a Member proposing to sell, transfer or dispose of any Share
or Shares under clause 6.3;
"TRIGGER EVENT" means the earlier to occur of:
(a) the date which is not later than 60 days before the likely day on which
Asia Online registers its initial public offering document with the
United States Securities and Exchange Commission;
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(b) a change of Control of Asia Online or Asia Online - Australia or any
sale of substantially all of the assets and undertaking of Asia Online
(other than by way of any group reorganisation or reconstruction
undertaken by Asia Online - Australia); or
(c) any group reorganisation or reconstruction of the Company or any
material part of its assets; and
"WARRANTIES" means the representations, warranties and covenants made by the
Members under clause 7 and "WARRANTY" means any one of them.
1.2 INTERPRETATION
In this Deed, unless the context otherwise requires:
(a) a reference:
(i) to the singular includes the plural and vice versa;
(ii) to a gender includes all genders;
(iii) to a document (including this Deed) is a reference to that
document (including any Schedules and Annexures,) as amended,
consolidated, supplemented, novated or replaced;
(iv) to an agreement includes any deed, agreement or legally
enforceable arrangement or understanding whether written or
not;
(v) to parties means the parties to this Deed and to a party means
a party to this Deed;
(vi) to a notice means all notices, approvals, demands, requests,
nominations or other communications given by one party to
another under or in connection with this Deed;
(vii) to a person (including any party) includes:
(A) a reference to an individual, company, body
corporate, association, partnership, firm, joint
venture, trust or Government Agency as the case
requires; and
(B) the person's successors, permitted assigns, executors
and administrators;
(viii) to a law:
(A) includes a reference to any constitutional provision,
subordinate legislation, treaty, decree, convention,
statute, regulation, rule, ordinance, proclamation,
by-law, judgment, rule of common law or equity or
rule of any applicable stock exchange;
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(B) is a reference to that law as amended, consolidated,
supplemented or replaced; and
(C) is a reference to any regulation, rule, ordinance,
proclamation, by-law or judgment made under that law;
(ix) to proceedings includes litigation, arbitration, and
investigation;
(x) to a judgement includes an order, injunction, decree,
determination or award of any court or tribunal; and
(xi) to time is a reference to Sydney time;
(b) headings are for convenience only and are ignored in interpreting this
Deed;
(c) if a period of time is specified and dates from, after or before, a
given day or the day of an act or event, it is to be calculated
exclusive of that day;
(d) if a payment or other act must (but for this clause) be made or done on
a day which is not a Business day, then it must be made or done on the
next Business day;
(e) the words "including" or "includes" mean "including but not limited to"
or "including without limitation;
(f) this Deed must not be construed adversely to a party solely because
that party was responsible for preparing it; and
(g) where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
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2. COMMENCEMENT OF OBLIGATIONS ON CLOSING
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Unless expressly stated otherwise in this Deed, the rights and obligations
created by this Deed commence, and are enforceable from the Closing Date.
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3. THE BUSINESS
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The primary object of the Company is to conduct the Business in accordance with
the Business Plan as amended from time to time.
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4. MANAGEMENT OF THE COMPANY
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4.1 APPOINTMENT OF DIRECTORS
(a) For so long as it holds 51% of the Shares, Asia Online _ Australia is
entitled to appoint, substitute and remove a total of three "A"
Directors.
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(b) For so long as they hold 49% of the Shares, the "B" Shareholders are
collectively entitled to appoint, substitute and remove a total of two
"B" Directors.
(c) For the avoidance of doubt, the "A" Shareholders are only entitled to
appoint, substitute and remove "A" Directors and the "B" Shareholders
are only entitled to appoint, substitute and remove "B" Directors.
4.2 MANNER OF APPOINTMENT
Each appointment, substitution and removal of a Director will be carried out by:
(a) the relevant Member(s) depositing a written notice at the Company's
registered office; and
(b) sending a copy of the notice to the other Members.
4.3 RESIGNATION ON DISPOSAL
If Asia Online - Australia disposes of all its Shares or the "B" Shareholders
dispose of all of their Shares, that Member or those Members must cause the
resignation of the relevant Director(s) appointed by it or them.
4.4 LIABILITY FOR REMOVAL
Any Member substituting or removing a Director using its rights under this
clause 4 is responsible for and holds harmless the other Members and the Company
from and against:
(a) any claim for unfair or wrongful dismissal arising out of the
substitution or removal; and
(b) any reasonable costs and expenses incurred in defending any
proceedings, including, but without limiting this, legal costs on a
solicitor and own client basis.
4.5 MEETINGS OF THE BOARD
(a) Subject to (b) below, at each meeting of the Board and for each
resolution proposed to the Board the Directors present at the meeting
will have one vote each.
(b) If less than the full number of "A" Directors or "B" Directors are
appointed to the Board or attend or are able to vote at any Board
meeting, the "A" Director(s) or "B" Director that attend or are so
appointed are entitled to exercise between them the number of votes
that equal the maximum number of "A" Directors entitled to be appointed
under clause 4.1(a) (in the case of any votes exercised by the Asia
Online - Australia Directors) and the maximum number of "B" Directors
entitled to be appointed under clause 4.1(b) (in the case of any votes
exercised by the "B" Directors).
(c) Subject to clause 5.1 all resolutions of the Board must be passed by
simple majority.
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(d) The quorum for a Board meeting is at least one "A" Director and one "B"
Director.
4.6 SHAREHOLDERS MEETINGS
(a) Subject to clause 4.6(b), the quorum for a general meeting is at least
two Members, one of which must be Asia Online - Australia.
(b) If a quorum is not present within 20 minutes after the time appointed
for the meeting, any meeting convened on a requisition of Members will
be dissolved but any other meeting will be adjourned to the same day in
the next week at the same time and place or to such other day, time and
place that the Directors may appoint by notice to the Members. If at
the adjourned meeting a quorum is not present within 20 minutes after
the time appointed for the meeting, the meeting will be further
adjourned until such day, time and place that the Directors may appoint
by notice to the Members. If at the second adjourned meeting a quorum
is not present, the Members present will be a quorum.
(c) At each meeting of the Members and for each resolution proposed to the
Members, each Member has one vote for each Share it holds.
4.7 CHAIRMAN
(a) Asia Online - Australia has the right to nominate one of the "A"
Directors to be Chairman. If the Chairman ceases to be a Director, Asia
Online - Australia will be entitled to nominate a replacement Chairman.
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5. MATTERS REQUIRING UNANIMOUS CONSENT
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5.1 UNANIMOUS CONSENT
The Members agree that despite anything to the contrary in this Deed, or in the
Constitution, the unanimous consent of the Members is required to:
(a) create or, where appropriate, issue any Security Interest over the
whole or any part of the undertaking, business, property or assets
(tangible or intangible) of the Company;
(b) sell, transfer, lease, assign, dispose of or part with control of any
interest in all or any material part of the undertaking, business,
property or assets (tangible or intangible) of the Company (whether by
a single transaction or a series of transactions) or contract to do so
(other than as a result of any group reorganisation or reconstruction
of the Company or any material part of its assets);
(c) acquire or contract to acquire any business, property or assets
(tangible or intangible) or any interest therein which represents more
than 20% of the Company's assets at the relevant time (other than as a
result of any group reorganisation or reconstruction of the Company or
any material part of its assets);
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(d) enter into any joint venture, partnership or profit sharing agreement
with any third party; and
(e) issue further shares.
In clauses 5.1(b) and 5.1(c) "material part" means any part or parts of the
undertaking, business, property or assets having a value of at least 20% of the
Company's assets at the relevant time.
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6. TRANSFER OF SHARES
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6.1 NO DEALING IN SHARES
(a) A Member may not sell, transfer or dispose of any Shares or any
interest in any Shares or charge or otherwise encumber or create any
Third Party Interest in any Shares without the prior consent of the
other Members, except as provided in this Deed.
(b) If any Member purports or attempts to transfer, dispose of or create a
Third Party Interest over their Shares or any interest in their Shares,
except as provided in this Deed, that Member will be deemed to have
served a Transfer Notice in accordance with clause 6.3 for those
Shares.
6.2 TRANSFER TO RELATED BODY CORPORATE
A transfer of Shares to a transferee who is and remains a Related Body Corporate
of the transferor Member is permitted if:
(a) the transferor Member has given prior written notice to the other
Members; and
(b) the transferee executes a Deed of Adherence at the same time as the
transfer.
6.3 TRANSFER NOTICE PROCEDURE
(a) A Transferor wishing to sell, assign or dispose of an interest in its
Shares (other than to a Related Body Corporate under clause 6.2) must
deliver a Transfer Notice to the other Members specifying:
(i) the Relevant Shares(which must be all of the Shares then held
by the Transferor);
(ii) the identity of the Prospective Purchaser (if any);
(iii) the price at which the Transferor wishes to sell the Relevant
Shares.
(iv) any other material terms or circumstances known to the
Transferor which affect or may affect the offer.
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(b) A Transfer Notice once given or deemed to have been given is not
revocable except with the consent of all of the Directors in writing;
(c) Receipt of the Transfer Notice constitutes an offer by the Transferor
to the other Members to sell the Relevant Shares to the other Members
on terms contained in the Transfer Notice.
(d) Each Member (other than the Transferor) may exercise its option to buy
the Relevant Shares by serving a Purchase Notice on the Transferor of
the number of Relevant Shares it wants to buy within 15 Business days
of the date of service of the Transfer Notice.
(e) If a Member serves a Purchase Notice under clause 6.3(d):
(i) the Transferor must sell to that Member the number of Relevant
Shares allocated to that Member under clause 6.4; and
(ii) the relevant Member must buy them on the terms set out in the
Transfer Notice.
6.4 ALLOCATION OF RELEVANT SHARES
(a) The Transferor must sell to each Offering Member the number of Relevant
Shares that Offering Member has offered to buy if the Transferor
receives offers for equal to or less than the number of Relevant
Shares.
(b) The Relevant Shares must be allocated to the Offering Members in the
proportion that their Proportionate Shares bear to each other if there
are not enough Relevant Shares to satisfy the offers of all Offering
Members.
(c) An Offering Member is not bound to buy or entitled to buy more than the
number of Relevant Shares which that Offering Member has offered to
buy, even if paragraph (b) would result in a higher number of Relevant
Shares being allocated to that Offering Member.
(d) Any Relevant Shares which remain unallocated because of paragraph (c)
must be re-allocated amongst those remaining Offering Members who
offered to buy more than the number of Relevant Shares already
allocated to them under paragraph (b). This process may be repeated if
necessary until all of the Relevant Shares have been allocated.
(e) The Company may round a fraction up or down as it thinks fit, if this
clause would otherwise result in a fraction of a Share.
(f) The Company must notify the Transferor and each Offering Member of the
number of Relevant Shares to which each Offering Member is entitled.
(g) Within 30 Business days of the date of service of the Transfer Notice
and subject to the Offering Member paying the Transferor the required
sale consideration, the
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Transferor must give each Offering Member a transfer of the relevant
number of Relevant Shares signed by the Transferor.
(h) The Transferor must give the Company the share certificates for the
Relevant Shares at the same time as it gives the Offering Member a
transfer under paragraph (g).
6.5 SHARES NOT PURCHASED BY MEMBERS
(a) If offers are not received from the Members to purchase all the
Relevant Shares, or a Member defaults in paying for the Relevant Shares
in accordance with clause 6.4(g), then the Transferor may sell the
Relevant Shares to the Prospective Purchaser within 60 Business days
but not before 40 Business days after the date of service of the
Transfer Notice.
(b) The Transferor must not sell the Relevant Shares for a lower price than
that specified in the Transfer Notice or otherwise on more beneficial
terms.
6.6 REGISTRATION OF TRANSFERS
(a) The Members will ensure that the Directors register any transfer of
Shares which complies with clause 6 or clause 8.
(b) The Directors must refuse to register the transfer of any Share, unless
the provisions of this clause 6 or clause 8 have been duly complied
with and the proposed transferee has executed a Deed of Adherence.
6.7 OBLIGATIONS OF TRANSFEROR TO TRANSFER
(a) Upon the Transferor becoming bound to transfer any Shares under this
Deed the Transferor must deliver to the transferee executed transfers
for those Shares in favour of the transferee together with the relevant
share certificate(s) against payment by the transferee of the price due
for them.
(b) If the Transferor defaults in transferring the Shares, any Director is
irrevocably and unconditionally appointed as the attorney of the
Transferor to complete and execute the necessary instrument of transfer
of those Shares together with a standard form indemnity for
non-production of share certificates for those Shares and may deliver
them on behalf of the Transferor and the Company will receive the
purchase money for the Shares on trust for the Transferor and will
(subject to the instrument being duly stamped) cause the transferee to
be registered as the holder of the Shares.
(c) The Company is not bound to earn or pay interest on any money held and
will not pay any money to the Transferor until the Transferor has
delivered the Transferor's share certificates (or an appropriate
indemnity for any lost certificates) to the Company.
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6.8 NO LIMITATION
Nothing in this clause limits or restricts the rights of the "B" Shareholders or
Asia Online - Australia under clause 8.
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7. WARRANTIES
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7.1 WARRANTIES BY THE MEMBERS
Each Member warrants to the other Members that:
(a) the execution of this Deed by it has been properly authorised by all
necessary corporate or other action by it;
(b) it has full corporate authority or statutory power, as the case may be,
and lawful authority, to execute and deliver this Deed and to perform
or cause to be performed its obligations under this Deed;
(c) this Deed constitutes a full and binding legal obligation upon it;
(d) this Deed does not conflict with or result in the breach of or default
under the provision of its constitution or other constituent documents
or any material term or provision of any agreement or deed or any writ
order or injunction, rule, judgment, law, or regulation to which it is
a party or is subject or by which it is bound;
7.2 WARRANTY BY THE "B" SHAREHOLDERS
Each of the "B" Shareholders warrants that on exercise and completion of the put
or call options in clause 8 it will be the legal and beneficial owner of the
Shares to be transferred to Asia Online - Australia free of all Third Party
Interests.
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8. OPTIONS
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8.1 PUT AND CALL OPTIONS
If a Trigger Event occurs:
(a) the "B" Shareholders may require Asia Online - Australia to purchase
all, but not less than all, of their Shares at any time during the
Exercise Period on the terms contained in clause 8.2; and
(b) other than where there is any group reorganisation or reconstruction of
the Company or any material part of its assets, Asia Online - Australia
may purchase all of the "B" Shareholders' Shares at any time during the
Exercise Period on the terms contained in clause 8.3.
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Asia Online - Australia will notify the "B" Shareholders within two business
days of a Trigger Event occurring. For the avoidance of doubt, a Trigger Event
which is based on the event referred to in paragraph (a) of the definition of
"Trigger Event", shall be deemed to have occurred on provision by Asia Online -
Australia, in good faith, of the requisite notice under this clause
notwithstanding that registration of Asia Online's initial public offering
document with the United States Securities Exchange Commission actually occurs
within 60 days of the notice being given.
8.2 TERMS OF EXERCISE OF PUT OPTION
(a) Upon expiry of the Exercise Period the put option in favour of the "B"
Shareholders (or their permitted assigns) lapses if not previously
exercised.
(b) The put option provided in clause 8.1(a) in favour of the "B"
Shareholders (or their permitted assigns) must be exercised by the "B"
Shareholders (or their permitted assigns) serving on Asia Online -
Australia an Option Notice.
(c) The Option Notice must require the purchase of all of the Shares then
held by the "B" Shareholders (or their permitted assigns).
(d) Upon service of an Option Notice, Asia Online - Australia becomes bound
to buy the Shares specified in the Option Notice at the Exercise Price
within 10 Business days , subject to any consent or approval (the
"Approval") required from the Treasurer of the Commonwealth of
Australia under the Foreign Acquisitions and Takeovers Act 1975.
Subject to receipt of the Approval, Asia Online will either offer that
number of Asia Online Class C Non-Voting Common Shares set out opposite
each "B" Shareholder's name in Schedule 3 or, if a Cash Election has
been made in accordance with clause 8.10, pay the Exercise Price to the
"B" Shareholders in the proportions set out against their names in
Schedule 1.
8.3 TERMS OF EXERCISE OF CALL OPTION
(a) Upon expiry of the Exercise Period the call option in favour of Asia
Online - Australia lapses if not previously exercised;
(b) The call option provided in clause 8.1(b) in favour of Asia Online -
Australia must be exercised by Asia Online - Australia serving on the
"B" Shareholders an Option Notice.
(c) The Option Notice will specify that it is in respect of all Shares held
by the "B" Shareholders (or their permitted assigns).
(d) Upon service of an Option Notice, the "B" Shareholders become bound to
sell their entire shareholding in the Company specified in the Option
Notice at the Exercise Price within 10 Business days subject to any
consent or approval (the "Approval") required from the Treasurer of the
Commonwealth of Australia under the Foreign Acquisitions and Takeovers
Act 1975. Subject to receipt of the Approval, Asia Online will either
offer to the "B" Shareholders that number of Asia Online Class C
Non-Voting Common Shares set out opposite each "B" Shareholders name in
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Schedule 3, or if a Cash Election has been made in accordance with
clause 8.10, pay the Exercise Price to the "B" Shareholders in the
proportions set out against their names in Schedule 1.
8.4 COMPLETION OF EXERCISE OF OPTION
(a) If the exercise of the put and call option becomes binding pursuant to
clause 8.2(d) or 8.3(d), then within 10 Business days of service of the
relevant Option Notice and subject to any consent required from the
Treasurer of the Commonwealth of Australia under the Foreign
Acquisitions and Takeovers Act 1975:
(i) the "B" Shareholders must deliver to Asia Online - Australia:
(A) transfers of all their Shares duly executed by the
registered holders in favour of Asia Online -
Australia together with the relevant share
certificates for those Shares; and
(B) executed resignations of the "B" Shareholders'
Directors;
(ii) Asia Online must either:
(A) deliver to each of the "B" Shareholders that number
of Asia Online Class C Non-Voting Common Shares set
out opposite each "B" Shareholder's name in Schedule
3; or:
(B) if a Cash Election has been made in accordance with
clause 8.10, pay the equivalent to each "B"
Shareholder of the actual price at which the Asia
Online Stock is to be issued in the initial public
offering of Asia Online on a US Stock Exchange
multiplied by that number of Asia Online Class C
Non-Voting Common Shares set out opposite each "B"
Shareholder's name in Schedule 3.
8.5 US SECURITIES LAWS REPRESENTATIONS AND UNDERTAKINGS
Each Regulation S Vendor represents, warrants and undertakes to each other party
as follows:
(a) This Deed is entered into by each other party in reliance upon
Regulation S Vendor's representations, warranties and undertakings in
this clause.
(b) The Asia Online Stock to be acquired under this Deed by each Regulation
S Vendor will be acquired for investment for such Regulation S Vendor's
own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof in the United States or to a
United States resident (except in compliance with United States
securities laws), and that such Regulation S Vendor has no present
intention of selling, granting any participation in, or otherwise
distributing the same (except in compliance with United States
securities laws). By executing this Deed, each Regulation S Vendor
further represents, warrants and undertakes that such Regulation S
Vendor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations
to such
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<PAGE> 17
person or to any third person in the United States or to a United
States resident, or any hedging transaction with any third person in
the United States or to a United States resident, with respect to any
of the Regulation S Securities.
(c) Each Regulation S Vendor understands and acknowledges that the Asia
Online Stock is not registered under the Securities Act on the ground
that the sale provided for in this Deed and the issuance of Securities
hereunder is exempt from registration under the Securities Act pursuant
to Regulation S thereof, and that Asia Online's reliance on such
exemption is predicated on the Regulation S Vendors' representations
set forth in this Deed.
(d) Each Regulation S Vendor has received all the information such
Regulation S Vendor considers necessary or appropriate for deciding
whether to purchase the Asia Online Stock.
(e) Each Regulation S Vendor has had an opportunity to ask questions and
receive answers from Asia Online regarding the terms and conditions of
the offering of the Asia Online Stock and the business, properties,
prospects, and financial condition of Asia Online and to obtain such
additional information (to the extent Asia Online possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such
Regulation S Vendor or to which such Regulation S Vendor had access.
(f) Each Regulation S Vendor is either experienced in evaluating and
investing in securities of companies in the early stages of product
production or has access to appropriate advisers or representation that
can assist in evaluating companies in the early stages of product
production and acknowledges that such Regulation S Vendor is able to
fend for himself, herself or itself, can bear the economic risk of such
Regulation S Vendor's investment, and has such knowledge and experience
in financial and business matters that such Regulation S Vendor is
capable of evaluating the merits and risks of the investment in the
Asia Online Stock. If other than an individual, the Regulation S Vendor
also represents, warrants and undertakes that such Vendor has not been
organized for the purpose of acquiring the Asia Online Stock.
(g) Each Regulation S Vendor is a Qualified Regulation S Vendor. The term
"Qualified Regulation S Vendor" in this Deed means a person or entity
who is not a U.S. person, as such term is defined in Rule 902
promulgated under the Securities Act.
8.6 RESTRICTED SECURITIES
Each Regulation S Vendor understands that the Asia Online Stock may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Asia Online Stock or an available exemption
from registration under the Securities Act, the Asia Online Stock must be held
indefinitely. In particular, each Regulation S Vendor is aware that the Asia
Online Stock may not be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of that Rule are met. Among the
conditions for use of Rule 144 may be the availability of current information to
the public about Asia Online.
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<PAGE> 18
Such information is not now available and Asia Online has no current plans to
make such information available.
8.7 LEGENDS
To the extent applicable, each certificate or other document evidencing any of
the Asia Online Stock shall be endorsed with the legends set forth below:
(a) The following legend under the Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) As to Regulation S Securities, the following legend under the
Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED PURSUANT
TO REGULATION S OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
`ACT'), AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. IN
ADDITION, NO HEDGING TRANSACTION MAY BE CONDUCTED WITH RESPECT
TO THESE SECURITIES UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE
WITH THE ACT."
8.8 LOCK UP
Each Regulation S Vendor hereby undertakes that such Regulation S Vendor shall
not sell, transfer, make any short sale of, grant any option for the purchase
of, or enter into any hedging or similar transaction with the same economic
effect as a sale, or otherwise reduce its risk of ownership or investment in,
any common stock (or other securities) of Asia Online held by such Regulation S
Vendor (other than those included in the registration) for a period (if any)
specified by the representative of the underwriters of common stock (or other
securities) of Asia Online with respect to each such transaction not to exceed
one hundred eighty (180) days following the effective date of a registration
statement of Asia Online filed under the Securities Act. Asia Online may impose
stop-transfer instructions with respect to the shares of common stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period. Each Regulation S Vendor agrees to execute and
deliver such other agreements as may be reasonably requested by Asia Online or
the underwriter which are consistent with the foregoing or which are necessary
to give further effect thereto. In addition, if requested by Asia Online or the
representative of the underwriters of common stock (or other securities) of Asia
Online, each Vendor shall provide,
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<PAGE> 19
within ten (10) days of such request, such information as may be required by
Asia Online or such representative in connection with the completion of any
public offering of Asia Online's securities pursuant to a registration statement
filed under the Securities Act.
8.9 DEFINITIONS
In this clause:
"ASIA ONLINE STOCK" means the Asia Online class C non-voting common stock to be
acquired under this Deed by each Regulation S Vendor;
"REGULATION S" means Regulation S promulgated by the SEC under the Securities
Act;
"REGULATION S SECURITIES" or the "SECURITIES" means collectively the Asia Online
Stock to be acquired under this Deed by each "B" Shareholder;
"REGULATION S VENDOR" means a "B" Shareholder;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES ACT" means the United States Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder;
"UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia; and
"US PERSON" has the meaning given to that expression in Rule 902 of Regulation
S.
8.10 CASH ELECTION
If the Trigger Event under which an Option Notice is served is based on the
event referred to in paragraph (a) of the definition of "Trigger Event" in this
Deed then, during the 9 Business days following receipt of the notification
under clause 8.1 (the "Election Period"), the "B" Shareholders may unanimously
elect that the Exercise Price be paid in cash rather than by the issue of Asia
Online Class C Non-Voting Common Shares by serving on Asia Online-Australia a
written notice signed by all the "B" Shareholders stating that they unanimously
elect that the Exercise Price be paid in cash. If the "B" Shareholders fail to
make a unanimous election during the Election Period, they shall be deemed to
have elected to receive the Exercise Price by way of Asia Online Class C
Non-Voting Common Shares.
================================================================================
9. PROMISE TO PAY
--------------------------------------------------------------------------------
9.1 ASIA ONLINE TO PAY
In consideration of Asia Online - Australia's subscription for shares in the
Company under the Subscription Agreement, Asia Online shall make payments
totalling $2,190,857 to the
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<PAGE> 20
Company on a monthly basis in accordance with the expenditure requirements
detailed in the Business Plan included in Schedule 4 of this Deed. The Members
acknowledge that the Board will in good faith review such expenditure
requirements on a regular basis to ensure that the Business has the appropriate
level of working capital to function efficiently and profitably and the level of
monthly payments may be altered to achieve this. Interest shall be charged on
the outstanding balance owed from time to time under this clause at the rate of
5% per centum per annum.
9.2 LIMIT ON PAYMENTS
Asia Online shall not be obliged to pay more than $2,190,857 (together with
interest) to the Company under clause 9.1.
================================================================================
10. MUTUAL CO-OPERATION
--------------------------------------------------------------------------------
10.1 PRIMARY OBLIGATION
Each of the Members agrees that it will use all reasonable endeavours to promote
the business and profitability of the Company.
10.2 OBLIGATIONS OF MEMBERS
Each of the Members agrees with the other that this Deed is entered into between
them and will be performed by each of them in a spirit of good faith, mutual
cooperation, trust and confidence and that it will use all means reasonably
available to it (including its voting power whether direct or indirect, about
the Company) to give effect to the objectives of this Deed and to ensure that
the Company complies with its obligations.
================================================================================
11. NO PARTNERSHIP AND CONFLICT
--------------------------------------------------------------------------------
11.1 NO PARTNERSHIP
(a) The parties' rights and obligations are not joint, or joint and
several, or collective. Each party is only responsible for its own
obligations as set out in this Deed.
(b) The parties do not intend to create, and this Deed does not constitute,
a partnership, agency, trust or other arrangement.
(c) Unless otherwise expressly stated in this Deed, neither party has the
authority to act for, or incur any obligation on behalf of, the other
party.
11.2 CONFLICT WITH CONSTITUTION
To the extent that the Constitution conflicts with the provisions of this Deed,
the parties will exercise their respective voting rights as members of the
Company and take all such further steps as may be necessary to ensure that the
provisions of this Deed prevail.
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<PAGE> 21
================================================================================
12. NOTICES
--------------------------------------------------------------------------------
(a) All notices must be:
(i) in legible writing and in English;
(ii) addressed to the recipient at the address or facsimile number
set out below or to such other address or facsimile number as
a party may notify to the other:
to Asia Online-Australia:
Address: 23rd Floor, Citicorp Centre
18 Whitfield Road
Causeway Bay
Hong Kong
Attention: Ed Roberto
Facsimile no: (852) 2882-4468
to Asia Online:
Address: 23rd Floor, Citicorp Centre
18 Whitfield Road
Causeway Bay
Hong Kong
Attention: Ed Roberto
Facsimile no: (852) 2882-4468
to the "B" Shareholders:
Address: 97 Wattle Street
Punchbowl NSW 2196
Attention: Charles Assaf
Facsimile no: (612) 9796-2728
to the Company:
Address: 97 Wattle Street
Punchbowl NSW 2196
Attention: Charles Assaf
Facsimile no: (612) 9796-2728
Copy to: Ed Roberto
Facsimile No: (852) 2882 4468
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<PAGE> 22
(iii) signed by the party, or where the sender is a company, by an
authorised officer or under the common seal of the sender;
(iv) sent to the recipient by hand, prepaid post (airmail if to or
from a place outside Australia) or facsimile; and
(b) Subject to clause 12(c), without limiting any other means by which a
party may be able to prove that a notice has been received by another
party, a notice will be deemed to be duly received:
(i) if sent by hand when left at the address of the recipient;
(ii) if sent by pre-paid post, 3 days (if posted within Australia
to an address in Australia) or 10 days (if posted from one
country to another) after the date of posting; or
(iii) if sent by facsimile, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine
from which the facsimile was sent indicating that the whole
facsimile was sent to the recipient's facsimile number;
but if a notice is served by hand, or is received by the recipient's
facsimile on a day which is not a Business day, or after 5:00 pm on a
Business day, the notice is deemed to be duly received by the recipient
at 9.00 am on the first Business day after that day.
(c) In the event of a notification under clause 8.1 which is based on the
event referred to in paragraph (a) of the definition of "Trigger Event"
in this Deed, then such a notice will be deemed received by all the "B"
Shareholders:
(i) if sent by hand, when personally served on one of the "B"
Directors ; or
(ii) if sent by pre-paid registered post, when a "B" Director signs
a receipt acknowledging his receipt of the notice,
provided that, notwithstanding anything to the contrary in this Deed, a
notice under clause 8.1 shall be deemed received 10 Business days after
it is first sent to the "B" Shareholders.
In the event that a notification under clause 8.1 is given, Asia Online
Australia shall, in addition, provide a simultaneous communication to
the "B" Shareholders either by email or facsimile, confirming for the
benefit of the "B" Shareholders that a formal notice has been
despatched in accordance with that clause.
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<PAGE> 23
================================================================================
13. GENERAL PROVISIONS
--------------------------------------------------------------------------------
13.1 INVALID OR UNENFORCEABLE
If a provision of this Deed is invalid or unenforceable in a jurisdiction:
(a) it is read down or severed in that jurisdiction to the extent of the
invalidity or unenforceability; and
(b) it does not affect the validity or enforceability of:
(i) that provision in another jurisdiction; or
(ii) the remaining provisions.
13.2 WAIVER AND EXERCISE OF RIGHTS
The waiver provisions in clause 10.11 of the Subscription Agreement apply
mutatis mutandis to this Deed.
13.3 AMENDMENT
This Deed may be amended only by a written document signed by all parties.
13.4 COUNTERPARTS
(a) This Deed may be signed in counterparts and all counterparts taken
together constitute one document.
(b) Once all counterparts have been executed, each counterpart is an
effective instrument.
13.5 FURTHER ASSURANCES
Each party must, at its own expense, whenever requested by another party,
promptly do or cause to be done everything reasonably necessary to give full
effect to this Deed and the transactions contemplated by this Deed.
13.6 COSTS
Each party must pay its own costs in respect of this Deed and the documents and
transactions contemplated by this Deed.
13.7 ASSIGNMENT
A party must not assign, create an interest in or deal in any other way with any
of its rights under this Deed without the prior written consent of the other
party.
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<PAGE> 24
13.8 NON-MERGER
The representations and covenants by the parties in this Deed are continuing and
will not merge or be extinguished on Completion and will survive after
Completion.
13.9 ENTIRE DEED
This Deed comprises the entire agreement of the parties about the subject matter
of this Deed
13.10 RIGHTS CUMULATIVE
The rights, remedies and powers of the parties under this Deed are cumulative
and not exclusive of any rights, remedies or powers provided to the parties by
law.
13.11 CONSENTS AND APPROVALS
A party may give its consent conditionally or unconditionally or withhold its
approval or consent in its absolute discretion unless this Deed expressly
provides otherwise.
13.12 JURISDICTION AND GOVERNING LAW
Each party irrevocably and unconditionally:
(a) submits to the non-exclusive jurisdiction of the courts of the State of
New South Wales;
(b) waives any claim or objection based on absence of jurisdiction or
inconvenient forum; and.
(c) agrees that a document required to be served in proceedings about this
Deed may be served:
(i) by being delivered to or left at its address for service of
notices under clause 12; and
(ii) in any other way permitted by law.
13.13 DISPUTE RESOLUTION
If a Dispute arises, except where the party seeks urgent interlocutory relief, a
party may not commence any court or arbitration proceedings about the dispute
unless it has complied with the following:
(a) a party claiming that the Dispute has arisen must give written notice
to the other parties to this contract specifying the nature of the
Dispute;
(b) on receipt of the written notice, the parties must endeavour in good
faith to resolve the Dispute as soon as possible using informal dispute
resolution techniques such as mediation, independent expert evaluation
or determination or similar techniques agreed by them; and
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<PAGE> 25
(c) if the parties do not agree within 7 days of receipt of the notice (or
such further period agreed in writing by them) about:
(i) the dispute resolution technique and procedures to be adopted;
(ii) the timetable for all steps in those procedures; and
(iii) the selection of the person responsible for the resolution of
the Dispute and that person's compensation;
the parties must mediate the Dispute under the Mediation Rules of the
Law Society of New South Wales and the President of the Law Society of
New South Wales or the President's nominee will select the mediator and
determine the mediator's compensation. The Company shall be liable to
pay the mediator's compensation.
13.14 CONFIDENTIALITY
Subject to clauses 13.15 and 13.16 Asia Online, Asia Online - Australia and the
"B" Shareholders (each a "Covenantor" and together with the "Covenantors") must
not and must ensure that their officers employees and agents do not during the
period of this Deed, and for a period of 12 months after its termination without
the prior written consent of the other Covenantors:
(a) disclose any confidential information except in the proper course of
the provision of services on behalf of the Company; and
(b) other than as required by the Company, retain, duplicate or remove from
the premises of the Company information about the Company or the other
Members in whatever form (whether written, or recorded in some other
form, or oral) which is supplied by the Company or the other Members to
it or which comes to its notice during the period of this Deed
13.15 EXCLUSIONS
(a) A Covenantor may make disclosures:
(i) to those of its employees, officers, professional or financial
advisers and bankers as the party reasonably thinks necessary
to give effect to this Deed but only on a strictly
confidential basis; and
(ii) if required by law, after the form and terms of that
disclosure have been notified to the Covenantors and the other
Covenantors have had a reasonable opportunity to comment on
the form and terms.
(b) The obligations of this clause do not apply to any information which
the recipient can reasonably demonstrate:
(i) is in the public domain through no fault of its own;
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<PAGE> 26
(ii) is already known to the recipient (as evidenced by its written
records) at the date of disclosure and was not acquired
directly or indirectly from the disclosing party; or
(iii) is required to be disclosed by law under a court order, or by
any recognised stock exchange or other regulatory body.
13.16 RESTRICTIONS ON ANNOUNCEMENTS
Each of the Covenantors undertakes that it will not (except as required by law
or any applicable regulatory body) make any announcement in connection with this
Deed unless the other Covenantors have consented to that announcement (which
consents may not be unreasonably withheld and may be given either generally or
in a specific case or cases and may be subject to conditions).
EXECUTED AS A DEED
-23-
<PAGE> 27
SIGNED SEALED AND DELIVERED )
for and on behalf of )
ASIA ONLINE-AUSTRALIA PTY LIMITED )
by its duly authorised representatives: )
/s/ JAMES EGAN /s/ KEVIN H. RANDOLPH
----------------------------------------- ---------------------------------
Signature of secretary/director Signature of director
James Egan Kevin H. Randolph
----------------------------------------- ---------------------------------
Name of secretary/director (please print) Name of director (please print)
SIGNED SEALED AND DELIVERED )
for and on behalf of )
ASIA ONLINE, LTD. )
by its duly authorised representative: )
/s/ JOHN G. STARK /s/ KEVIN H. RANDOLPH
----------------------------------------- ---------------------------------
Signature of witness Signature of authorised
representative
John G. Stark Kevin H. Randolph
----------------------------------------- ---------------------------------
Name of witness (please print) Name of authorised representative
(please print)
SIGNED SEALED AND DELIVERED )
for and on behalf of )
FLEX INFORMATION TECHNOLOGY PTY LTD )
)
by its duly authorised representatives: )
/s/ CHARLES ASSAF /s/ BARRY ASSAF
----------------------------------------- ---------------------------------
Signature of secretary/director Signature of director
Charles Assaf Barry Assaf
----------------------------------------- ---------------------------------
Name of secretary/director (please print) Name of director (please print)
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<PAGE> 28
SIGNED SEALED AND DELIVERED )
for and on behalf of )
MORSE CORPORATION (AUSTRALIA) PTY
LIMITED )
)
by its duly authorised representatives: )
/s/ CHARLES ASSAF /s/ BARRY ASSAF
----------------------------------------- ---------------------------------
Signature of secretary/director Signature of director
Charles Assaf Barry Assaf
----------------------------------------- ---------------------------------
Name of secretary/director (please print) Name of director (please print)
SIGNED SEALED AND DELIVERED )
for and on behalf of )
FLEXIT PTY LTD )
)
by its duly authorised representatives: )
/s/ CHARLES ASSAF /s/ BARRY ASSAF
----------------------------------------- ---------------------------------
Signature of secretary/director Signature of director
Charles Assaf Barry Assaf
----------------------------------------- ---------------------------------
Name of secretary/director (please print) Name of director (please print)
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<PAGE> 29
SCHEDULE 1
"B" SHAREHOLDERS
<TABLE>
<CAPTION>
NAME PROPORTION
---- ----------
<S> <C>
Flex IT Pty Ltd 50%
97 Wattle Street
Punchbowl NSW 2196
Morse Corporation (Australia) Pty Ltd 50%
97 Wattle Street
Punchbowl NSW 2196
</TABLE>
