Exhibit 10.3.4

 

Investment and Shareholders’ Agreement

 

between

 

Channell Bushman Pty Limited

(ACN 109 821 614)

 

and

 

Channell Commercial Corporation

 

and

 

Australia and New Zealand Banking Group Limited

(ABN 11 005 357 522)

 

BAKER   29 07 2004 Solicitors

 

 

Level 26, AMP Centre

Level 39, Rialto

50 Bridge Street

525 Collins Street

SYDNEY NSW 2000

MELBOURNE VIC  3000

Tel: (02) 9225-0200

Tel:  (03) 9617-4200

Fax: (02) 9225-1595

Fax:  (03) 9614-2103

 

--------------------------------------------------------------------------------

 

Contents

 

Clause
number

 

Heading

 

 

 

 

 

1.

 

Definitions and interpretation

 

1.1

 

Definitions

 

1.2

 

Interpretation

 

1.3

 

Payments

 

 

 

 

 

2.

 

Conditions

 

2.1

 

Conditions

 

2.2

 

Best endeavours to fulfil

 

2.3

 

Waiver of certain Conditions

 

2.4

 

Termination for failure of Conditions

 

 

 

 

 

3.

 

Completion

 

3.1

 

Time and place of Completion

 

3.2

 

Investment and other obligations

 

3.3

 

Consent to investments

 

3.4

 

Use of investment funds

 

3.5

 

Parties bound by the Constitution

 

3.6

 

Post-Completion

 

 

 

 

 

4.

 

Warranties

 

4.1

 

Warranties

 

4.2

 

Reliance

 

4.3

 

Disclosures

 

4.4

 

Assignment of Warranties

 

 

 

 

 

5.

 

Non-compete

 

5.1

 

Channell obligations

 

5.2

 

ANZ obligations

 

5.3

 

Restraints fair and reasonable

 

5.4

 

Acknowledgments

 

 

 

 

 

6.

 

Financial information

 

6.1

 

Annual business plan

 

6.2

 

Management accounts

 

6.3

 

Audited accounts

 

6.4

 

Other information and access

 

6.5

 

Confidentiality

 

6.6

 

D&O Policy

 

6.7

 

Other insurance

 

 

 

 

 

7.

 

Future conduct of the Company

 

7.1

 

Management of the Business

 

7.2

 

Board

 

7.3

 

Conduct of the Board and Director fees

 

7.4

 

Matters requiring unanimous approval

 

 

i

--------------------------------------------------------------------------------

 

7.5

 

The Chairman

 

7.6

 

Day-to-day management

 

7.7

 

Senior Executives

 

7.8

 

Observer at Board meetings

 

7.9

 

Guarantees for financiers

 

7.10

 

Quorum for Member meetings

 

7.11

 

Buyer’s representative

 

 

 

 

 

8.

 

Disposal of Shares

 

8.1

 

Requirements for Disposal of Shares

 

8.2

 

Permitted transfers

 

8.3

 

Pre-emptive right

 

8.4

 

Tag along rights

 

8.5

 

Sale of Shares by Channell Member

 

8.6

 

Perfection of Transfers

 

8.7

 

Miscellaneous

 

 

 

 

 

9.

 

Issue of Shares

 

 

 

 

 

10.

 

Exit

 

10.1

 

Intention to exit

 

10.2

 

Sale or Listing

 

10.3

 

Call Option

 

 

 

 

 

11.

 

New Shareholders

 

11.1

 

Deed of Adherence

 

11.2

 

Assignment

 

 

 

 

 

12.

 

Fees and costs

 

12.1

 

Capital raising fee

 

12.2

 

Investors’ costs

 

 

 

 

 

13.

 

Duration

 

13.1

 

Termination

 

13.2

 

Continuing rights and obligations

 

 

 

 

 

14.

 

Confidentiality and announcements

 

14.1

 

Provisions to remain confidential

 

14.2

 

Permitted disclosures

 

14.3

 

Public Announcements

 

 

 

 

 

15.

 

Investors’ obligations and rights

 

15.1

 

Several and not Joint

 

15.2

 

Separate Warranties and undertakings

 

15.3

 

Exercise of Investors’ rights

 

15.4

 

Waiver of Investors’ rights

 

 

 

 

 

16.

 

Notices

 

16.1

 

Requirements

 

16.2

 

Receipt

 

 

ii

--------------------------------------------------------------------------------

 

17.

 

General provisions

 

17.1

 

Entire agreement

 

17.2

 

Further assurances

 

17.3

 

Conflict with the Constitution

 

17.4

 

Invalid or unenforceable provisions

 

17.5

 

No merger

 

17.6

 

Waiver and exercise of rights

 

17.7

 

Rights Cumulative

 

17.8

 

Acknowledgment

 

17.9

 

Amendment

 

17.10

 

Counterparts

 

17.11

 

Governing law

 

17.12

 

Jurisdiction

 

17.13

 

Consents or approvals

 

17.14

 

GST

 

17.15

 

Constitution

 

 

 

 

 

 

 

Annexure 1

 

 

 

The Company

 

 

 

 

 

 

 

Annexure 2

 

 

 

Warranties

 

 

 

 

 

 

 

Annexure 3

 

 

 

Deed of Adherence

 

 

 

 

 

 

 

Annexure 4

 

 

 

Agreed Form Documents

 

 

iii

--------------------------------------------------------------------------------

 

Investment and Shareholders’ Agreement

 

This Agreement is made on the second day of August, 2004.

 

Between

 

Channell Bushman Pty Limited (ACN 109 821 614) of 391 Park Road, Unit Q3,
Regents Park, New South Wales 2143 (the “Company”)

 

and

 

Channell Commercial Corporation of 26040 Ynez Road, Temecula CA USA (“Channell”)

 

and

 

Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) of 100
Queen Street, Melbourne, Victoria 3000 (“ANZ”)

 

Recitals

 

A.                                                     The Company has been
incorporated to acquire the shares of the Target Companies and, indirectly
through the Target Companies, the Purchased Assets.

 

B.                                                       This Agreement sets out
the terms on which the Investors are willing to invest in the Company and
certain matters regarding the operation of the Company following the acquisition
of the Target Companies.

 

Operative provisions

 

1.                                      Definitions and interpretation

 

1.1                               Definitions

 

In this Agreement, unless the context requires another meaning:

 

“A Class Ordinary Shares” means the A class ordinary shares in the capital of
the Company having the rights set out in the Constitution from time to time;

 

“Accounting Standards” means:

 

(a)                                                    the accounting standards
applicable for the purposes of the Act;

 

(b)                                                   the requirements of the
Act for the preparation and content of financial statements, directors’ reports
and auditors reports; and

 

4

--------------------------------------------------------------------------------

 

(c)                                                    generally accepted and
consistently applied accounting principles and practices in Australia, except
those inconsistent with the standards or requirements referred to in
paragraphs (a) or (b);

 

“Acquisition Agreement” means the agreement between Channell, the Company,
Australia’s Bushman Tanks Pty Ltd ACN 010 928 168 and others relating to, among
other matters, the acquisition by the Company of the shares in the Target
Companies;

 

“Act” means the Corporations Act 2001 and its associated regulations;

 

“Agreed Form” means in the form previously agreed by or on behalf of the
Investors and signed for the purposes of identification by or on behalf of each
of them;

 

“Agreement” means this investment and shareholders’ agreement;

 

“Alternative Purchaser” has the meaning given to that term in clause 8.3(h);

 

“ANZ” means Australia and New Zealand Banking Group Limited ABN 11 005 357 522;

 

“ANZ Director” means the Director appointed by ANZ, who shall be Kevin Cooney or
another ANZ employee agreed by the Investors;

 

“ANZ Group” means ANZ and its Related Bodies Corporate;

 

“ANZ Member” means:

 

(a)                                                    any person to whom B
Class Ordinary Shares are transferred under clause 8.2; and

 

(b)                                                   where ANZ holds Shares,
ANZ;

 

“ANZPE Investment Committee” means the investment committee of ANZ Private
Equity;

 

“ANZ Private Equity” means ANZ Private Equity, a division of ANZ;

 

“B Class Ordinary Shares” means the B class ordinary shares in the capital of
the Company having the rights set out in the Constitution from time to time;

 

“Board” means the board of Directors as constituted from time to time;

 

“Business” means the business carried on by the Target Companies of
manufacturing and selling products, including products containing polyethylene
rotomoulded plastic;

 

“Business Day” means a day that is not a Saturday, Sunday or a public holiday or
bank holiday in Sydney;

 

“Business Plan” has the meaning given to that term in clause 6.1(a);

 

“Call Option” has the meaning given to that term in clause 10.3(a);

 

“Call Option Notice” has the meaning given to that term in clause 10.3(b);

 

5

--------------------------------------------------------------------------------

 

“Change of Control” means the acquisition by any person (excluding the Investors
and the Investor Members) of any interest in the Shares if, upon completion of
that acquisition, such person, together with persons acting in concert with the
first mentioned person, would have an interest in not less than 75% of the
Shares;

 

“Channell Directors” means any Directors appointed by Channell;

 

“Channell Member” means:

 

(a)                                                    any person to whom A
Class Ordinary Shares are transferred under clause 8.2; and

 

(b)                                                   where Channell holds
Shares, Channell;

 

“Completion” means completion under clause 3.2;

 

“Completion Date” means the date upon which Completion takes place;

 

“Completion Notice” has the meaning given to that term in clause 8.3(e);

 

“Conditions” means the conditions set out in clause 2.1;

 

“Constitution” means:

 

(a)                                                    at Completion, the
constitution of the Company in the Agreed Form; and

 

(b)                                                   thereafter, the
constitution of the Company from time to time;

 

“D&O Policy” has the meaning given to that term in clause 6.6(a);

 

“Deed of Access and Indemnity” means the deed of access and indemnity in the
Agreed Form between the Company and each of the Directors;

 

“Deed of Adherence” means a deed poll in the form set out in Annexure 3;

 

“Directors” means the directors of the Company from time to time;

 

“Disposal” has the meaning given to that term in clause 8.1(f), and “Dispose”
has a corresponding meaning;

 

“Dollars” and “$” means the lawful currency of Australia;

 

“Fair Market Value” means the fair market value of all Shares as determined by
the Independent Valuer and, in making any determination of fair market value for
the proposed transfer of Shares under this Agreement, the Independent Valuer
must:

 

(A)                                                    NOT TAKE ACCOUNT OF
WHETHER THE SHARES TO BE TRANSFERRED COMPRISE A MAJORITY OR MINORITY INTEREST IN
THE COMPANY;

 

(B)                                                   IGNORE THE FACT THAT THE
TRANSFERABILITY OF THE SHARES TO BE TRANSFERRED IS RESTRICTED BY THIS AGREEMENT
OR THE CONSTITUTION; AND

 

(C)                                                    ASSUME THAT THE SHARES TO
BE TRANSFERRED ARE BEING SOLD BY A WILLING (BUT NOT ANXIOUS) VENDOR AND ARE
BEING PURCHASED BY A WILLING (BUT NOT ANXIOUS) PURCHASER.

 

6

--------------------------------------------------------------------------------

 

THE COMPANY WILL BEAR THE COSTS OF THE INDEPENDENT VALUER IN MAKING THE
DETERMINATION;

 

“Financing Documents” means the letter of offer from the National Australia Bank
Limited addressed to the Company and dated 13 July, 2004, together with the
Guarantees and Debtor Finance Agreement, Registered Mortgage Debentures and
Guarantees and Indemnities between National Australia Bank Limited and the
Company and Target Companies, all as set out in the Annexure “E” Schedule to the
letter of offer;

 

“Government Agency” means:

 

(a)                                                    a government, whether
foreign, federal, state, territorial or local;

 

(b)                                                   a department, office or
minister of a government acting in that capacity; or

 

(c)                                                    a commission, delegate,
instrumentality, agency, board or other governmental, semi-governmental,
judicial, administrative, monetary or fiscal authority, whether statutory or
not;

 

“Group Companies “ means the Company, the Target Companies and the Subsidiaries
of the Company and the Target Companies;

 

“GST” has the meaning given in section 195-1 of the A New Tax System (Goods and
Services Tax) Act 1999 (Cth);

 

“Independent Adviser” means:

 

(a)                                                    any national accounting
firm or investment bank mutually agreed by the parties; or

 

(b)                                                   if the parties cannot
agree under paragraph (a) within 5 Business Days, Deloitte Touche Tohmatsu; or

 

(c)                                                    if ANZ advises the other
parties that it considers Deloitte Touche Tohmatsu is not independent, any one
of PriceWaterhouseCoopers, Ernst and Young or KPMG, as determined by Channell in
its sole discretion;

 

“Independent Valuer” means:

 

(a)                                                    any national accounting
firm or investment bank mutually agreed by the parties; or

 

(b)                                                   if the parties cannot
agree under paragraph (a) within 5 Business Days, Deloitte Touche Tohmatsu; or

 

(c)                                                    if ANZ advises the other
parties that it considers Deloitte Touche Tohmatsu is not independent, any one
of PriceWaterhouseCoopers, Ernst and Young or KPMG, as determined by Channell in
its sole discretion;

 

“Investor Members” means the ANZ Member and the Channell Member;

 

“Investors” means ANZ and Channell;

 

7

--------------------------------------------------------------------------------

 

“Listing” means the admission of the Company or any Related Body Corporate of
the Company to the official list of Australian Stock Exchange Limited or any
other recognised stock exchange approved by the Investors;

 

“Listing Rules” means the official listing rules from time to time of Australian
Stock Exchange Limited or any other recognised stock exchange approved by the
Investors;

 

“Member” means a person who is entered in the Members’ Register from time to
time as the holder of Shares;

 

“Members’ Register” means the register of Members of the Company;

 

“New Shareholder” means a person who is not already a party to this Agreement
and to whom it is proposed to issue or transfer Shares;

 

“Ordinary Shares” means ordinary shares in the capital of the Company from time
to time;

 

“Pre-emption Notice” has the meaning given to that term in clause 8.3(b);

 

“Pre-emption Price” has the meaning given to that term in clause 8.3(b)(iii);

 

“Pre-emption Purchaser” has the meaning given to that term in clause 8.3(a);

 

“Pre-emption Terms” has the meaning given to that term in clause 8.3(b)(iii);

 

“Pre-emption Vendor” has the meaning given to that term in clause 8.3(a);

 

“Purchased Assets” has the meaning as defined in the Acquisition Agreement;

 

“Related Body Corporate” has the same meaning as in the Act;

 

“Related Party” has the meaning given to that term under section 228 of the Act
as if a reference to a public company in that section were a reference to any
Group Company;

 

“Retention Period” means 18 months from the Completion Date;

 

“Sale” means:

 

(a) the entering into of one or more agreements (whether conditional or not) for
the sale of Shares giving rise to a Change of Control; or

 

(b) the entering into of one or more agreements (whether conditional or not) for
the sale of all (or substantially all) of the assets or business undertaking of
the Group Companies; or

 

(c) any other transaction or series of transactions (including without
limitation a scheme of arrangement, share buy-back, dividend or other
distribution) which directly or indirectly has the effect of a sale of Shares
giving rise to a Change of Control or for the sale of all (or substantially all)
of the assets or business undertaking of the Group Companies.

 

“Sale Shares” has the meaning given to that term in clause 8.3(b)(ii);

 

8

--------------------------------------------------------------------------------

 

“Security Interest” means an interest in 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, first right of refusal,
voting right or arrangement for the retention of title or any agreement, option
or other arrangement to grant such an interest or right;

 

“Senior Executives” means any senior executive employee of any Group Company
whose total remuneration is to be or is in excess of $200,000 per annum or who
is named as a “Key Employee” in the Acquisition Agreement;

 

“Shares” means shares of any class in the capital of the Company from time to
time;

 

“Subscribers” has the meaning given to that term under clause 9(b)(i);

 

“Subscription Notice” has the meaning given to that term under clause 9(b);

 

“Subscription Shares” has the meaning given to that term under clause 9(a);

 

“Subscription Terms” has the meaning given to that term under clause 9(b)(iii);

 

“Subsidiaries” has the meaning given to it in the Act;

 

“Tag Along Offer” has the meaning given to that term in clause 8.4(d);

 

“Target Companies” means Bushmans Group Pty Ltd ACN 090 744 022, Hold-on
Industries Australia Pty Ltd ACN 074 185 461, Polyrib Tanks Pty Ltd ACN 062 942
661 and Australian Bushman Tanks Pty Ltd ACN 058 504 108;

 

“Tax” means a tax, levy, charge, impost, deduction, withholding or duty of any
nature (including stamp and transaction duty and GST, value added or similar
tax) at any time:

 

(a)                                                    imposed or levied by any
Government Agency; or

 

(b)                                                   required to be remitted
to, or collected, withheld or assessed by, any Government Agency; and

 

(c)                                                    any related interest,
expense, fine, penalty or other charge on those amounts;

 

“Taxable Supply” has the meaning given to that expression under the A New Tax
System (Goods and Services Tax) Act 1999 (Cth);

 

“Transfer Shares” has the meaning given to it in clause 8.4;

 

“Transfer Terms” has the meaning given to that term in clause8.4(c);

 

“Transferee” has the meaning given to that term in clause 8.4;

 

“Transferor” has the meaning given to that term in clause 8.6(a);

 

“Transferring Member” has the meaning given to that term in clause 8.4; and

 

“Warranties” means the representations, warranties and covenants made by the
Company under clause 4 and “Warranty” means any one of them.

 

9

--------------------------------------------------------------------------------

 

1.2                                                 Interpretation

 

(A)                                                    IN THIS AGREEMENT, UNLESS
THE CONTEXT REQUIRES ANOTHER MEANING, 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 AGREEMENT) IS A REFERENCE TO THAT DOCUMENT (INCLUDING ANY SCHEDULES AND
ANNEXURES) AS AMENDED, CONSOLIDATED, SUPPLEMENTED, ASSIGNED, NOVATED OR
REPLACED;

 

(IV)                                                  TO AN AGREEMENT INCLUDES
ANY UNDERTAKING, REPRESENTATION, DEED, AGREEMENT OR LEGALLY ENFORCEABLE
ARRANGEMENT OR UNDERSTANDING WHETHER WRITTEN OR NOT;

 

(V)                                                     TO A PARTY MEANS A PARTY
TO THIS AGREEMENT;

 

(VI)                                                  TO AN ITEM, RECITAL,
CLAUSE, SCHEDULE OR ANNEXURE IS TO AN ITEM, RECITAL, CLAUSE, SCHEDULE OR
ANNEXURE OF OR TO THIS AGREEMENT;

 

(VII)                                               TO A NOTICE MEANS A NOTICE,
APPROVAL, DEMAND, REQUEST, NOMINATION OR OTHER COMMUNICATION GIVEN BY ONE PARTY
TO ANOTHER UNDER OR IN CONNECTION WITH THIS AGREEMENT;

 

(VIII)                                            TO A PERSON (INCLUDING A
PARTY) INCLUDES:

 

(A)                                                    AN INDIVIDUAL, COMPANY,
OTHER BODY CORPORATE, ASSOCIATION, PARTNERSHIP, FIRM, JOINT VENTURE, TRUST, FUND
OR GOVERNMENT AGENCY;

 

(B)                                                      THE PERSON’S
SUCCESSORS, PERMITTED ASSIGNS, SUBSTITUTES, EXECUTORS AND ADMINISTRATORS; AND

 

(C)                                                      A REFERENCE TO THE
REPRESENTATIVE MEMBER OF THE GST GROUP TO WHICH THE PERSON BELONGS TO THE EXTENT
THAT THE REPRESENTATIVE MEMBER HAS ASSUMED RIGHTS, ENTITLEMENTS, BENEFITS,
OBLIGATIONS AND LIABILITIES WHICH WOULD REMAIN WITH THE PERSON IF THE PERSON
WERE NOT A MEMBER OF A GST GROUP;

 

(IX)                                                    TO A LAW INCLUDES ANY
LEGISLATION, JUDGMENT, RULE OF COMMON LAW OR EQUITY OR RULE OF ANY APPLICABLE
STOCK EXCHANGE, AND IS A REFERENCE TO THAT LAW AS AMENDED, CONSOLIDATED,
SUPPLEMENTED OR REPLACED, AND INCLUDES A REFERENCE TO ANY REGULATION, BY-LAW OR
OTHER SUBORDINATE LEGISLATION;

 

(X)                                                       TO PROCEEDINGS
INCLUDES LITIGATION, ARBITRATION AND INVESTIGATION;

 

(XI)                                                    TO A JUDGEMENT INCLUDES
AN ORDER, INJUNCTION, DECREE, DETERMINATION OR AWARD OF ANY COURT OR TRIBUNAL;

 

(XII)                                                 TO TIME IS TO SYDNEY TIME;

 

10

--------------------------------------------------------------------------------

 

(XIII)                                              TO AN ACCOUNTING TERM IS TO
BE INTERPRETED ACCORDING TO THE ACCOUNTING STANDARDS;

 

(XIV)                                             THE WORD “INCLUDING” OR
“INCLUDES” MEANS “INCLUDING, BUT NOT LIMITED TO,” OR “INCLUDES, WITHOUT
LIMITATION, RESPECTIVELY”.

 

(B)                                                   WHERE A WORD OR PHRASE IS
DEFINED, ITS OTHER GRAMMATICAL FORMS HAVE A CORRESPONDING MEANING.

 

(C)                                                    HEADINGS ARE FOR
CONVENIENCE ONLY AND DO NOT AFFECT THE INTERPRETATION OF THIS AGREEMENT.

 

(D)                                                   IF A PAYMENT OR OTHER ACT
MUST (BUT FOR THIS CLAUSE) BE MADE OR DONE ON A DAY THAT IS NOT A BUSINESS DAY,
THEN IT MUST BE MADE OR DONE ON THE NEXT BUSINESS DAY.

 

(E)                                                    IF A PERIOD STARTS FROM,
AFTER OR BEFORE A DAY OR THE DAY OF AN ACT OR EVENT, IT EXCLUDES THAT DAY.

 

(F)                                                      THIS AGREEMENT MUST NOT
BE CONSTRUED ADVERSELY TO A PARTY ONLY BECAUSE THAT PARTY WAS RESPONSIBLE FOR
PREPARING IT.

 

1.3                                                 Payments

 

(A)                                                    ALL PAYMENTS REQUIRED TO
BE MADE UNDER THIS AGREEMENT MUST BE TENDERED, AS AGREED BY THE RECIPIENT IN
RESPECT OF EACH PAYMENT, BY:

 

(I)                                                         A DRAFT OR CHEQUE
DRAWN BY A BANK AS DEFINED IN THE BANKING ACT 1959 (CTH); OR

 

(II)                                                      BY WAY OF A DIRECT
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO THE BANK ACCOUNT NOMINATED PRIOR TO
THE DUE DATE FOR PAYMENT BY THE PARTY TO WHOM THE PAYMENT IS DUE; OR

 

(III)                                                   TO THE EXTENT THAT THE
COMPANY’S LAWYERS HOLD FUNDS TO THE ORDER OF A PARTY (OR ITS REPRESENTATIVE),
THE COMPANY’S LAWYERS RECEIVING A SIGNED IRREVOCABLE AUTHORISATION FROM THE
PARTY TO WHOSE ORDER THE FUNDS ARE HELD (IN A FORM ACCEPTABLE TO THE COMPANY’S
LAWYERS) UNCONDITIONALLY AUTHORISING THE COMPANY’S LAWYERS TO IMMEDIATELY HOLD
THOSE FUNDS TO THE ORDER OF THE COMPANY.

 

(B)                                                   IF CLAUSE 1.3(A)(II)
APPLIES, UNLESS OTHERWISE AGREED BY THE RECIPIENT, PAYMENT WILL BE DEEMED TO
HAVE BEEN MADE ONLY WHEN THE RECEIPT OF THE RELEVANT FUNDS IS CONFIRMED ORALLY
OR IN WRITING BY THE BANK OPERATING THE NOMINATED ACCOUNT.

 

11

--------------------------------------------------------------------------------

 

2.                                                        Conditions

 

2.1                                                 Conditions

 

Except for clauses 1, 2, 14, 16 and 17, Completion is conditional upon the
following matters having been satisfied (in each case on terms reasonably
acceptable to the party entitled to the benefit of the condition) or waived:

 

(A)                                                    ANZ HAVING COMPLETED ITS
DUE DILIGENCE INVESTIGATIONS IN RESPECT OF THE TARGET COMPANIES, THE PURCHASED
ASSETS AND THE BUSINESS AND BEING REASONABLY SATISFIED WITH THOSE DUE DILIGENCE
INVESTIGATIONS, INCLUDING BEING REASONABLY SATISFIED WITH ITS ABILITY TO RELY ON
ANY DUE DILIGENCE REPORT PREPARED IN RESPECT OF THE TARGET COMPANIES, THE
PURCHASED ASSETS OR THE BUSINESS WHICH IS ADDRESSED TO ANZ;

 

(B)                                                   ANZ HAVING OBTAINED THE
APPROVAL OF THE ANZPE INVESTMENT COMMITTEE TO THE INVESTMENTS IT PROPOSES TO
MAKE UNDER THIS AGREEMENT;

 

(C)                                                    THE APPROVAL BY THE BOARD
OF DIRECTORS OF EACH PARTY OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT;

 

(D)                                                   THE APPROVAL BY THE BOARD
OF THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT (INCLUDING THE ISSUE AND
ALLOTMENT OF SHARES UNDER CLAUSE 3.2);

 

(E)                                                    THE PASSING OF A BOARD
RESOLUTION CONFIRMING THE MATTERS REFERRED TO IN SECTION 260A(1)(A) OF THE ACT
IN RELATION TO THE COSTS TO BE PAID BY THE COMPANY UNDER CLAUSE 12 OR MEMBER
APPROVAL OF THE PAYMENT OF THOSE COSTS IN ACCORDANCE WITH SECTION 260A(1)(B) OF
THE ACT;

 

(F)                                                      ALL CONDITIONS
PRECEDENT TO DRAWDOWN UNDER THE FINANCING DOCUMENTS HAVING BEEN SATISFIED OR
WAIVED (SAVE FOR ANY CONDITION RELATING TO THE COMPLETION OF THIS AGREEMENT OR
THE ACQUISITION AGREEMENT);

 

(G)                                                   THE TERMS OF THE
ACQUISITION AGREEMENT HAVING BEEN APPROVED BY ALL PARTIES AND THE ACQUISITION
AGREEMENT HAVING BEEN EXCHANGED IN ACCORDANCE WITH ITS TERMS AND HAVING BECOME
UNCONDITIONAL (SAVE FOR ANY CONDITION RELATING TO COMPLETION OF THIS AGREEMENT
OR THE FINANCING DOCUMENTS) AND ALL COMPLETION OBLIGATIONS UNDER THE ACQUISITION
AGREEMENT HAVING BEEN SATISFIED OR WAIVED; AND

 

(H)                                                   THE COMPANY HAVING ADOPTED
THE CONSTITUTION AND NO AMENDMENT TO THE CONSTITUTION HAVING BEEN EFFECTED SINCE
THE COMPANY’S INCORPORATION UNLESS IN ACCORDANCE WITH THE ACT.

 

2.2                                                 Best endeavours to fulfil

 

The parties, so far as they are reasonably able, must use their respective best
endeavours to fulfil the Conditions.

 

12

--------------------------------------------------------------------------------

 

2.3                                                 Waiver of certain Conditions

 

(a)                                                    Subject to paragraph (b),
the Conditions are for the sole benefit of the Investors and the Investors may
in their absolute discretion jointly waive all or any of those Conditions (in
whole or in part) by notice to the Company on or before Completion.

 

(b)                                                   The Conditions in clauses
2.1(a) and 2.1(b) are for the sole benefit of ANZ and ANZ may in its absolute
discretion waive all or any of those Conditions (in whole or in part) by notice
to the Company and Channell on or before Completion.

 

2.4                                                 Termination for failure of
Conditions

 

If any of the Conditions are not satisfied in full or waived on or before 31
July 2004, or such later date agreed by the Investors, then either Investor may
terminate this Agreement (without liability) by notice to the other parties.

 

3.                                                        Completion

 

3.1                                                 Time and place of Completion

 

Completion must take place at the offices of Macrossans Lawyers at Level 23, AMP
Place, 10 Eagle Street, Brisbane, Queensland, immediately following waiver or
fulfilment of the Conditions (to the satisfaction of the Investors) or on any
other date as the Investors agree in writing.

 

3.2                                                 Investment and other
obligations

 

At Completion:

 

(A)                                                    CHANNELL MUST, SUBJECT TO
THE COMPANY FULFILLING ITS OBLIGATIONS PURSUANT TO CLAUSE 3.2(C)(I):

 

(I)                                                         SUBSCRIBE FOR
11,249,998 A CLASS ORDINARY SHARES AT $1.00 PER SHARE; AND

 

(II)                                                      AT ITS OPTION EITHER:

 

(A)                                                    PAY TO THE COMPANY
$11,249,998 FOR THE A CLASS ORDINARY SHARES SUBSCRIBED FOR PURSUANT TO CLAUSE
3.2(A)(I); OR

 

(B)                                                      PAY TO THE COMPANY
$10,249,998 AND ISSUE TO THE COMPANY (OR ITS NOMINEE) THAT NUMBER OF ORDINARY
SHARES IN CHANNELL CALCULATED BY DIVIDING $1,000,000 BY THE AVERAGE CLOSING
PRICE OF CHANNELL’S ORDINARY SHARES ON THE NASDAQ STOCK MARKET INC’S NATIONAL
MARKET FOR THE TRADING DAYS INCLUDED WITHIN THE THIRTY DAY CALENDAR PERIOD
ENDING ON THE BUSINESS DAY IMMEDIATELY PRIOR TO THE CLOSING DATE UNDER THE
ACQUISITION AGREEMENT, FOR THE A CLASS ORDINARY SHARES SUBSCRIBED FOR PURSUANT
TO CLAUSE 3.2(A)(I);

 

13

--------------------------------------------------------------------------------

 

(B)                                                   ANZ MUST, SUBJECT TO THE
COMPANY FULFILLING ITS OBLIGATIONS PURSUANT TO CLAUSE 3.2(C)(II):

 

(I)                                                         SUBSCRIBE IN CASH
FOR 3,750,000 B CLASS ORDINARY SHARES AT $1.00 PER SHARE; AND

 

(II)                                                      PAY TO THE COMPANY
$3,750,000 FOR THE B CLASS ORDINARY SHARES SUBSCRIBED FOR PURSUANT TO CLAUSE
3.2(B)(I);

 

(C)                                                    THE COMPANY MUST ISSUE:

 

(I)                                                         11,249,998 A CLASS
ORDINARY SHARES (AND A CERTIFICATE FOR THOSE SHARES) TO CHANNELL FREE OF
SECURITY INTERESTS (EXCEPT THOSE SET OUT IN THE CONSTITUTION AND/OR THIS
AGREEMENT) AND CREDITED AS FULLY PAID AND WILL REGISTER CHANNEL IN THE MEMBERS
REGISTER AS THE HOLDER OF THOSE SHARES;

 

(II)                                                      3,750,000 B CLASS
ORDINARY SHARES (AND A CERTIFICATE FOR THOSE SHARES) TO ANZ FREE OF SECURITY
INTERESTS (EXCEPT THOSE SET OUT IN THE CONSTITUTION AND/OR THIS AGREEMENT) AND
CREDITED AS FULLY PAID AND WILL REGISTER ANZ IN THE MEMBERS REGISTER AS THE
HOLDER OF THOSE SHARES;

 

(D)                                                   THE COMPANY MUST TAKE ALL
STEPS NECESSARY TO DRAWDOWN FUNDS UNDER THE FINANCING DOCUMENTS AND TO COMPLETE
THE ACQUISITION AGREEMENT; AND

 

(E)                                                    THE COMPANY MUST PAY THE
FEES AND COSTS DESCRIBED IN CLAUSE 12 TO THE EXTENT PAYABLE AT COMPLETION AND
OTHERWISE ARRANGE FOR PAYMENT OF ANY FEES PAYABLE UNDER CLAUSE 12 WHICH CAN ONLY
BE PAID AFTER THE PERIOD DESCRIBED IN SECTION 260B(6) OF THE ACT HAS EXPIRED.

 

3.3                                                 Consent to investments

 

The parties consent to the investments referred to in clause 3.2 and so far as
they are able, waive or agree to procure the waiver of any rights or
restrictions which may exist in the Constitution or otherwise which might
prevent the investments referred to in clause 3.2.

 

3.4                                                 Use of investment funds

 

The proceeds of the investments made under clause 3.2 will be used by the
Company for the purpose of:

 

(A)                                                    PAYING THE CONSIDERATION
DUE BY THE COMPANY UNDER THE ACQUISITION AGREEMENT;

 

(B)                                                   PAYING THE FEES AND COSTS
DESCRIBED IN CLAUSE 12 TO THE EXTENT PAYABLE AT COMPLETION; AND

 

(C)                                                    IN RESPECT OF THE
BALANCE, PROVIDING WORKING CAPITAL FOR THE GROUP COMPANIES OR OTHERWISE IN
ACCORDANCE WITH A BUDGET APPROVED BY THE BOARD.

 

3.5                                                 Parties bound by the
Constitution

 

Each party acknowledges and agrees to observe the provisions of this Agreement
and the Constitution.

 

14

--------------------------------------------------------------------------------

 

3.6                                                 Post-Completion

 

(A)                                                    FOLLOWING COMPLETION, THE
COMPANY MUST:

 

(I)                                                         IF REQUESTED BY THE
ANZ MEMBER, PROCURE THE APPOINTMENT OF KEVIN COONEY OR ANOTHER ANZ EMPLOYEE
AGREED BY THE INVESTORS (ACTING REASONABLY) AS A DIRECTOR OF THE COMPANY; AND

 

(II)                                                      ENTER INTO AND DELIVER
TO EACH DIRECTOR A DEED OF ACCESS AND INDEMNITY IN FAVOUR OF THE DIRECTOR AND
EFFECTIVE FROM THE TIME OF HIS APPOINTMENT.

 

(B)                                                   AS SOON AS PRACTICABLE
FOLLOWING COMPLETION, AND IN ANY EVENT WITHIN APPLICABLE TIME LIMITS, THE
COMPANY MUST LODGE WITH THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION AND
ANY OTHER APPROPRIATE REGULATORY AUTHORITIES ALL APPROPRIATE DOCUMENTS AND
FORMS.

 

4.                                                        Warranties

 

4.1                                                 Warranties

 

(A)                                                    THE COMPANY REPRESENTS,
WARRANTS AND COVENANTS TO AND WITH THE INVESTORS THAT EACH OF THE STATEMENTS
CONTAINED IN ANNEXURE 2 (EACH A “WARRANTY”) IS NOW AND WILL BE TRUE, ACCURATE
AND NOT MISLEADING AT COMPLETION (EXCEPT THAT WHERE ANY STATEMENT IS EXPRESSED
TO BE MADE ONLY AT A PARTICULAR DATE IT IS GIVEN ONLY AT THAT DATE).

 

(B)                                                   EACH WARRANTY IS SEPARATE
AND INDEPENDENT AND UNLESS EXPRESSLY PROVIDED IS NOT LIMITED BY ANY OTHER
WARRANTY OR PROVISION OF THIS AGREEMENT.

 

(C)                                                    EACH INVESTOR REPRESENTS
AND WARRANTS TO EACH OF THE OTHER PARTIES THAT EACH OF THE FOLLOWING STATEMENTS
IS TRUE AND ACCURATE AND NOT MISLEADING AT:

 

(I)                                                         COMPLETION:

 

(A)                                                    IT IS VALIDLY EXISTING
UNDER THE LAWS OF ITS PLACE OF INCORPORATION;

 

(B)                                                      IT HAS THE POWER TO
ENTER INTO AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND TO CARRY OUT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; AND

 

(C)                                                      IT HAS TAKEN ALL
NECESSARY ACTION TO AUTHORISE ITS ENTRY INTO AND PERFORMANCE OF THIS AGREEMENT
AND TO CARRY OUT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; AND

 

(II)                                                      THE DATE OF THIS
AGREEMENT: IT IS UP TO DATE WITH ALL NASDAQ AND SEC CONTINUOUS DISCLOSURE
REQUIREMENTS.

 

15

--------------------------------------------------------------------------------

 

(D)                                                   CHANNELL REPRESENTS AND
WARRANTS TO ANZ THAT EACH OF THE FOLLOWING STATEMENTS IS TRUE AND ACCURATE AND
NOT MISLEADING AT:

 

(I)                                                         COMPLETION:

 

(A)                                                    IT IS NOT AWARE OF ANY
CURRENT, THREATENED OR POTENTIAL BREACH OF THE WARRANTIES BY THE VENDORS UNDER
THE ACQUISITION AGREEMENT; AND

 

(B)                                                      IT IS NOT INSOLVENT OR
SUBJECT TO ANY CURRENT, THREATENED OR PENDING BANKRUPTCY PROCEEDINGS, WINDING UP
APPLICATIONS, ADMINISTRATION, RECEIVERSHIP OR LIQUIDATION;

 

(E)                                                    THE DATE OF THIS
AGREEMENT: THERE IS NO CURRENT, THREATENED OR PENDING MATERIAL LITIGATION
INVOLVING CHANNELL WHICH MAY ADVERSELY IMPACT ON THE OPERATIONS OF THE COMPANY.
IF BETWEEN THE DATE OF THIS AGREEMENT AND COMPLETION CHANNELL BECOMES AWARE OF
ANY MATTER OR CIRCUMSTANCE WHICH WOULD BE A BREACH OF THE WARRANTIES GIVEN UNDER
CLAUSES 4.1(C)(II) OR 4.1(D)(II) IF THEY WERE GIVEN AT COMPLETION, CHANNELL MUST
PROMPTLY DISCLOSE THE MATTER OR CIRCUMSTANCE TO ANZ.

 

4.2                                                 Reliance

 

(A)                                                    THE COMPANY ACKNOWLEDGES
THAT THE INVESTORS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE
WARRANTIES AND HAVE RELIED ON THE TRUTH AND ACCURACY OF THE WARRANTIES.

 

(B)                                                   CHANNELL ACKNOWLEDGES THAT
ANZ HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE WARRANTIES GIVEN BY
CHANNELL IN CLAUSES 4.1(C) AND 4.1(D) AND HAS RELIED ON THE TRUTH AND ACCURACY
OF THOSE WARRANTIES.

 

(C)                                                    ANZ ACKNOWLEDGES THAT
CHANNELL HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE WARRANTIES GIVEN
BY ANZ IN CLAUSE 4.1(C) AND HAS RELIED ON THE TRUTH AND ACCURACY OF THOSE
WARRANTIES.

 

4.3                                                 Disclosures

 

Each of the Warranties is given subject to the matters expressly provided in
this Agreement and the Financing Documents.

 

4.4                                                 Assignment of Warranties

 

The benefit of the Warranties may not be assigned in whole or in part, without
the prior written approval of the other parties in their absolute discretion.

 

5.                                                        Non-compete

 

5.1                                                 Channell obligations

 

Channell undertakes to the Company (for itself and as trustee for each member of
the Group Companies) and to ANZ that it will not, so long as it (or the Channell
Member) holds Shares

 

16

--------------------------------------------------------------------------------

 

in the Company, directly or indirectly, whether as principal, agent, director,
executive officer, shareholder, partner, joint venturer, adviser, consultant or
otherwise:

 

(A)                                                    CARRY ON OR BE ENGAGED OR
INVOLVED IN WITHIN AUSTRALIA ANY BUSINESS OR ACTIVITY THAT COMPETES WITH THE
BUSINESS (OR ANY PART OF IT); OR

 

(B)                                                   ATTEMPT, COUNSEL, PROCURE
OR OTHERWISE ASSIST ANY PERSON TO CARRY ON OR BE ENGAGED OR INVOLVED IN WITHIN
AUSTRALIA ANY BUSINESS OR ACTIVITY THAT COMPETES WITH THE BUSINESS (OR ANY PART
OF IT).

 

5.2                                                 ANZ obligations

 

ANZ undertakes to the Company (for itself and as trustee for each member of the
Group Companies) and to Channell that so long as ANZ (or the ANZ Member) holds
Shares in the Company ANZ will procure that ANZ Private Equity does not, and no
person operating within ANZ Private Equity, directly or indirectly, invests
equity in any person, business or activity that competes with the Business (or
any part of it) in Australia.

 

5.3                                                 Restraints fair and
reasonable

 

The Investors acknowledge and agree that:

 

(A)                                                    THE COVENANTS IN CLAUSES
5.1 AND 5.2 ARE MATERIAL TO THE COMPANY’S DECISION TO ENTER INTO THIS AGREEMENT;

 

(B)                                                   THE RESTRAINTS CONTAINED
IN CLAUSES 5.1 AND 5.2 ARE:

 

(I)                                                         FAIR AND REASONABLE
REGARDING THE SUBJECT MATTER, AREA AND DURATION; AND

 

(II)                                                      REASONABLY REQUIRED BY
THE COMPANY TO PROTECT THE BUSINESS, FINANCIAL AND PROPRIETARY INTERESTS OF THE
GROUP COMPANIES; AND

 

(C)                                                    EACH OF THE OBLIGATIONS
IN CLAUSES 5.1 AND 5.2 IS SEVERABLE AND INDEPENDENT SO THAT IF CLAUSE 5.1 OR
CLAUSE 5.2 OR ANY PART OF THEM IS HELD INVALID OR UNENFORCEABLE BY A COURT OF
LAW THEN CLAUSE 5.1, CLAUSE 5.2 AND/OR SUCH PART AS THE CASE MAY BE WILL BE
CONSIDERED TO BE AUTOMATICALLY DELETED FROM THIS AGREEMENT.  ANY SUCH DELETION
SHALL APPLY ONLY TO THAT PART OF CLAUSE 5.1 AND/OR CLAUSE 5.2 SO ADJUDICATED,
AND THE OPERATION OF SUCH PART WILL ONLY BE DEEMED INAPPLICABLE IN THE
PARTICULAR JURISDICTION IN WHICH THE ADJUDICATION IS MADE.

 

5.4                                                 Acknowledgments

 

Notwithstanding any other provision of this Agreement, the parties acknowledge
and agree that the ANZ Group:

 

(A)                                                    PROVIDES A RANGE OF
BANKING, FUNDS MANAGEMENT AND ADVISORY SERVICES INTERNATIONALLY;

 

(B)                                                   IS THE RESPONSIBLE ENTITY
AND/OR MANAGER OF A NUMBER OF MANAGED FUNDS AND TRUSTS AND HAS OBLIGATIONS AND
DUTIES IN RELATION TO EACH OF THOSE MANAGED FUNDS AND TRUSTS;

 

17

--------------------------------------------------------------------------------

 

(C)                                                    MAY, SUBJECT TO CLAUSE
5.2, INVEST FUNDS IN COMPANIES OR OTHER ENTITIES THAT MAY COMPETE DIRECTLY OR
INDIRECTLY WITH THE COMPANY;

 

(D)                                                   CANNOT FOSTER AND PROMOTE
THE BUSINESS WHERE SUCH CONDUCT WOULD BREACH ITS OBLIGATIONS TO, OR ADVERSELY
IMPACT ON, THE SHAREHOLDINGS OF THE ANZ GROUP IN ANY SUCH COMPETING COMPANY OR
ENTITY REFERRED TO IN CLAUSE 5.4(C) IN WHICH FUNDS MANAGED BY THE ANZ GROUP HAVE
BEEN INVESTED, PROVIDED THAT:

 

(I)                                                         ANZ TO THE BEST OF
ITS KNOWLEDGE WARRANTS THAT AT THE COMPLETION DATE IT IS NOT AWARE OF ANY SUCH
DIRECTLY CONFLICTING AND/OR COMPETING BUSINESS INTEREST IN RELATION TO WHICH A
MEMBER OF THE ANZ GROUP HAS A SHAREHOLDING; AND

 

(II)                                                      WITHOUT LIMITING
CLAUSE 5.2, AFTER THE COMPLETION DATE, IF A MEMBER OF THE ANZ GROUP PROPOSES TO
ENTER INTO A TRANSACTION WHICH WILL HAVE, OR WHICH IS LIKELY HAVE, THE EFFECT OF
CREATING A CONFLICTING AND/OR COMPETING BUSINESS INTEREST THEN ANZ WILL NOTIFY
CHANNELL AND THE COMPANY PRIOR TO THAT MEMBER ENTERING INTO THE TRANSACTION; AND

 

(E)                                                    MAY HOLD MARKETABLE
SECURITIES QUOTED AT THE TIME OF ACQUISITION ON A RECOGNISED STOCK EXCHANGE
REPRESENTING COLLECTIVELY NOT MORE THAN 10% OF THE ISSUED CAPITAL OF THE LISTED
ENTITY.

 

6.                                                        Financial information

 

6.1                                                 Annual business plan

 

(A)                                                    SUBJECT TO CLAUSE 6.1(B),
THE COMPANY MUST PROCURE THAT BEFORE THE START OF EACH FINANCIAL ACCOUNTING
PERIOD OF THE COMPANY A BUSINESS PLAN INCORPORATING AN ANNUAL PROJECTED
STATEMENT OF FINANCIAL POSITION, STATEMENT OF FINANCIAL PERFORMANCE AND
STATEMENT OF CASH FLOWS FOR THE GROUP COMPANIES (“BUSINESS PLAN”) IS PREPARED
AND DELIVERED TO THE BOARD AND THE INVESTORS.  THE BUSINESS PLAN MUST BE
APPROVED (IN FORM AND CONTENT) BY THE BOARD BEFORE BEING DELIVERED TO THE
INVESTORS.

 

(B)                                                   THE INITIAL BUSINESS PLAN
FOR THE GROUP COMPANIES FOR THE PERIOD FROM THE COMPLETION DATE TO 30 JUNE 2005
IS ATTACHED AT ANNEXURE 4.

 

6.2                                                 Management accounts

 

The Company must procure that management accounts are prepared for the Group
Companies each month.  The management accounts must include a statement of
financial position, a statement of financial performance and a statement of cash
flows together with a commentary on the trading and prospects of the Group
Companies including a comparison to the annual Business Plan prepared for the
relevant period.  The management accounts must be delivered to the Board and the
Investors within 20 Business Days of the end of each month.

 

18

--------------------------------------------------------------------------------

 

6.3                                                 Audited accounts

 

Within 60 Business Days of the end of each financial accounting period of the
Company, the Company must provide a copy of the audited consolidated accounts of
the Group Companies for that period to the Board and the Investors.

 

6.4                                                 Other information and access

 

The Company must:

 

(A)                                                    PROCURE THAT THE
DIRECTORS ARE KEPT FULLY INFORMED OF ALL MATERIAL DEVELOPMENTS REGARDING THE
GROUP COMPANIES;

 

(B)                                                   PROVIDE ANY INFORMATION
REASONABLY REQUESTED BY AN INVESTOR TO SATISFY ANY REPORTING OR AUDITING
REQUIREMENTS OF THE INVESTOR; AND

 

(C)                                                    UPON REASONABLE NOTICE
BEING SERVED ON THE COMPANY, PROVIDE THE INVESTORS AND THEIR RESPECTIVE
OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES, WITH SUCH ACCESS TO THE BOOKS
AND RECORDS, OFFICERS, EMPLOYEES AND PREMISES OF THE GROUP COMPANIES AS THEY MAY
REASONABLY REQUIRE.

 

THE FORMAT, TIMING AND REGULARITY OF THE REPORTING SET OUT IN CLAUSES 6.1 TO 6.4
MAY BE VARIED BY MUTUAL AGREEMENT OF ANZ AND CHANNELL.

 

6.5                                                 Confidentiality

 

(A)                                                    SUBJECT TO CLAUSES
6.5(B), 6.5(C) AND 6.5(D), THE INVESTORS MUST KEEP, AND THE COMPANY MUST PROCURE
THAT THE DIRECTORS KEEP, THE INFORMATION REFERRED TO IN CLAUSES 6.1 TO 6.4
STRICTLY CONFIDENTIAL.

 

(B)                                                   SUBJECT TO CLAUSE 6.5(E),
ANY:

 

(I)                                                         CHANNELL DIRECTOR
MAY PASS ANY INFORMATION CONCERNING THE COMPANY OR ANY OTHER GROUP COMPANY
RECEIVED BY HIM TO CHANNELL, THE CHANNELL MEMBER AND/OR ANY EMPLOYEE OR OFFICER
OF CHANNELL OR THE CHANNELL MEMBER; AND

 

(II)                                                      ANZ DIRECTOR MAY PASS
ANY INFORMATION CONCERNING THE COMPANY OR ANY OTHER GROUP COMPANY RECEIVED BY
HIM TO RELEVANT EMPLOYEES AND OFFICERS OF THE ANZ GROUP.

 

(C)                                                    SUBJECT TO CLAUSE 6.5(E),
THE INVESTORS AND THE INVESTOR MEMBERS MAY PASS ANY INFORMATION RECEIVED FROM
THE COMPANY OR A DIRECTOR TO:

 

(I)                                                         ANY OF THEIR
RESPECTIVE RELATED BODIES CORPORATE;

 

(II)                                                      IN THE CASE OF AN
INVESTOR WHICH IS A FUND OR WHICH HOLDS SHARES ON BEHALF OF A FUND, ANY ADVISER
TO, NOMINEE, CUSTODIAN, TRUSTEE, MANAGER OR GENERAL PARTNER OF, OR INVESTOR OR
PROSPECTIVE INVESTOR IN, THE FUND;

 

(III)                                                   ITS INVESTMENT ADVISER
OR ANY OTHER PROFESSIONAL ADVISER;

 

19

--------------------------------------------------------------------------------

 

(IV)                                                  ANY POTENTIAL PURCHASER
OF, OR POTENTIAL INVESTOR IN, A GROUP COMPANY, PROVIDED THAT A CONFIDENTIALITY
UNDERTAKING IS FIRST OBTAINED FROM THE RECIPIENT ON TERMS SATISFACTORY TO THE
COMPANY AND THE OTHER INVESTOR AND INVESTOR MEMBER; AND

 

(V)                                                     ANY GOVERNMENT AGENCY
WHERE THE DISCLOSURE TO THE GOVERNMENT AGENCY IS REQUIRED BY LAW PROVIDED THAT
THE FORM AND TERMS OF THAT DISCLOSURE HAVE BEEN NOTIFIED TO THE OTHER PARTIES
AND THE OTHER PARTIES HAVE HAD A REASONABLE OPPORTUNITY TO COMMENT ON THE FORM
AND TERMS AND ALL REASONABLE REQUESTS CONTAINED IN SUCH COMMENTS HAVE BEEN
COMPLIED WITH.

 

(D)                                                   CHANNELL MAY DISCLOSE ANY
INFORMATION RECEIVED FROM THE COMPANY OR A DIRECTOR IN QUARTERLY PRESS RELEASES
AND ANALYST CONFERENCE CALLS WHICH IN THE ORDINARY COURSE IS APPROPRIATE FOR
DISCLOSURE.

 

(E)                                                    THE PARTIES ACKNOWLEDGE
THAT THE RECIPIENTS MAY USE THE INFORMATION RECEIVED UNDER CLAUSES 6.5(B) AND
6.5(C) TO INFORM THEIR INVESTMENT AND LENDING DECISIONS BUT MAY NOT:

 

(I)                                                         USE THAT INFORMATION
IN ANY WAY THAT MAY CAUSE DETRIMENT TO A GROUP COMPANY OR THE BUSINESS;

 

(II)                                                      USE THAT INFORMATION
TO INFORM ANY DECISION REGARDING INVESTING IN OR LENDING TO A PERSON OR BUSINESS
THAT COMPETES WITH THE BUSINESS (OR ANY PART OF IT); OR

 

(III)                                                   PROVIDE THAT INFORMATION
TO ANY PERSON OR BUSINESS THAT COMPETES WITH THE BUSINESS (OR ANY PART OF IT).

 

6.6                                                 D&O Policy

 

(A)                                                    SUBJECT TO CLAUSE 6.6(B),
CHANNELL AGREES TO TAKE OUT AND MAINTAIN, OR PROCURE THE COMPANY TO TAKE OUT AND
MAINTAIN, A DIRECTORS AND OFFICERS INSURANCE POLICY (“D&O POLICY”) IN RESPECT OF
EACH DIRECTOR AND TO PAY THE PREMIUMS IN RESPECT OF THAT D&O POLICY DURING THE
DIRECTOR’S TERM IN OFFICE.

 

(B)                                                   NOTHING IN CLAUSE 6.6(A)
CONSTITUTES AN AGREEMENT BY THE COMPANY TO PAY A PREMIUM WHICH IT IS PROHIBITED
FROM PAYING UNDER THE ACT OR OTHERWISE.

 

(C)                                                    THE INSURER UNDER THE D&O
POLICY AND THE AMOUNT AND TERMS OF THE D&O POLICY WILL BE SUBJECT TO APPROVAL BY
THE BOARD.

 

(D)                                                   IF CHANNELL TAKES OUT AND
MAINTAINS THE D&O POLICY, CHANNELL MAY CHARGE THE ENTIRE COST, OR ANY PRO RATED
PORTION OF THE COST, OF THE PREMIUMS PAID OR PAYABLE IN RESPECT OF THE D&O
POLICY TO THE COMPANY.

 

6.7                                                 Other insurance

 

THE COMPANY MUST TAKE OUT AND MAINTAIN SUCH OTHER INSURANCES AS ARE REQUIRED BY
THE BOARD.  THE COMPANY WILL MAINTAIN VALID AND ADEQUATE INSURANCE IN RESPECT OF
ALL RISKS WHICH ARE

 

20

--------------------------------------------------------------------------------

 

NORMALLY INSURED AGAINST BY COMPANIES CARRYING ON SIMILAR BUSINESSES TO THE
COMPANY FOR SUCH AMOUNTS AS DETERMINED BY THE BOARD.

 

7.                                                        Future conduct of the
Company

 

7.1                                                 Management of the Business

 

THE COMPANY UNDERTAKES TO THE INVESTORS THAT IT WILL (AND THE INVESTORS CONFIRM
THAT THEY WILL PROCURE THE COMPANY TO), UNLESS THE INVESTORS OTHERWISE CONSENT
IN WRITING, PROCURE THAT THE BUSINESS WILL BE PROPERLY MANAGED IN ACCORDANCE
WITH USUAL GOOD COMMERCIAL PRACTICE AND WILL COMPLY WITH ALL APPLICABLE LAWS AND
THE GROUP COMPANIES WILL MAINTAIN ALL LICENCES, CONSENTS AND AUTHORISATIONS
WHATSOEVER WHICH ARE REQUIRED OR NECESSARY TO CARRY ON THE BUSINESS FROM TIME TO
TIME.

 

7.2                                                 Board

 

(A)                                                    UNLESS OTHERWISE AGREED
IN WRITING BY THE INVESTORS, AND SUBJECT TO THE RELEVANT POSITIONS BEING
OCCUPIED, THE BOARD WILL COMPRISE NO MORE THAN 4 DIRECTORS, CONSISTING OF:

 

(I)                                                         THREE CHANNELL
DIRECTORS; AND

 

(II)                                                      ONE ANZPE DIRECTOR.

 

(B)                                                   FOR SO LONG AS CHANNELL OR
THE CHANNELL MEMBER CONTINUES TO HOLD ANY A CLASS ORDINARY SHARES, CHANNELL IS
SOLELY ENTITLED TO APPOINT, SUBSTITUTE AND REMOVE THE CHANNELL DIRECTORS.

 

(C)                                                    FOR SO LONG AS ANZ OR THE
ANZ MEMBER CONTINUES TO HOLD ANY B CLASS ORDINARY SHARES, ANZ IS SOLELY ENTITLED
TO APPOINT, SUBSTITUTE AND REMOVE THE ONE ANZ DIRECTOR.

 

(D)                                                   EACH APPOINTMENT,
SUBSTITUTION AND REMOVAL OF A DIRECTOR WILL BE CARRIED OUT BY DEPOSITING AT THE
COMPANY’S REGISTERED OFFICE OR AT A BOARD MEETING A WRITTEN NOTICE, SIGNED BY OR
ON BEHALF OF THE PARTY OR DIRECTORS ENTITLED TO APPOINT, SUBSTITUTE OR REMOVE
THE DIRECTOR CONFIRMING THAT APPOINTMENT, SUBSTITUTION OR REMOVAL.

 

(E)                                                    THE PARTIES MUST TAKE ALL
STEPS REASONABLY WITHIN THEIR POWER PROMPTLY TO PROCURE ANY SUCH APPOINTMENTS,
REMOVALS AND SUBSTITUTIONS IN ACCORDANCE WITH THIS CLAUSE 7.

 

(F)                                                      AS SOON AS PRACTICABLE
AFTER THE APPOINTMENT OF A DIRECTOR, THE COMPANY MUST ENTER INTO AND DELIVER TO
SUCH DIRECTOR A DEED OF ACCESS AND INDEMNITY IN FAVOUR OF THE DIRECTOR AND
EFFECTIVE FROM THE TIME OF HIS APPOINTMENT.

 

(G)                                                   A FAILURE BY A MEMBER OR
CLASS OF MEMBERS TO APPOINT A DIRECTOR DOES NOT CONSTITUTE A WAIVER OF THE
RIGHTS OF THAT MEMBER OR CLASS OF MEMBERS TO APPOINT A DIRECTOR UNDER THIS
CLAUSE.

 

21

--------------------------------------------------------------------------------

 

7.3                                                 Conduct of the Board and
Director fees

 

(A)                                                    THE COMPANY UNDERTAKES
TO:

 

(I)                                                         SEND TO THE
DIRECTORS (WITH A COPY TO THE INVESTORS):

 

(A)                                                    AT LEAST 5 BUSINESS DAYS’
ADVANCE NOTICE OF EACH MEETING OF THE BOARD OR OF THE BOARD OF ANY GROUP COMPANY
AND AN AGENDA OF THE BUSINESS TO BE TRANSACTED AT THE MEETING (TOGETHER WITH ALL
PAPERS TO BE CIRCULATED OR PRESENTED); AND

 

(B)                                                      AS SOON AS PRACTICABLE
AFTER EACH MEETING OF THE BOARD OR OF THE BOARD OF ANY GROUP COMPANY, A COPY OF
THE MINUTES OF THE MEETING; AND

 

(II)                                                      PROCURE THAT THE BOARD
MEETS AT LEAST ONCE EVERY QUARTER AT THE COMPANY’S REGISTERED OFFICE (OR OTHER
VENUE APPROVED BY THE DIRECTORS);

 

(III)                                                   PAY FOR OR REIMBURSE ANY
EXPENSES REASONABLY AND PROPERLY INCURRED BY EACH NON-EXECUTIVE DIRECTOR ON THE
BUSINESS OF A GROUP COMPANY; AND

 

(IV)                                                  PROCURE THAT, IF A
DIRECTOR REQUESTS TO PARTICIPATE IN ANY MEETING OF THE BOARD OR THE BOARD OF ANY
GROUP COMPANY USING TELEPHONE OR OTHER TECHNOLOGY IN ACCORDANCE WITH CLAUSE 18.2
OF THE CONSTITUTION, ANY SUCH MEETING BE HELD USING TECHNOLOGY THAT WILL ALLOW
THAT PARTICIPATION.

 

(B)                                                   SUBJECT TO CLAUSE 7.4, AT
EACH BOARD MEETING RESOLUTIONS MUST BE PASSED BY SIMPLE MAJORITY VOTE.  EACH
DIRECTOR HAS ONE VOTE FOR EACH RESOLUTION.

 

(C)                                                    NO MEETING OF THE BOARD
MAY PROCEED TO BUSINESS OR TRANSACT ANY BUSINESS UNLESS A QUORUM IS PRESENT AT
THE START OF AND THROUGHOUT THE MEETING.  A QUORUM OF THE BOARD IS TWO
DIRECTORS, AT LEAST ONE OF WHICH MUST BE A CHANNELL DIRECTOR AND ONE OF WHICH
MUST BE THE ANZ DIRECTOR.

 

(D)                                                   IF A QUORUM OF DIRECTORS
IS NOT PRESENT AT THE START OF A DULY CONVENED BOARD MEETING, THAT MEETING IS
ADJOURNED TO THE SAME TIME AND PLACE ON THE SAME DAY IN THE NEXT WEEK AND THE
DIRECTORS THEN PRESENT WILL BE A QUORUM AT THE ADJOURNED MEETING.

 

(E)                                                    EACH DIRECTOR MAY IN
ACCORDANCE WITH AND SUBJECT TO THE CONSTITUTION, APPOINT AN ALTERNATE TO
REPRESENT HIM AT BOARD MEETINGS THAT HE IS UNABLE TO ATTEND.  AN ALTERNATE IS
ENTITLED TO RECEIVE NOTICE OF AND ATTEND BOARD MEETINGS (REGARDLESS OF WHETHER
THE DIRECTOR WHO APPOINTED THE ALTERNATE IS PRESENT).  HOWEVER, AN ALTERNATE CAN
ONLY BE COUNTED TOWARDS A QUORUM AND VOTE AT MEETINGS WHERE THE DIRECTOR WHO
APPOINTED THE ALTERNATE IS NOT PRESENT.

 

(F)                                                      SUBJECT TO CLAUSE 7.4,
A BOARD RESOLUTION WILL BE VALIDLY PASSED IF THE WRITTEN TEXT OF THE RESOLUTION
HAS BEEN GIVEN TO ALL DIRECTORS AND SIGNED OR APPROVED BY A MAJORITY OF THE
DIRECTORS.

 

(G)                                                   THE COMPANY SHALL PAY THE
REASONABLE COST OF:

 

22

--------------------------------------------------------------------------------

 

(I)                                                         DOMESTIC TRAVEL AND
OTHER EXPENSES PROPERLY INCURRED BY THE NON-EXECUTIVE DIRECTORS RESIDENT IN
AUSTRALIA (AND IN ACCORDANCE WITH THE COMPANY’S POLICY CONCERNING TRAVEL) IN
RELATION TO THEIR TRAVEL TO, ATTENDANCE AT, AND RETURN FROM EACH BOARD MEETING;

 

(II)                                                      OVERSEAS TRAVEL UP TO
A MAXIMUM OF TWO BUSINESS CLASS RETURN FARES PER YEAR, UNLESS EACH INVESTOR
OTHERWISE GIVES THEIR PRIOR WRITTEN APPROVAL, AND OTHER EXPENSES PROPERLY
INCURRED BY THE NON-EXECUTIVE DIRECTORS RESIDENT OVERSEAS (AND IN ACCORDANCE
WITH THE COMPANY’S POLICY CONCERNING TRAVEL) IN RELATION TO THEIR TRAVEL TO,
ATTENDANCE AT, AND RETURN FROM EACH BOARD MEETING; AND

 

(III)                                                   EXPENSES INCURRED BY THE
NON-EXECUTIVE DIRECTORS IN RESPECT OF OTHER TRAVEL RELATED TO THE BUSINESS OF
THE COMPANY AS DETERMINED BY THE BOARD FROM TIME TO TIME.

 

7.4                                                 Matters requiring unanimous
approval

 

(A)  THE PARTIES AGREE THAT THE FOLLOWING ACTS, UNLESS REQUIRED OR PROVIDED FOR
BY THIS AGREEMENT, MUST NOT BE CARRIED OUT UNLESS APPROVED BY ALL DIRECTORS
(WHICH APPROVAL MUST NOT BE UNREASONABLY WITHHELD) AND EACH PARTY MUST USE ITS
RESPECTIVE RIGHTS AND POWERS TO PROCURE THAT NO SUCH ACT IS CARRIED OUT UNLESS
SUCH UNANIMOUS APPROVAL HAS BEEN GIVEN:

 

(I)                                                     SUBJECT TO CLAUSE
7.4(B), THE DISPOSAL OR ACQUISITION BY ANY GROUP COMPANY IN ANY FINANCIAL YEAR
OF AN ASSET WHERE THE DISPOSAL OR ACQUISITION IS NOT CONTEMPLATED IN A BUSINESS
PLAN REFERRED TO IN CLAUSE 6.1 FOR THAT FINANCIAL YEAR AND THE ASSET (WHEN
AGGREGATED WITH ALL OTHER DISPOSALS, IN THE CASE OF A DISPOSAL, OR ACQUISITIONS,
IN THE CASE OF AN ACQUISITION, FOR THAT FINANCIAL YEAR NOT CONTEMPLATED IN THE
BUSINESS PLAN REFERRED TO IN CLAUSE 6.1 FOR THAT FINANCIAL YEAR) EXCEEDS THE
AMOUNT OF ANY ASSET WHOSE DISPOSAL OR ACQUISITION IS CONTEMPLATED IN THE
BUSINESS PLAN REFERRED TO IN CLAUSE 6.1 FOR THAT FINANCIAL YEAR BY MORE THAN
$150,000;

 

(II)                                                  ANY PROPOSAL TO SELL ALL
(OR SUBSTANTIALLY ALL) OF THE ASSETS OR BUSINESS UNDERTAKING OF THE GROUP
COMPANIES;

 

(III)                                               ANY PROPOSAL TO LIMIT THE
COMPANY’S RIGHT TO CARRY ON THE BUSINESS OR A SUBSTANTIAL PART OF THE BUSINESS
OR TO WIND-UP OR DISSOLVE THE COMPANY OR TO TAKE ADVANTAGE OF ANY LAW PROVIDING
FOR THE RELIEF OF DEBTORS IN ADVERSE FINANCIAL CIRCUMSTANCES, AND THIS PARAGRAPH
WILL BE DEEMED TO INCLUDE MAKING AN APPLICATION OR COMMENCING ANY PROCEEDINGS OR
TAKING ANY OTHER STEPS FOR THE WINDING-UP, DISSOLUTION, OR APPOINTMENT OF AN
ADMINISTRATOR OF THE COMPANY OR ANY SUBSIDIARY OR THE ENTERING INTO BY THE
COMPANY OR ANY SUBSIDIARY OF AN ARRANGEMENT, COMPROMISE OR COMPOSITION WITH OR
ASSIGNMENT FOR THE BENEFIT OF ITS CREDITORS, A CLASS OF THEM OR ANY OF THEM;

 

(IV)                                              THE ISSUE OF ANY SECURITIES IN
ANY GROUP COMPANY TO A PERSON OTHER THAN THE COMPANY;

 

23

--------------------------------------------------------------------------------

 

(V)                                                 ANY RESTRUCTURE OF THE
CAPITAL OF ANY GROUP COMPANY, INCLUDING ANY BUY-BACK, REDUCTION, CONSOLIDATION
OR SPLIT OF THE CAPITAL OF ANY GROUP COMPANY;

 

(VI)                                              ANY TRANSACTION BETWEEN A
GROUP COMPANY AND A RELATED PARTY OTHER THAN A TRANSACTION THAT FALLS WITHIN THE
EXCEPTION UNDER CLAUSE 210 OF THE ACT AS IF A REFERENCE TO A PUBLIC COMPANY IN
THAT SECTION WERE A REFERENCE TO ANY GROUP COMPANY; AND

 

(VII)                                           THE GRANT OF ANY MORTGAGE,
CHARGE OR OTHER SECURITY INTEREST OVER OR NEGATIVE PLEDGE IN RESPECT OF ANY
ASSETS OF THE COMPANY IN EXCESS OF $500,000 OR THE ISSUE OF ANY GUARANTEE FOR
DEBTS OF THIRD PARTIES EXCEPT UNDER THE FINANCING DOCUMENTS.

 

(B)                                                   THE ANZ MEMBER GRANTS TO
THE COMPANY, CHANNELL AND THE CHANNELL MEMBER AN OPTION TO ACQUIRE ALL (BUT NOT
SOME) OF THE SHARES HELD BY THE ANZ MEMBER IF THE ANZ DIRECTORS DO NOT APPROVE
ANY ACQUISITION OF AN ASSET UNDER CLAUSE 7.4(A)(I) AT ANY TIME ON OR BEFORE THE
SECOND ANNIVERSARY OF THE COMPLETION DATE.  THE CALL OPTION GRANTED UNDER THIS
CLAUSE 7.4(B) MAY BE EXERCISED IN ACCORDANCE WITH THE PROCEDURE SET OUT IN
CLAUSE 10.3 AND THE PRICE PER SHARE TO BE PAID TO THE ANZ MEMBER FOR THE
TRANSFER OF ITS SHARES PURSUANT TO THE CALL OPTION IS THE SAME PRICE PER SHARE
REFERRED TO IN CLAUSE 10.3(C)(III).

 

7.5                                                 The Chairman

 

(A)                                                    THE INITIAL CHAIRMAN OF
THE BOARD WILL BE WILLIAM H. CHANNELL JR.  THEREAFTER, THE CHAIRMAN OF THE BOARD
FROM TIME TO TIME WILL BE THE CHAIRMAN OF CHANNELL, OR IF THE CHANNELL MEMBER NO
LONGER HOLDS SHARES OR NO PERSON OCCUPIES THAT POSITION, A PERSON APPOINTED BY
THE BOARD.

 

(B)                                                   THE CHAIRMAN IS NOT
ENTITLED TO ANY CASTING VOTE IN ADDITION TO ANY VOTE TO WHICH HE IS ENTITLED AS
A DIRECTOR.

 

7.6                                                 Day-to-day management

 

(A)                                                    EXECUTIVE MANAGEMENT OF
THE DAY-TO-DAY AFFAIRS AND BUSINESS OF THE GROUP COMPANIES WILL BE MANAGED BY
THE MANAGING DIRECTOR OF THE COMPANY UNDER THE GUIDANCE OF THE BOARD.

 

(B)                                                   THE BOARD MAY DELEGATE
AUTHORITY (ON SUCH TERMS AS IT CONSIDERS APPROPRIATE) TO MEMBERS OF THE
EXECUTIVE MANAGEMENT TEAM OF THE GROUP COMPANIES AS THE BOARD DECIDES FROM TIME
TO TIME.  A DELEGATED AUTHORITY MAY BE REVOKED BY THE BOARD AT ANY TIME.

 

7.7                                                 Senior Executives

 

(A)                                                    WITHIN 12 MONTHS OF THE
COMPLETION DATE AND PRIOR TO THE EXPIRY OF THE RETENTION PERIOD, THE BOARD MUST
ADOPT A PLAN FOR INCENTIVISING THE SENIOR EXECUTIVES IN THE PERFORMANCE OF THEIR
DUTIES AND OBLIGATIONS IN RESPECT OF THE GROUP COMPANIES.

 

24

--------------------------------------------------------------------------------

 

(B)                                                   THE ANZ DIRECTOR MUST BE
NOTIFIED BEFORE THE BOARD APPOINTS, SUBSTITUTES OR REMOVES ANY CHIEF EXECUTIVE
OFFICER OR CHIEF FINANCIAL OFFICER OF THE COMPANY AND THE ANZ DIRECTOR MUST BE
PROVIDED WITH A REASONABLE OPPORTUNITY TO COMMENT ON THE APPOINTMENT,
SUBSTITUTION OR REMOVAL.

 

7.8                                                 Observer at Board meetings

 

(A)                                                    IF ANZ HAS NOT APPOINTED
A DIRECTOR IN ACCORDANCE WITH CLAUSE 7.2 OR NO PERSON OCCUPIES THE POSITION OF
ANZ DIRECTOR, KEVIN COONEY OR ANOTHER ANZ EMPLOYEE ACCEPTABLE TO THE INVESTORS
(ACTING REASONABLY) MAY ATTEND BOARD MEETINGS AS AN OBSERVER.  THE COMPANY HAS
NO OBLIGATION TO PAY THE COSTS AND EXPENSES OF THE OBSERVER.

 

(B)                                                   THE OBSERVER:

 

(I)                                                         WILL BE ENTITLED TO
RECEIVE ALL INFORMATION THAT A DIRECTOR IS ENTITLED TO RECEIVE AND WILL BE
SUBJECT TO THE SAME OBLIGATIONS OF CONFIDENTIALITY AS A DIRECTOR;

 

(II)                                                      MUST BE GIVEN THE SAME
NOTICE OF BOARD MEETINGS AS A DIRECTOR;

 

(III)                                                   WILL BE ENTITLED TO
CONVEY ALL INFORMATION OBTAINED BY IT IN ITS CAPACITY AS AN OBSERVER TO THE
APPOINTOR OR ITS NOMINEE WITHOUT RESTRICTION, PROVIDED THAT ANY PERSON TO WHOM
SUCH INFORMATION IS CONVEYED WILL BE SUBJECT TO THE SAME OBLIGATIONS OF
CONFIDENTIALITY AS THE OBSERVER; AND

 

(IV)                                                  WILL BE ENTITLED TO
PARTICIPATE IN ANY BOARD MEETING BUT IS NOT ENTITLED TO VOTE.

 

7.9                                                 Guarantees for financiers

 

Subject to the guarantees in the Financing Documents given at the time of
signing the Financing Documents, the parties acknowledge and agree that no
Member will be required to provide any guarantee, charges or other security to
any third party financier of a Group Company.

 

7.10                                          Quorum for Member meetings

 

The quorum for Member meetings will be two Members present in person or by
attorney or proxy, at least one of which must be the Channell Member and one of
which must be the ANZ Member.

 

7.11                                          Buyer’s representative

 

The parties acknowledge and agree that the buyer’s representative (as that term
is used in the Acquisition Agreement) may only act for all purposes in relation
to the Acquisition Agreement in accordance with the directions of the Board.

 

25

--------------------------------------------------------------------------------

 

8.                                                        Disposal of Shares and
assets

 

8.1                                                 Requirements for Disposal of
Shares

 

(A)                                                    A MEMBER MUST NOT DISPOSE
OF ANY SHARE REGISTERED IN THE MEMBER’S NAME, UNLESS THE DISPOSAL IS PERMITTED
UNDER THIS AGREEMENT AND THE CONSTITUTION.

 

(B)                                                   BEFORE A TRANSFER OF ANY
SHARE IS EFFECTIVE OR CAN BE REGISTERED:

 

(I)                                                         THE TRANSFER MUST
COMPLY WITH THE REQUIREMENTS OF THIS AGREEMENT AND THE CONSTITUTION; AND

 

(II)                                                      THE TRANSFEREE MUST,
IF IT IS NOT ALREADY A PARTY TO THIS AGREEMENT, ENTER INTO A DEED OF ADHERENCE
AND DELIVER IT TO THE COMPANY.

 

(C)                                                    THE BOARD MUST SANCTION
ANY TRANSFER MADE WHICH IS PERMITTED UNDER THIS AGREEMENT AND THE CONSTITUTION
UNLESS:

 

(I)                                                         THE REGISTRATION OF
THE TRANSFER WOULD PERMIT THE REGISTRATION OF A TRANSFER OF SHARES ON WHICH THE
COMPANY HAS A LIEN; OR

 

(II)                                                      THE BOARD IS OTHERWISE
ENTITLED TO REFUSE TO REGISTER THE TRANSFER PURSUANT TO THIS AGREEMENT OR THE
CONSTITUTION.

 

(D)                                                   NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT BUT SUBJECT TO CLAUSE 8.2:

 

(I)                                                         NO MEMBER MAY
DISPOSE OF ITS SHARES ON OR PRIOR TO THE FIRST ANNIVERSARY OF THE COMPLETION
DATE WITHOUT THE PRIOR WRITTEN CONSENT (SUCH CONSENT NOT TO BE WITHHELD
UNREASONABLY) OF THE INVESTORS TO THE TRANSFER; AND

 

(II)                                                      SO LONG AS AN ANZ
MEMBER HOLDS SHARES, THE CHANNELL MEMBER MAY NOT DISPOSE OF ANY SHARES WITHOUT
THE PRIOR WRITTEN CONSENT OF ANZ TO THE DISPOSAL,

 

AND THE BOARD MAY REFUSE TO REGISTER ANY SUCH DISPOSAL WHICH IS A TRANSFER OF
SHARES WITHOUT OBTAINING SUCH CONSENT.

 

(E)                                                    ANY MEMBER WISHING TO
TRANSFER SHARES TO ANOTHER PERSON MAY ONLY TRANSFER ALL, NOT SOME ONLY, OF ITS
SHARES.

 

(F)                                                      FOR THE PURPOSES OF
THIS CLAUSE, THE FOLLOWING IS DEEMED TO BE A DISPOSAL BY A MEMBER:

 

(I)                                                         ANY DIRECTION (BY
WAY OF RENUNCIATION OR OTHERWISE) BY A MEMBER ENTITLED TO AN ISSUE OR TRANSFER
OF SHARES THAT A SHARE BE ISSUED OR TRANSFERRED TO SOME PERSON OTHER THAN THAT
MEMBER;

 

(II)                                                      ANY TRANSFER, SALE OR
OTHER DISPOSAL OF ANY RIGHT OR INTEREST IN A SHARE (INCLUDING ANY VOTING OR
DIVIDEND RIGHT ATTACHED TO IT):

 

(A)                                                    WHETHER OR NOT BY THE
RELEVANT MEMBER;

 

26

--------------------------------------------------------------------------------

 

(B)                                                      WHETHER OR NOT FOR
CONSIDERATION; AND

 

(C)                                                      WHETHER OR NOT EFFECTED
BY AN INSTRUMENT IN WRITING;

 

(III)                                                   THE CREATION OF ANY
SECURITY INTEREST OVER THE SHARE;

 

(IV)                                                  ANY PERSON BECOMING
ENTITLED TO APPOINT A DIRECTOR OF THE COMPANY; OR

 

(V)                                                     ANY PERSON ACQUIRING A
LEGAL OR EQUITABLE RIGHT AGAINST THE MEMBER WHICH HAS THE EFFECT OF PLACING THAT
PERSON IN THE SAME POSITION AS IF THAT PERSON HAD ACQUIRED A LEGAL OR EQUITABLE
INTEREST IN THE SHARE.

 

8.2                                                 Permitted transfers

 

(A)                                                    NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT BUT SUBJECT TO CLAUSES 8.1(B) AND 8.2(B), ANY MEMBER
IS ENTITLED TO TRANSFER ALL (BUT NOT SOME) OF ITS SHARES TO:

 

(I)                                                         A RELATED BODY
CORPORATE OF THE INVESTOR;

 

(II)                                                      IN THE CASE OF AN ANZ
MEMBER:

 

(A)                                                    A TRUSTEE, CUSTODIAN OR
NOMINEE OF ANZ PROVIDED THAT THE ANZ MEMBER RETAINS THE BENEFICIAL INTEREST IN
THE SHARES; OR

 

(B)                                                      A COMPANY, TRUST, FUND
OR OTHER ENTITY (INCLUDING A POOLED DEVELOPMENT FUND) WHICH IS OWNED, MANAGED OR
CONTROLLED BY AN ANZ MEMBER OR ANZ PRIVATE EQUITY; OR

 

(C)                                                      A COMPANY, TRUST, FUND
OR OTHER ENTITY (INCLUDING A POOLED DEVELOPMENT FUND) WHICH IS OWNED, MANAGED OR
CONTROLLED BY AN ENTITY FORMED AS PART OF A MANAGEMENT BUYOUT OF ANZ PRIVATE
EQUITY FROM ANZ.

 

(B)                                                   IF THE TRANSFEREE UNDER
CLAUSE 8.2(A)(I) CEASES TO BE A RELATED BODY CORPORATE OF THE INVESTOR, THE ANZ
MEMBER CEASES AT ANY TIME TO RETAIN ITS BENEFICIAL INTEREST OR IF THE ANZ MEMBER
OR ANZ PRIVATE EQUITY CEASES TO OWN, MANAGE OR CONTROL ANY ENTITY REFERRED TO IN
CLAUSE 8.2(A)(II), IT MUST, WITHIN 15 BUSINESS DAYS OF SO CEASING, TRANSFER THE
SHARES HELD BY IT TO THAT INVESTOR OR A RELATED BODY CORPORATE OF THAT INVESTOR.

 

(C)                                                    CLAUSES 8.3 AND 8.4 DO
NOT APPLY TO TRANSFERS PURSUANT TO THIS CLAUSE 8.2.

 

8.3                                                 Pre-emptive right

 

(A)                                                    A MEMBER (“PRE-EMPTION
VENDOR”) WHO WISHES TO TRANSFER ITS SHARES TO A THIRD PARTY (“PRE-EMPTION
PURCHASER”) MUST FIRST COMPLY WITH THE PROCEDURE IN THIS CLAUSE 8.3.

 

(B)                                                   THE PRE-EMPTION VENDOR
MUST GIVE A NOTICE (“PRE-EMPTION NOTICE”) TO THE OTHER MEMBER (THE “PRE-EMPTION
MEMBER”) AND THE COMPANY SPECIFYING:

 

(I)                                                         THE NAME OF THE
PRE-EMPTION PURCHASER;

 

27

--------------------------------------------------------------------------------

 

(II)                                                      THE NUMBER OF SHARES
(“SALE SHARES”) PROPOSED TO BE TRANSFERRED BY THE PRE-EMPTION VENDOR, WHICH MUST
BE ALL THE SHARES HELD BY THE PRE-EMPTION VENDOR;

 

(III)                                                   THE PRICE (“PRE-EMPTION
PRICE”) AT WHICH THE PRE-EMPTION VENDOR WISHES TO TRANSFER THE SALE SHARES AND
ANY OTHER MATERIAL TERMS OF THE PROPOSED TRANSACTION (WHICH, TOGETHER WITH THE
PRE-EMPTION PRICE, ARE THE “PRE-EMPTION TERMS”);

 

(IV)                                                  THAT THE SALE SHARES ARE
OFFERED TO THE PRE-EMPTION MEMBER ON THE PRE-EMPTION TERMS; AND

 

(V)                                                     THAT THE PRE-EMPTION
MEMBER HAS 15 BUSINESS DAYS FOLLOWING RECEIPT OF THE PRE-EMPTION NOTICE TO
NOTIFY THE PRE-EMPTION VENDOR AND THE COMPANY IN WRITING WHETHER IT OR AN
ALTERNATIVE PURCHASER IS WILLING TO PURCHASE THE SALE SHARES.

 

(C)                                                    NO PRE-EMPTION NOTICE
ONCE GIVEN IN ACCORDANCE WITH THIS AGREEMENT MAY BE WITHDRAWN OR REVOKED WITHOUT
THE APPROVAL OF THE BOARD.

 

(D)                                                   THE PRE-EMPTION NOTICE
CONSTITUTES THE COMPANY AS THE AGENT OF THE PRE-EMPTION VENDOR FOR THE SALE OF
THE SALE SHARES ON THE PRE-EMPTION TERMS.

 

(E)                                                    IF THE PRE-EMPTION MEMBER
NOTIFIES THE PRE-EMPTION VENDOR AND THE COMPANY IN ACCORDANCE WITH CLAUSE
8.3(B)(V) THAT IT OR AN ALTERNATIVE PURCHASER IS WILLING TO PURCHASE THE SALE
SHARES, THE COMPANY MUST PROMPTLY GIVE A NOTICE (“COMPLETION NOTICE”) TO THE
PRE-EMPTION VENDOR AND THE PRE-EMPTION MEMBER SPECIFYING THE PLACE AND TIME
(BEING NOT LESS THAN 10 BUSINESS DAYS AND NOT MORE THAN 20 BUSINESS DAYS AFTER
THE DATE OF THE COMPLETION NOTICE) AT WHICH THE TRANSFER OF THE SALE SHARES IS
TO BE COMPLETED.

 

(F)                                                      UPON RECEIPT OF A
COMPLETION NOTICE COMPLYING WITH CLAUSE 8.3(E), THE PRE-EMPTION VENDOR IS
OBLIGED, SUBJECT TO RECEIPT OF THE CASH CONSIDERATION OFFERED UNDER THE
PRE-EMPTION TERMS, TO TRANSFER ALL OF ITS SHARES TO THE PRE-EMPTION MEMBER.

 

(G)                                                   IF ALL THE SALE SHARES
HAVE NOT BEEN SOLD UNDER THE PRECEDING PARAGRAPHS OF THIS CLAUSE, THE
PRE-EMPTION VENDOR MAY, AT ANY TIME WITHIN THREE MONTHS AFTER RECEIVING
CONFIRMATION FROM THE COMPANY THAT THE PRE-EMPTION PROCEDURE UNDER THIS CLAUSE
8.3 HAS BEEN EXHAUSTED, TRANSFER THE REMAINING SALE SHARES TO ANY PERSON OR
PERSONS ON TERMS THAT ARE NO MORE FAVOURABLE (TO THOSE PERSONS) THAN THE
PRE-EMPTION TERMS.

 

(H)                                                   A PRE-EMPTION MEMBER MAY,
DURING THE 15 BUSINESS DAY PERIOD REFERRED TO IN CLAUSE 8.3(B)(V), FIND AN
ALTERNATIVE PURCHASER (“ALTERNATIVE PURCHASER”) FOR THE SALE SHARES PROVIDED
THAT THE ALTERNATIVE PURCHASER OFFERS TO BUY THOSE SALE SHARES ON THE SAME OR
BETTER TERMS (TO THE PRE-EMPTION VENDOR) THAN THE PRE-EMPTION TERMS.  IN THE
EVENT THAT A PRE-EMPTION MEMBER NOTIFIES THE PRE-EMPTION VENDOR UNDER CLAUSE
8.3(B)(V) THAT AN ALTERNATIVE PURCHASER IS WILLING TO BUY THE SALE SHARES,
REFERENCES TO A PRE-EMPTION MEMBER IN CLAUSES 8.3(E) AND 8.3(F) ABOVE WILL BE
DEEMED TO BE REFERENCES TO THE ALTERNATIVE PURCHASER.

 

28

--------------------------------------------------------------------------------

 

(I)                                                       THIS CLAUSE 8.3 ABOVE
DOES NOT APPLY TO A TRANSFER OF SHARES:

 

(I)                                                         PERMITTED UNDER
CLAUSE 8.2;

 

(II)                                                      PURSUANT TO CLAUSE 8.4
IF THE PRE-EMPTION PROCEDURE UNDER THIS CLAUSE 8.3 ABOVE HAS ALREADY BEEN
OBSERVED IN RESPECT OF THE PROPOSED TRANSFER UNDER THAT CLAUSE; OR

 

(III)                                                   REQUIRED UNDER CLAUSES
8.5 OR 10.3; OR

 

(IV)                                                  UNDER ANY SALE OR LISTING
UNLESS A MEMBER HAS MADE A NOTIFICATION UNDER CLAUSE 10.2(G).

 

8.4                                                 Tag along rights

 

If a Member (a “Transferring Member”) receives an offer to acquire all of its
Shares (“Transfer Shares”) from a bona fide third party (the “Transferee”), the
Transferring Member may transfer those Transfer Shares if and only if:

 

(A)                                                    THE PRE-EMPTION PROCEDURE
UNDER CLAUSE 8.3 HAS FIRST BEEN OBSERVED;

 

(B)                                                   IF THE TRANSFERRING MEMBER
IS THE CHANNELL MEMBER, THE TRANSFERRING MEMBER COMPLIES WITH ITS OBLIGATION
UNDER CLAUSE 8.5;

 

(C)                                                    THE TRANSFERRING MEMBER
CONFIRMS IN WRITING TO THE COMPANY AND THE OTHER MEMBER THE PRICE AT WHICH AND
ALL OF THE OTHER MATERIAL TERMS ON WHICH THE TRANSFEREE PROPOSES TO ACQUIRE THE
TRANSFER SHARES (THE “TRANSFER TERMS”); AND

 

(D)                                                   THE TRANSFERRING MEMBER
PROCURES THE TRANSFEREE TO MAKE A BINDING UNCONDITIONAL OFFER (A “TAG ALONG
OFFER”) TO THE OTHER MEMBER:

 

(I)                                                         FOR ALL OF THAT
MEMBER’S SHARES; AND

 

(II)                                                      ON THE SAME TERMS AS
THE TRANSFER TERMS; AND

 

(E)                                                    THE TAG ALONG OFFER IS
REASONABLY CAPABLE OF ACCEPTANCE AND COMPLETION BY THE OTHER MEMBER PRIOR TO OR
CONTEMPORANEOUSLY WITH THE TRANSFER OF THE TRANSFER SHARES TO THE TRANSFEREE.

 

8.5                                                 Sale of Shares by Channell
Member

 

IF THE CHANNELL MEMBER RECEIVES AN OFFER TO ACQUIRE ALL OF ITS SHARES FROM A
BONA FIDE THIRD PARTY, THE CHANNELL MEMBER MUST, BEFORE TRANSFERRING ITS SHARES
TO THAT THIRD PARTY, EXERCISE THE CALL OPTION ON THE BASIS THAT:

 

(A)                                                    THE LIMITATION ON THE
TIME FOR EXERCISE OF THE CALL OPTION UNDER CLAUSE 10.3(B) DOES NOT APPLY TO ANY
EXERCISE OF THE CALL OPTION REQUIRED UNDER THIS CLAUSE 8.5; AND

 

(B)                                                   THE PRICE PER SHARE WHICH
THE ISSUER OF THE CALL OPTION NOTICE PROPOSES TO PAY TO THE ANZ MEMBER FOR THE
TRANSFER OF ITS SHARES PURSUANT TO THE CALL OPTION MUST BE EQUAL TO THE HIGHER
OF THE FAIR MARKET VALUE DIVIDED BY THE TOTAL NUMBER OF SHARES

 

29

--------------------------------------------------------------------------------

 

AND THE PRICE PER SHARE OFFERED BY THE BONA FIDE THIRD PARTY TO THE CHANNELL
MEMBER.

 

8.6                                                 Perfection of Transfers

 

(A)                                                    IF A MEMBER (THE
“TRANSFEROR”) BECOMES BOUND TO TRANSFER ANY SHARES UNDER THIS AGREEMENT OR THE
CONSTITUTION, THE TRANSFEROR MUST PROMPTLY 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)                                                   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, AND ANY OTHER DOCUMENT REQUIRED
UNDER LAW IN RESPECT OF ANY LOST CERTIFICATES) TO THE COMPANY.

 

(C)                                                    THE RECEIPT BY THE
COMPANY OF THE PURCHASE MONEY FOR THE SHARES WILL RELEASE THE OTHER MEMBERS WHO
WILL NOT BE BOUND TO SEE TO THE APPLICATION OF THAT MONEY, AND AFTER THE NAME OF
THE TRANSFEREE HAS BEEN ENTERED IN THE MEMBERS REGISTER THE VALIDITY OF THE
PROCEEDINGS MAY NOT BE QUESTIONED OR DISPUTED BY ANY PERSON.

 

8.7                                                 Miscellaneous

 

Upon a transfer of any Shares:

 

(A)                                                    THE TRANSFEROR MEMBER IS
ENTITLED TO ALL DIVIDENDS AND INTEREST ACCRUED ON THOSE SHARES UP TO AND
INCLUDING THE DATE OF TRANSFER;

 

(B)                                                   THE TRANSFEREE MEMBER IS
ENTITLED TO ALL DIVIDENDS AND INTEREST ACCRUED ON THOSE SHARES AFTER THE DATE OF
TRANSFER; AND

 

(C)                                                    ANY AMOUNT PAID TO EITHER
THE TRANSFEROR MEMBER OR THE TRANSFEREE MEMBER IN EXCESS OF THEIR ENTITLEMENT IS
HELD BY THAT PARTY ON TRUST FOR THE OTHER PARTY.

 

8.8                                                 Disposal of assets

 

(A)                                                    THE PARTIES AGREE THAT IF
ALL (OR SUBSTANTIALLY ALL) OF THE ASSETS OR BUSINESS UNDERTAKING OF THE GROUP
COMPANIES ARE DISPOSED OF (ASSET SALE), THE PROCEEDS OF THE SALE MUST BE
DISTRIBUTED SO THAT THE ANZ MEMBER IS ENTITLED TO THE FIRST $3,750,000 (AFTER
PAYMENT OF ALL COSTS AND EXPENSES OF THE SALE) (PREFERRED DISTRIBUTION).

 

(B)                                                   THE PREFERRED DISTRIBUTION
IN PARAGRAPH (A) SHALL BE DISTRIBUTED IN SUCH A MANNER AS THE MEMBERS AGREE
(ACTING REASONABLY), PROVIDED THAT IF WITHIN 60 BUSINESS DAYS OF COMPLETION OF
THE ASSET SALE THE MEMBERS HAVE NOT AGREED THE METHOD OF DISTRIBUTION, THEN THE
COMPANY SHALL BE WOUND-UP AND THE AVAILABLE ASSETS SHALL BE DISTRIBUTED IN
ACCORDANCE WITH CLAUSE 34 OF THE CONSTITUTION.

 

(C)                                                    THE COMPANY SHALL NOT
(AND THE MEMBERS SHALL PROCURE THAT THE COMPANY DOES NOT) MAKE ANY DISTRIBUTIONS
AFTER AN ASSET SALE OTHER THAN IN ACCORDANCE WITH THIS CLAUSE 8.8.

 

30

--------------------------------------------------------------------------------

 

(D)                                                   ANY AMENDMENT TO CLAUSE 34
OF THE CONSTITUTION MUST HAVE THE PRIOR WRITTEN APPROVAL OF THE ANZ MEMBER.

 

9.                                                        Issue of Shares

 

(A)                                                    IF THE COMPANY WISHES TO
ISSUE ANY SHARES, OTHER THAN THE SHARES UNDER CLAUSE 3.2, (“SUBSCRIPTION
SHARES”), IT MUST FIRST COMPLY WITH THE PROCEDURE IN THIS CLAUSE 9.

 

(B)                                                   THE COMPANY MUST GIVE A
NOTICE (“SUBSCRIPTION NOTICE”) TO EACH MEMBER SPECIFYING:

 

(I)                                                         THE NAME OF THE
PERSON(S) TO WHOM IT PROPOSES TO ISSUE THE SUBSCRIPTION SHARES (THE
“SUBSCRIBERS”);

 

(II)                                                      THE NUMBER OF
SUBSCRIPTION SHARES PROPOSED TO BE ISSUED TO EACH SUBSCRIBER;

 

(III)                                                   THE PRICE AT WHICH THE
COMPANY WISHES TO ISSUE THE SUBSCRIPTION SHARES TO EACH SUBSCRIBER AND ANY OTHER
MATERIAL TERMS OF THE PROPOSED TRANSACTION (THE “SUBSCRIPTION TERMS”);

 

(IV)                                                  THAT THE SUBSCRIPTION
SHARES ARE OFFERED TO THE MEMBER ON THE SUBSCRIPTION TERMS IN PROPORTION TO THE
AMOUNT OF SHARES HELD BY THAT MEMBER RELATIVE TO THE TOTAL NUMBER OF SHARES; AND

 

(V)                                                     THAT THE MEMBER HAS 10
BUSINESS DAYS FOLLOWING RECEIPT OF THE SUBSCRIPTION NOTICE TO NOTIFY THE COMPANY
IN WRITING WHETHER IT IS WILLING TO SUBSCRIBE FOR THE SUBSCRIPTION SHARES.

 

(C)                                                    IF THE MEMBER NOTIFIES
THE COMPANY IN ACCORDANCE WITH CLAUSE 9(B)(V) THAT IT IS WILLING TO SUBSCRIBE
FOR THE SUBSCRIPTION SHARES OFFERED UNDER CLAUSE 9(B)(IV), THE COMPANY IS
OBLIGED, SUBJECT TO RECEIPT OF THE CASH CONSIDERATION OFFERED UNDER THE
SUBSCRIPTION TERMS, TO ISSUE THE SUBSCRIPTION SHARES OFFERED TO THE MEMBER UNDER
CLAUSE 9(A)(IV) TO THE MEMBER.

 

(D)                                                   IF ALL THE SUBSCRIPTION
SHARES HAVE NOT BEEN ISSUED UNDER THE PRECEDING PARAGRAPHS OF THIS CLAUSE, THE
COMPANY MUST OFFER IN WRITING (SECOND NOTICE) THE SHORTFALL TO THE MEMBER WHICH
SUBSCRIBED UNDER PARAGRAPH (C) THE RIGHT TO SUBSCRIBE FOR THE BALANCE OF THE
SUBSCRIPTION SHARES AND THAT MEMBER HAS 10 BUSINESS DAYS FOLLOWING RECEIPT OF
THE SECOND NOTICE TO NOTIFY THE COMPANY IN WRITING WHETHER IT IS WILLING TO
SUBSCRIBE FOR THE SUBSCRIPTION SHARES.

 

(E)                                                    IF ALL THE SUBSCRIPTION
SHARES HAVE NOT BEEN ISSUED UNDER PARAGRAPH (D), THE COMPANY MAY, AT ANY TIME
WITHIN 25 BUSINESS DAYS AFTER THE PRE-EMPTION PROCEDURE UNDER THIS CLAUSE 9 HAS
BEEN EXHAUSTED, ISSUE THE SUBSCRIPTION SHARES TO ANY PERSON OR PERSONS ON TERMS
THAT ARE NO MORE FAVOURABLE (TO THOSE PERSONS) THAN THE SUBSCRIPTION TERMS.

 

31

--------------------------------------------------------------------------------

 

10.                                                 Exit

 

10.1                                          Intention to exit

 

(A)                                                    IT IS ANZ’S INTENTION
THAT IT EXIT ITS INVESTMENT IN THE GROUP COMPANIES WITHIN 5 YEARS OF COMPLETION.

 

(B)                                                   THE PARTIES WILL USE THEIR
RESPECTIVE BEST ENDEAVOURS TO FACILITATE ANZ EXITING ITS INVESTMENT IN THE GROUP
COMPANIES WITHIN 5 YEARS OF COMPLETION IN ACCORDANCE WITH THE MECHANISMS
PROVIDED FOR IN THIS CLAUSE 10, HOWEVER NOTHING IN THIS CLAUSE 10.1(B) REQUIRES
CHANNELL, THE CHANNELL MEMBER OR THE COMPANY TO EXERCISE THE CALL OPTION.

 

10.2                                          Sale or Listing

 

(A)                                                    AT ANY TIME ON OR AFTER
THE FIFTH ANNIVERSARY OF THE COMPLETION DATE, EITHER THE ANZ MEMBER OR THE
CHANNELL MEMBER (THE “EXIT MEMBER”) MAY NOTIFY THE OTHER PARTIES IN WRITING THAT
IT WISHES THE COMPANY TO UNDERTAKE A SALE OR LISTING (AN “EXIT NOTICE”).

 

(B)                                                   WITHIN 40 BUSINESS DAYS OF
RECEIPT OF AN EXIT NOTICE, ANY PARTY RECEIVING THE EXIT NOTICE (“RECEIVER”) MAY
ISSUE A NOTICE IN WRITING TO THE EXIT MEMBER THAT IT WISHES TO BUY ALL (BUT NOT
SOME) OF THE EXIT MEMBER’S SHARES, SPECIFYING:

 

(I)                                                         THE DATE FOR
COMPLETION OF THE TRANSFER OF THE EXIT MEMBER’S SHARES, WHICH MUST NOT BE LESS
THAN 15 BUSINESS DAYS AND NOT MORE THAN 2 MONTHS AFTER THE DATE OF THE NOTICE;
AND

 

(II)                                                      THE PRICE PER SHARE
WHICH THE RECEIVER PROPOSES TO PAY TO THE EXIT MEMBER FOR THE TRANSFER OF ITS
SHARES.

 

(C)                                                    WITHIN 10 BUSINESS DAYS
OF THE RECEIPT OF THE NOTICE UNDER PARAGRAPH (B), THE EXIT MEMBER MUST:

 

(I)                                                         NOTIFY THE RECEIVER
THAT IT ACCEPTS THE PRICE PER SHARE OFFERED BY THE RECEIVER FOR THE TRANSFER OF
ITS SHARES UNDER CLAUSE 10.2(B)(II); OR

 

(II)                                                      APPOINT AN INDEPENDENT
VALUER TO DETERMINE THE FAIR MARKET VALUE.

 

(D)                                                   THE EXIT MEMBER IS
OBLIGED, SUBJECT TO RECEIPT OF THE CASH CONSIDERATION OFFERED UNDER THE NOTICE,
TO TRANSFER ALL OF ITS SHARES TO THE ISSUER OF THE NOTICE AT EITHER:

 

(I)                                                         THE PRICE PER SHARE
OFFERED BY THE RECEIVER FOR THE TRANSFER OF ITS SHARES UNDER CLAUSE 10.2(B)(II),
IF THAT PRICE WAS ACCEPTED BY THE EXIT MEMBER UNDER CLAUSE 10.2(C)(I); OR

 

(II)                                                      THE PRICE PER SHARE
EQUAL TO THE FAIR MARKET VALUE DIVIDED BY THE TOTAL NUMBER OF SHARES ON ISSUE IF
THE EXIT MEMBER APPOINTED AN INDEPENDENT VALUER UNDER CLAUSE 10.2(C)(II),

 

32

--------------------------------------------------------------------------------

 

AND THE DATE FOR COMPLETION OF THE TRANSFER OF THE EXIT MEMBER’S SHARES WILLL BE
THE DATE SET OUT IN CLAUSE 10.2(B)(I) (IF CLAUSE 10.2(D)(I) APPLIES) OR 5
BUSINESS DAYS AFTER THE DATE THE INDEPENDENT VALUER NOTIFIES THE MEMBERS OF THE
FAIR MARKET VALUE (IF CLAUSE 10.2(D)(II) APPLIES).

 

(E)                                                    WITHOUT LIMITING CLAUSE
8.6, IF THE COMPANY WISHES TO BUY BACK THE EXIT MEMBER’S SHARES UNDER THIS
CLAUSE 10.2:

 

(I)                                                         THE COMPANY MUST
COMPLY WITH THE REQUIREMENTS OF PART 2J.1 OF THE ACT; AND

 

(II)                                                      EACH PARTY MUST DO AND
PERFORM ALL SUCH ACTS AND ENTER INTO SUCH INSTRUMENTS AS ARE WITHIN ITS POWER
(IN ANY CAPACITY), AND USE ITS BEST ENDEAVOURS TO PROCURE OTHERS TO DO AND
PERFORM SUCH ACTS AND ENTER INTO SUCH INSTRUMENTS, AS ARE NECESSARY OR DESIRABLE
TO GIVE EFFECT TO THE BUY BACK INCLUDING:

 

(A)                                                    VOTING IN FAVOUR OF THE
BUY BACK AT ANY SHAREHOLDER MEETINGS THAT MAY BE REQUIRED;

 

(B)                                                      ENTERING INTO ANY BUY
BACK AGREEMENT THAT MAY BE REQUIRED TO EFFECT THE BUY BACK; AND

 

(C)                                                      LODGING ALL NECESSARY
DOCUMENTS AND GIVING ALL NECESSARY NOTIFICATIONS OF THE BUY BACK TO ANY
REGULATORY AUTHORITIES.

 

(F)                                                      IF NO NOTICE IS ISSUED
WITHIN THE PERIOD REFERRED TO IN CLAUSE 10.2(B), THEN:

 

(I)                                                         THE COMPANY MUST
APPOINT AN INDEPENDENT ADVISER TO ADVISE ON AND IMPLEMENT A SALE OR LISTING; AND

 

(II)                                                      THE PARTIES MUST,
SUBJECT TO CLAUSE 10.2(G) AND THEIR RESPECTIVE FIDUCIARY AND STATUTORY
OBLIGATIONS, DO ALL THINGS REASONABLY REQUIRED OF THEM TO FACILITATE A SALE OR
LISTING.

 

(G)                                                   PRIOR TO COMPLETION OF THE
SALE OR LISTING, A MEMBER MAY NOTIFY THE OTHER MEMBER AND THE COMPANY IN WRITING
THAT IT REQUIRES THAT MEMBER TO FOLLOW THE PRE-EMPTION PROCEDURE UNDER CLAUSE
8.3 IN RESPECT OF THE SHARES HELD BY THAT MEMBER, IN WHICH CASE REFERENCES IN
CLAUSE 8.3 TO:

 

(I)                                                         THE “PRE-EMPTION
MEMBER” WILL BE DEEMED TO BE A REFERENCE TO THE MEMBER ISSUING THE NOTICE UNDER
THIS CLAUSE10.2(G);

 

(II)                                                      THE “PRE-EMPTION
VENDOR” WILL BE DEEMED TO BE A REFERENCE TO THE MEMBER RECEIVING THE NOTICE
UNDER THIS CLAUSE 10.2(G); AND

 

(III)                                                   THE “PRE-EMPTION PRICE”
WILL BE TO:

 

(A)                                                    IN RESPECT OF A SALE, THE
DIRECTORS’ BONA FIDE ESTIMATION OF THE PRICE PER SHARE EXPRESSED AS A CASH PRICE
(WHETHER THE CONSIDERATION UNDER THE SALE IS TO BE SATISFIED IN CASH, SHARES OR
OTHERWISE) DUE TO BE PAID ON COMPLETION OF THE SALE (OR, WHERE

 

33

--------------------------------------------------------------------------------

 

THE SALE IS FOR ONLY PART OF THE SHARES, THE AMOUNT WHICH WOULD HAVE BEEN PAID
IF ALL OF THE SHARES HAD BEEN ACQUIRED AT THE SAME PRICE PER SHARE AS THE SHARES
COMPRISED IN THE SALE), PROVIDED THAT IF ANY SHARES THAT ARE OFFERED AS
CONSIDERATION UNDER THE SALE ARE QUOTED ON A RECOGNISED STOCK EXCHANGE, THE
PRICE PER SHARE OF THOSE SHARES WILL BE DEEMED TO BE THE CLOSING PRICE PER SHARE
OF THE SHARES ON THAT STOCK EXCHANGE ON THE TRADING DAY IMMEDIATELY PRIOR TO
COMPLETION OF THE SALE; OR

 

(B)                                                      IN RESPECT OF A
LISTING, THE PRICE PER SHARE AT WHICH ORDINARY SHARES ARE PROPOSED TO BE ISSUED
OR SOLD IN CONNECTION WITH THE PROPOSED LISTING, BEING:

 

(1)                                               IN THE CASE OF AN OFFER FOR
ISSUE OR SALE, THE UNDERWRITTEN PRICE OR, IF APPLICABLE, THE MINIMUM PRICE AT
WHICH ORDINARY SHARES ARE TO BE ISSUED OR SOLD IN CONNECTION WITH THE LISTING;
AND

 

(2)                                               IN THE CASE OF A PLACING, THE
PLACING PRICE.

 

(H)                                                   IN THE EVENT OF A SALE OR
A LISTING WITHIN 6 MONTHS OF THE DATE OF THE NOTICE REFERRED TO IN CLAUSE
10.2(F) WHICH VALUES THE SHARES AT A PRICE PER SHARE HIGHER THAN THE PRICE PER
SHARE PAID TO THE ANZ MEMBER PURSUANT TO CLAUSE 10.2(F), CHANNELL MUST PAY TO
THE ANZ MEMBER AN AMOUNT EQUAL TO THE DIFFERENCE PER SHARE MULTIPLIED BY THE
NUMBER OF SHARES TRANSFERRED PURSUANT TO CLAUSE 10.2(F).  IF ANY SHARES THAT ARE
OFFERED AS CONSIDERATION UNDER THE SALE ARE QUOTED ON A RECOGNISED STOCK
EXCHANGE, THE PRICE PER SHARE OF THOSE SHARES WILL BE DEEMED TO BE THE CLOSING
PRICE PER SHARE OF THE SHARES ON THAT STOCK EXCHANGE ON THE TRADING DAY
IMMEDIATELY PRIOR TO COMPLETION OF THE SALE.  IF ANY SHARES THAT ARE OFFERED AS
CONSIDERATION UNDER THE SALE ARE NOT QUOTED ON A RECOGNISED STOCK EXCHANGE, THEN
CHANNELL SHALL, ACTING REASONABLY AND IN GOOD FAITH, DETERMINE THE VALUE OF
THOSE SHARES.

 

(I)                                                       IF THE INDEPENDENT
VALUER IS APPOINTED PURSUANT TO THIS AGREEMENT TO DETERMINE FAIR MARKET VALUE
THEN THE FOLLOWING PROVISIONS APPLY: (I) THE INDEPENDENT VALUER HAS 15 BUSINESS
DAYS FROM THEIR APPOINTMENT TO DETERMINE THE FAIR MARKET VALUE; (II) THE MEMBERS
AND COMPANY MUST PROVIDE REASONABLE ASSISTANCE TO THE INDEPENDENT VALUER
(INCLUDING REASONABLY FULL ACCESS DURING BUSINESS HOURS TO THE BOOKS AND RECORDS
OF THE GROUP COMPANIES AND TO THE GROUP COMPANIES PERSONNEL AND ACCOUNTANTS);
(III) THE MEMBERS MAY MAKE SUBMISSIONS TO THE INDEPENDENT VALUER (A COPY OF
WHICH MUST BE PROVIDED TO THE OTHER MEMBER); (IV) THE INDEPENDENT VALUER ACTS AS
AN EXPERT AND NOT AN ARBITRATOR; AND (V) THE EXPERT’S DETERMINATION IS FINAL AND
BINDING ON THE PARTIES, IN THE ABSENCE OF MANIFEST ERROR OR FRAUD.

 

10.3                                          Call Option

 

(A)                                                    THE ANZ MEMBER GRANTS TO
THE COMPANY, CHANNELL AND THE CHANNELL MEMBER AN OPTION TO ACQUIRE ALL OF THE
SHARES HELD BY THE ANZ MEMBER (“CALL OPTION”) ON THE TERMS OF THIS CLAUSE 10.3.

 

34

--------------------------------------------------------------------------------

 

(B)                                                   THE CALL OPTION MAY BE
EXERCISED BY THE COMPANY, CHANNELL OR THE CHANNELL MEMBER AT ANY TIME ON OR
AFTER THE SECOND ANNIVERSARY OF THE COMPLETION DATE BY GIVING A NOTICE (“CALL
OPTION NOTICE”) TO THE ANZ MEMBER.

 

(C)                                                    THE CALL OPTION NOTICE
MUST SPECIFY:

 

(I)                                                         THE DATE FOR
COMPLETION OF THE TRANSFER OF THE ANZ MEMBER’S SHARES TO THE ISSUER OF THE CALL
OPTION NOTICE, WHICH MUST NOT BE LESS THAN 15 BUSINESS DAYS AND NOT MORE THAN 2
MONTHS AFTER THE DATE OF THE CALL OPTION NOTICE;

 

(II)                                                      THE PRICE PER SHARE
WHICH THE ISSUER OF THE CALL OPTION NOTICE PROPOSES TO PAY TO THE ANZ MEMBER FOR
THE TRANSFER OF ITS SHARES PURSUANT TO THE CALL OPTION.

 

(D)                                                   WITHIN 10 BUSINESS DAYS OF
THE RECEIPT OF THE NOTICE UNDER PARAGRAPH (B), THE ANZ MEMBER MUST:

 

(I)                                                         NOTIFY THE ISSUER OF
THE CALL OPTION NOTICE THAT IT ACCEPTS THE PRICE PER SHARE NOMINATED BY THE
ISSUER OF THE CALL OPTION NOTICE FOR THE TRANSFER OF ITS SHARES UNDER CLAUSE
10.3(C)(II); OR

 

(II)                                                      APPOINT AN INDEPENDENT
VALUER TO DETERMINE THE FAIR MARKET VALUE.

 

(E)                                                    THE ANZ MEMBER IS
OBLIGED, SUBJECT TO RECEIPT OF THE CASH CONSIDERATION OFFERED UNDER THE CALL
OPTION, TO TRANSFER ALL OF ITS SHARES TO THE ISSUER OF THE CALL OPTION NOTICE AT
EITHER:

 

(I)                                                         THE PRICE PER SHARE
OFFERED BY THE ISSUER OF THE CALL OPTION NOTICE FOR THE TRANSFER OF ITS SHARES
UNDER CLAUSE 10.3(C)(II), IF THAT PRICE WAS ACCEPTED BY THE ANZ MEMBER UNDER
CLAUSE 10.3(D)(I); OR

 

(II)                                                      THE PRICE PER SHARE
EQUAL TO THE FAIR MARKET VALUE DIVIDED BY THE TOTAL NUMBER OF SHARES, IF THE ANZ
MEMBER APPOINTED AN INDEPENDENT VALUER UNDER CLAUSE 10.3(D)(II),

 

AND THE DATE FOR COMPLETION OF THE TRANSFER OF THE ANZ MEMBER’S SHARES TO THE
ISSUER OF THE CALL OPTION NOTICE WILL BE THE DATE SPECIFIED IN CLAUSE 10.3(C)(I)
(IF CLAUSE 10.3(E)(I) APPLIES) OR 5 BUSINESS DAYS AFTER THE DATE THE INDEPENDENT
VALUER NOTIFIES THE MEMBERS OF THE FAIR MARKET VALUE (IF CLAUSE 10.3(E)(II)
APPLIES).

 

(F)                                                      WITHOUT LIMITING CLAUSE
8.6, IF THE COMPANY WISHES TO BUY BACK THE ANZ MEMBER’S SHARES UNDER THIS CLAUSE
10.3:

 

(I)                                                         THE COMPANY MUST
COMPLY WITH THE REQUIREMENTS OF PART 2J.1 OF THE ACT; AND

 

(II)                                                      EACH PARTY MUST DO AND
PERFORM ALL SUCH ACTS AND ENTER INTO SUCH INSTRUMENTS AS ARE WITHIN ITS POWER
(IN ANY CAPACITY), AND USE ITS BEST ENDEAVOURS TO PROCURE OTHERS TO DO AND
PERFORM SUCH ACTS AND ENTER INTO SUCH INSTRUMENTS, AS ARE NECESSARY OR DESIRABLE
TO GIVE EFFECT TO THE BUY BACK INCLUDING:

 

35

--------------------------------------------------------------------------------

 

(A)                                                    VOTING IN FAVOUR OF THE
BUY BACK AT ANY SHAREHOLDER MEETINGS THAT MAY BE REQUIRED;

 

(B)                                                      ENTERING INTO ANY BUY
BACK AGREEMENT THAT MAY BE REQUIRED TO EFFECT THE BUY BACK; AND

 

(C)                                                      LODGING ALL NECESSARY
DOCUMENTS AND GIVING ALL NECESSARY NOTIFICATIONS OF THE BUY BACK TO ANY
REGULATORY AUTHORITIES.

 

(G)                                                   IN THE EVENT OF A SALE OR
A LISTING WITHIN 6 MONTHS OF THE DATE OF THE CALL OPTION NOTICE WHICH VALUES (IN
CHANNELL’S REASONABLE OPINION) THE SHARES AT A PRICE PER SHARE HIGHER THAN THE
PRICE PER SHARE PAID TO THE ANZ MEMBER PURSUANT THE CALL OPTION, CHANNELL MUST
PAY TO THE ANZ MEMBER AN AMOUNT EQUAL TO THE DIFFERENCE PER SHARE MULTIPLIED BY
THE NUMBER OF SHARES TRANSFERRED PURSUANT TO THE CALL OPTION.  IF ANY SHARES
THAT ARE OFFERED AS CONSIDERATION UNDER THE SALE ARE QUOTED ON A RECOGNISED
STOCK EXCHANGE, THE PRICE PER SHARE OF THOSE SHARES WILL BE DEEMED TO BE THE
CLOSING PRICE PER SHARE OF THE SHARES ON THAT STOCK EXCHANGE ON THE TRADING DAY
IMMEDIATELY PRIOR TO COMPLETION OF THE SALE.  IF ANY SHARES THAT ARE OFFERED AS
CONSIDERATION UNDER THE SALE ARE NOT QUOTED ON A RECOGNISED STOCK EXCHANGE, THEN
CHANNELL SHALL, ACTING REASONABLY AND IN GOOD FAITH, DETERMINE THE VALUE OF
THOSE SHARES.

 

11.                                                 New Shareholders

 

11.1                                          Deed of Adherence

 

Shares in the capital of the Company must not be issued or transferred to a New
Shareholder unless:

 

(A)                                                    AT THE TIME OF OR PRIOR
TO ANY ALLOTMENT OR TRANSFER THE NEW SHAREHOLDER ENTERS INTO A DEED OF ADHERENCE
IN THE FORM SET OUT IN ANNEXURE 4; AND

 

(B)                                                   IF THE NEW SHAREHOLDER IS
TO BE BOUND BY THIS AGREEMENT IN THE CAPACITY OF AN INVESTOR, THE INVESTORS HAVE
APPROVED IN WRITING THE NEW SHAREHOLDER BEING TREATED AS AN INVESTOR UNDER THIS
AGREEMENT.

 

11.2                                          Assignment

 

(A)                                                    AN INVESTOR MAY ASSIGN
THE BENEFIT OF THIS AGREEMENT (INCLUDING THE BENEFIT OF THE WARRANTIES AND THE
COVENANTS GIVEN TO THE INVESTOR) TO A PERSON TO WHOM IT TRANSFERS SHARES IN
ACCORDANCE WITH THIS AGREEMENT AND THE CONSTITUTION.

 

(B)                                                   SUBJECT TO CLAUSE 11.2(A),
NO PARTY MAY ASSIGN OR IN ANY OTHER WAY DISPOSE OF ANY OF ITS RIGHTS OR
OBLIGATIONS UNDER THIS AGREEMENT WITHOUT OBTAINING THE PRIOR WRITTEN CONSENT OF
THE OTHER PARTIES, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD.

 

36

--------------------------------------------------------------------------------

 

12.                                                 Fees and costs

 

12.1                                          Capital raising fee

 

Within 10 days of Completion or, to the extent that any payment requires the
approval of the Company’s shareholders, after the expiry of the period described
in section 260B(6) of the Act, the Company must pay to ANZ (or as ANZ directs) a
capital raising fee of $300,000.

 

12.2                                          Investors’ costs

 

On Completion or, to the extent that any payment requires the approval of the
Company’s shareholders, after the expiry of the period described in section
260B(6) of the Act, the Company must pay the reasonable costs and expenses of
the Investors in connection with the negotiation, preparation, execution and
completion of this Agreement, the Acquisition Agreement and the Financing
Documents and all documents referred to in them up to a maximum amount of
$60,000.

 

13.                                                 Duration

 

13.1                                          Termination

 

(A)                                                    THIS AGREEMENT WILL
TERMINATE:

 

(I)                                                         IN RESPECT OF ALL
PARTIES, ON A SALE OR LISTING;

 

(II)                                                      WITH RESPECT TO A
MEMBER, UPON THAT MEMBER CEASING TO BE A SHAREHOLDER IN THE COMPANY (EXCEPT FOR
CLAUSES 1, 5, 14, 16 AND 17);

 

(III)                                                   WHEN ALL THE PARTIES SO
AGREE IN WRITING.

 

(B)                                                   IF EITHER INVESTOR
MATERIALLY BREACHES THIS AGREEMENT AND FAILS TO REMEDY THE BREACH WITHIN 1 MONTH
OF BEING GIVEN WRITTEN NOTICE BY THE OTHER INVESTOR TO DO SO, THE INVESTOR NOT
IN BREACH MAY PURCHASE ALL OF THE SHARES HELD BY THE OTHER INVESTOR (AND/OR ALL
SHARES HELD BY A PERMITTED TRANSFEREE OF THAT INVESTOR UNDER CLAUSE 8.2) AT A
PRICE PER SHARE CALCULATED IN ACCORDANCE WITH THE FOLLOWING FORMULA:

 

95%

X

A

 

 

B

 

WHERE:

 

A = THE FAIR MARKET VALUE; AND

 

B = THE TOTAL NUMBER OF SHARES.

 

37

--------------------------------------------------------------------------------

 

IN WHICH CASE, THE INVESTOR IN BREACH AND/OR ITS PERMITTED TRANSFEREES, AS THE
CASE MAY BE, MUST TRANSFER ALL OF THEIR SHARES TO THE INVESTOR NOT IN BREACH.

 

13.2                                          Continuing rights and obligations

 

Termination of this Agreement under clause 13.1 does not prejudice the rights,
obligations or liabilities of any party which have accrued or arisen prior to
termination.

 

14.                                                 Confidentiality and
announcements

 

14.1                                          Provisions to remain confidential

 

Except as permitted under clause 14.2, each party will not (and will procure
that its, and its Related Bodies’ Corporate, employees, officers, agents,
consultants, professional advisers and Related Bodies Corporate will not)
disclose the content or effect of this Agreement or the identity of the
Investors or any Related Bodies Corporate of the Investors.

 

14.2                                          Permitted disclosures

 

A party may make disclosures:

 

(A)                                                    TO THE EXTENT PERMITTED
BY THE ACQUISITION AGREEMENT;

 

(B)                                                   TO THOSE OF ITS EMPLOYEES
AND OFFICERS AS THE PARTY REASONABLY THINKS NECESSARY TO GIVE EFFECT TO THIS
AGREEMENT BUT ONLY ON A CONFIDENTIAL BASIS;

 

(C)                                                    TO THOSE OF ITS
PROFESSIONAL OR FINANCIAL ADVISERS, INSURANCE BROKERS AND BANKERS FOR THE
PURPOSE OF OBTAINING ADVICE OR ASSISTANCE IN CONNECTION WITH ITS OBLIGATIONS OR
RIGHTS OR THE RIGHTS OF ANY OTHER PARTY UNDER THIS AGREEMENT PROVIDED THAT SUCH
PERSON IS SUBJECT TO OBLIGATIONS OF CONFIDENTIALITY SUBSTANTIALLY SIMILAR TO OR
GREATER THAN THOSE CONTAINED IN THIS CLAUSE 14;

 

(D)                                                   IF REQUIRED BY LAW, AFTER
THE FORM AND TERMS OF THAT DISCLOSURE HAVE BEEN NOTIFIED TO THE OTHER PARTIES
AND THE OTHER PARTIES HAVE HAD A REASONABLE OPPORTUNITY TO COMMENT ON THE FORM
AND TERMS AND ALL REASONABLE REQUESTS CONTAINED IN SUCH COMMENTS HAVE BEEN
COMPLIED WITH;

 

(E)                                                    IF BY AN INVESTOR, TO THE
EXTENT PERMITTED BY CLAUSE 6.5; AND/OR

 

(F)                                                      TO THE EXTENT THAT THE
INFORMATION DISCLOSED IS OR BECOMES AVAILABLE TO THE PUBLIC OTHER THAN BY REASON
OF A BREACH OF THIS AGREEMENT OR OTHER LEGALLY BINDING OBLIGATION.

 

14.3                                          Public Announcements

 

Either party may, after completion, publish a tombstone advertisement or issue
an Australian Venture Capital Journal press release which discloses their
investment in the Company or the purchase under the Acquisition Agreement,
including the amount of their investment and the name of the Company, without
obtaining approval from the Company or any of the other parties to this
Agreement provided that the party wishing to publish the advertisement or issue

 

38

--------------------------------------------------------------------------------

 

the press release has first consulted with the other parties as to, and has
given them a reasonable opportunity to comment on, the form and content of the
advertisement and/or press release.

 

15.                                                 Investors’ obligations and
rights

 

15.1                                          Several and not Joint

 

The obligations of the Investors in this Agreement are several and not joint.

 

15.2                                          Separate Warranties and
undertakings

 

Every Warranty or undertaking in this Agreement which is expressed to be given
to the Investors is given to each Investor separately.

 

15.3                                          Exercise of Investors’ rights

 

In relation to the enforcement of any of the obligations owed to the Investors
(other than obligations owed to a single Investor) by the Company under this
Agreement, the Investors agree that no claim will be brought by any one of the
Investors without the prior written consent of the other Investor (such consent
not to be unreasonably withheld).

 

15.4                                          Waiver of Investors’ rights

 

Any liability owed to the Investors (other than obligations owed to a single
Investor) by the Company under this Agreement may only be released, compounded
or compromised (in whole or in part) with the prior written consent of the other
Investor (such consent not to be unreasonably withheld).

 

16.                                                 Notices

 

16.1                                          Requirements

 

All notices must be:

 

(A)                                                    IN LEGIBLE WRITING AND IN
ENGLISH;

 

(B)                                                   ADDRESSED TO THE RECIPIENT
AT THE ADDRESS OR FACSIMILE NUMBER SET OUT BELOW OR TO SUCH OTHER ADDRESS OR
FACSIMILE NUMBER AS THAT PARTY MAY NOTIFY TO THE OTHER PARTIES:

 

to the Company:

Address: 391 Park Road, Unit Q5, Regents Park NSW 2143;

Attention: Chairman;

Facsimile no: +61 2 9738 9763;

 

to Channell

Address: 26040 Ynez Road, Temecula CA USA

Attention: William H Channell, Jr;

 

39

--------------------------------------------------------------------------------

 

Facsimile no: +1 909 296 3965;

 

to ANZ

Address: Level 17, 20 Martin Place, Sydney NSW 2000

Attention: Kevin Cooney;

Facsimile no: +61 2 9232 7469;

 

(C)                                                    SIGNED BY THE PARTY OR
WHERE THE SENDER IS A COMPANY BY AN AUTHORISED OFFICER OF THAT COMPANY; AND

 

(D)                                                   SENT TO THE RECIPIENT BY
HAND, PREPAID POST (AIRMAIL IF TO OR FROM A PLACE OUTSIDE AUSTRALIA) OR
FACSIMILE.

 

16.2                                          Receipt

 

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:

 

(A)                                                    IF SENT BY HAND WHEN LEFT
AT THE ADDRESS OF THE RECIPIENT;

 

(B)                                                   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

 

(C)                                                    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,
recipient’s local time, the notice is deemed to be duly received by the
recipient at 9.00 am on the first Business Day after that day.

 

17.                                                 General provisions

 

17.1                                          Entire agreement

 

This Agreement and any documents referred to in this Agreement or executed in
connection with this Agreement is the entire agreement of the parties about the
subject matter of this Agreement and supersedes all other representations,
negotiations, arrangements, understandings, agreements and communications.  No
party has entered into this Agreement relying on any representations made by or
on behalf of another, other than those expressly made in this Agreement.

 

17.2                                          Further assurances

 

Each party must, at its own expense, whenever reasonably requested by another
party, promptly do or arrange for others to do (so far as it is able),
everything reasonably necessary that is lawful and within its power to give full
effect to this Agreement and the transactions contemplated by this Agreement.

 

40

--------------------------------------------------------------------------------

 

17.3                                          Conflict with the Constitution

 

To the extent permitted by law:

 

(A)                                                    IF THERE IS ANY CONFLICT
OR INCONSISTENCY BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE CONSTITUTION,
THIS AGREEMENT PREVAILS; AND

 

(B)                                                   THE MEMBERS WILL TAKE SUCH
STEPS AS ARE NECESSARY AND WITHIN THEIR POWER TO AMEND THE CONSTITUTION
(INCLUDING PASSING ALL SHAREHOLDER RESOLUTIONS PROPOSED BY THE BOARD) TO RECTIFY
ANY SUCH INCONSISTENCY FROM TIME TO TIME.

 

17.4                                          Invalid or unenforceable
provisions

 

If a provision of this Agreement is invalid or unenforceable in a jurisdiction:

 

(A)                                                    IT IS TO BE READ DOWN OR
SEVERED IN THAT JURISDICTION TO THE EXTENT OF THE INVALIDITY OR
UNENFORCEABILITY; AND

 

(B)                                                   THAT FACT DOES NOT AFFECT
THE VALIDITY OR ENFORCEABILITY OF:

 

(I)                                                         THAT PROVISION IN
ANOTHER JURISDICTION; OR

 

(II)                                                      THE REMAINING
PROVISIONS.

 

17.5                                          No merger

 

The warranties, representations, covenants, undertakings and promises made by
the parties under this Agreement are continuing and will not merge or be
extinguished on Completion.

 

17.6                                          Waiver and exercise of rights

 

(A)                                                    A WAIVER OF A PROVISION
OF OR OF A RIGHT UNDER THIS AGREEMENT IS BINDING ON THE PARTY GRANTING THE
WAIVER ONLY IF IT IS GIVEN IN WRITING AND IS SIGNED BY THE PARTY OR AN
AUTHORISED OFFICER OF THE PARTY GRANTING THE WAIVER.

 

(B)                                                   A WAIVER IS EFFECTIVE ONLY
IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH IT IS GIVEN AND
MAY BE GIVEN ON SUCH TERMS AND CONDITIONS AS THE WAIVING PARTY CONSIDERS
APPROPRIATE.

 

(C)                                                    A SINGLE OR PARTIAL
EXERCISE OF A RIGHT BY A PARTY DOES NOT PRECLUDE ANOTHER EXERCISE OR ATTEMPTED
EXERCISE OF THAT RIGHT OR THE EXERCISE OF ANOTHER RIGHT.

 

(D)                                                   FAILURE BY A PARTY TO
EXERCISE OR DELAY IN EXERCISING A RIGHT DOES NOT PREVENT ITS EXERCISE OR OPERATE
AS A WAIVER.

 

17.7                                          Rights Cumulative

 

The rights, remedies and powers of the parties under this Agreement are
cumulative and not exclusive of any rights, remedies or powers provided to the
parties by law.

 

41

--------------------------------------------------------------------------------

 

17.8                                          Acknowledgment

 

Each party agrees that for the purpose of entering into the transactions
contemplated under this Agreement:

 

(A)                                                    IT HAS ENTERED INTO THE
TRANSACTIONS ENTIRELY ON THE BASIS OF ITS OWN ASSESSMENT OF THE RISKS AND THE
EFFECT OF THE TRANSACTIONS AFTER TAKING APPROPRIATE PROFESSIONAL ADVICE IN
RELATION TO SUCH MATTERS;

 

(B)                                                   EXCEPT AS SET OUT
EXPRESSLY IN THIS AGREEMENT, IT OWES NO DUTY OF CARE OR OTHER FIDUCIARY
OBLIGATION TO ANY OTHER PARTY;

 

(C)                                                    TO THE EXTENT THAT IT
OWES ANY DUTY OR OBLIGATION AS REFERRED TO IN CLAUSE 17.8(B) (WHETHER IN
CONTRACT, TORT OR OTHERWISE) (EXCEPT AS SET OUT EXPRESSLY IN THIS AGREEMENT) TO
ANY OTHER PARTY, THE PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
RIGHTS WHICH THE PARTY MAY HAVE IN RESPECT OF SUCH DUTY OF CARE OR FIDUCIARY
OBLIGATION.

 

17.9                                          Amendment

 

This Agreement may be amended only by a document signed by all parties provided
that if an Investor ceases to hold Shares, then as from that time it will cease
to be a party to this Agreement and this Agreement may be varied without
reference to, or the need for, the signature of that Investor.

 

17.10                                   Counterparts

 

This Agreement may be signed in counterparts and all counterparts taken together
constitute one document.

 

17.11                                   Governing law

 

This Agreement is governed by the laws of New South Wales.

 

17.12                                   Jurisdiction

 

Each party irrevocably and unconditionally:

 

(A)                                                    SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF NEW SOUTH WALES; AND

 

(B)                                                   WAIVES, WITHOUT
LIMITATION, ANY CLAIM OR OBJECTION BASED ON ABSENCE OF JURISDICTION OR
INCONVENIENT FORUM.

 

17.13                                   Consents or approvals

 

Unless a contrary intention is expressly stated, if the doing of any act, matter
or thing under this Agreement is dependent on the consent or approval of a party
or is within the discretion of a party, the consent or approval may be given or
the discretion may be exercised conditionally or unconditionally or withheld by
the party in its absolute discretion.

 

42

--------------------------------------------------------------------------------

 

17.14                                   GST

 

Unless otherwise expressly stated, all amounts payable under this Agreement are
expressed to be exclusive of GST.  If GST is payable on a Taxable Supply, the
amount payable for that Taxable Supply will be the amount expressed in this
Agreement plus GST.

 

17.15                                   Constitution

 

In the event of any inconsistency between this Agreement and the Constitution,
the provisions of this Agreement prevail.

 

Executed as an agreement

 

 

Signed by

 

)

 

 

 

Channell Bushman Pty Limited

 

)

 

 

 

by a director and secretary/director:

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Thomas Liguori

 

 

 

 

 

Signature of secretary/director

 

 

 

 

Signature of director

 

 

 

 

 

 

 

 

 

 

 

 

Thomas Liguori

 

 

 

 

 

Name of secretary/director (please print)

 

 

 

 

Name of director (please print)

 

 

Signed for and on behalf of

 

)

 

 

 

Channell Commercial Corporation

 

)

 

 

 

by its duly authorised representative

 

)

 

 

 

in the presence of:

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Ron Glatley

 

 

 

 

/s/ Thomas Liguori

Signature of witness

 

 

 

 

Signature of authorised representative

 

 

 

 

 

 

 

 

 

 

 

 

Ron Glatley

 

 

 

 

Thomas Liguori

Name of witness (please print)

 

 

 

 

Name of authorised representative

 

 

 

 

 

(please print)

 

43

--------------------------------------------------------------------------------

 

 

Signed for and on behalf of

 

)

 

 

 

Australia and New Zealand

 

)

 

 

 

Banking Group Limited

 

)

 

 

 

by a duly appointed attorney

 

)

 

 

 

in the presence of:

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature of witness

 

 

 

 

Signature of attorney (I have no notice of revocation of the power of attorney
under which I sign this document)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name of witness (please print)

 

 

 

 

Name of attorney (please print)

 

44

--------------------------------------------------------------------------------