Document:

Exhibit

Exhibit 10.2
Execution Version 

Portions of this Exhibit have been redacted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed. Information that was omitted has been noted in this document with a placeholder identified by the mark “[***]”.

Shareholders Agreement

The Shareholders detailed in Schedule 1

and

Novovet Pty Ltd

 

	
			
	Table of contents
	 

	1
	Definitions and interpretation
	2

	2
	Operation of this Agreement
	9

	3
	Board of Directors
	10

	4
	Board meetings
	11

	5
	Decision making
	12

	6
	Financial reporting
	13

	7
	Funding
	14

	8
	Dividend policy
	16

	9
	Encumbrances
	17

	10
	Employee Incentive Plan
	17

	11
	Anti-Dilution Right
	18

	12
	Transfer of Shares
	18

	13
	Procedure on Transfer of Shares
	20

	14
	Drag along rights
	24

	15
	Tag along rights
	25

	16
	Determination of Sale Price
	26

	17
	Provisions applying to all Transfers
	27

	18
	Confidentiality
	29

	19
	Public announcements
	31

	20
	Indemnity
	31

	21
	Party as trustee
	32

	22
	Default
	32

	23
	Resolution of deadlocks
	33

	24
	Termination
	36

	25
	Notices
	37

	26
	General
	38

	Schedule 1 - Shareholders
	41

	Schedule 2 - Matters requiring Special Majority Approval
	42

	 
	 
	 

Shareholders Agreement         page 1

 

Shareholders Agreement
Date ►26 April 2019
Parties
		
	1
	The Shareholders detailed in Schedule 1 (Shareholders)

		
	2
	Novovet Pty Ltd ACN 631 032 749 of 2806 Ipswich Road, Darra, Brisbane 4076 Queensland, Australia (Company)

Background
		
	A
	The Company was registered in Queensland on 16 January 2019.

		
	B
	The Company has entered into the Sub-Licence Agreement for the purposes of conducting the Business.

		
	C
	The Shareholders wish to enter into this Agreement to:

		
	(1)
	record their aims and objectives in relation to the Company;

		
	(2)
	regulate their rights and obligations as members of the Company;

		
	(3)
	provide for the admission (from time to time) of new shareholders to the Company; and

		
	(4)
	provide for the operation and administration of the Company.

It is agreed as follows.
		
	1
	Definitions and interpretation

		
	1.1
	Definitions

The following definitions apply in this document:
Accounting Standards means:
		
	(a)
	the accounting standards made by the Australian Accounting Standards Board in accordance with the Corporations Act, and the requirements of that Act relating to the preparation and content of financial statements; and

		
	(b)
	generally accepted accounting principles that are consistently applied in Australia, except those inconsistent with the standards or requirements referred to in paragraph (a).

Affiliate means in relation to a person (first-mentioned person):
		
	(a)
	a person that Controls or is Controlled by the first-mentioned person;

		
	(b)
	a Related Body Corporate of the first-mentioned person;

		
	(c)
	in the case of a party that is a trustee of a trust, includes any replacement trustee of that trust where there is no change to the ultimate beneficial owner of the Securities

Shareholders Agreement         page 2

 

Agreement means this document and includes any schedules or annexures.
Associate has the same meaning as "associate" in the Corporations Act and includes a person deemed to be an associate of a designated body within the meaning of section 12 of the Corporations Act.
Board means the board of Directors and includes any committee of that board.
Board Meeting means a meeting of the Board (or any committee of the Board) duly convened and held in accordance with this Agreement and the Constitution.
Business means an animal health pharmaceuticals and vaccines business utilising the Sub-Licensed IP within the scope of the Sub-Licensed Agreement or, subject to clause 5.2, any other business carried on by the Company from time to time.
Business Day means any day upon which banks are open for business in Brisbane, other than a Saturday, Sunday or public holiday in Brisbane.
Business Plan means the program current from time to time for the conduct of the Business during a Financial Year consisting of:
		
	(a)
	a business plan specifying the proposed marketing plans, finance arrangements, capital expenditures and activities of the Business during that Financial Year; and

		
	(b)
	a budget specifying an estimate of the income to be received and the expenses to be incurred in carrying out that business plan.

Chairperson means the chairperson of the Board from time to time appointed under clause 3.4.
Change of Control means, in relation to a Shareholder that is a body corporate or, in the case of a joint shareholding, includes a body corporate, the occurrence of an event or circumstance where a person who is not presently able to do any of the following things becomes able to do one of the following things (whether alone or together with any Associates and whether directly or indirectly or through one or more intervening persons, companies or trusts):
		
	(a)
	control the composition of more than one half of the body's board of directors;

		
	(b)
	be in a position to cast, or control the casting of, more than one half of the maximum number of votes that might be cast at a general meeting of the members of the body or its ultimate holding company; or

		
	(c)
	hold or have a beneficial interest in more than one half of the issued share capital of the or its ultimate holding company.

Confidential Information means:

Shareholders Agreement         page 3

 

		
	(a)
	the terms of this Agreement and its subject matter, including Information submitted or disclosed by a party during negotiations, discussions and meetings relating to this Agreement;

		
	(b)
	Information that at the time of disclosure by a Disclosing Party is identified to the Receiving Party as being confidential; and

		
	(c)
	all other Information belonging or relating to a Disclosing Party, or any Related Entity of that Disclosing Party, that is not generally available to the public at the time of disclosure other than by reason of a breach of this Agreement or which the Receiving Party knows, or ought reasonably to be expected to know, is confidential to that Disclosing Party or any Related Entity of that Disclosing Party.

Constitution means the constitution or other constituent document of the Company, as amended from time to time.
Corporations Act means Corporations Act 2001 (Cth).
Defaulting Party has the meaning set out in clause 22.2;
Directors means the directors of the Company for the time being and Director means one of them;
Disclosing Party means the party to whom Information belongs or relates;
Election Notice means a notice given by a Founding Shareholder under clause 13.9;
Employee Incentive Plan has the meaning in clause 10(a).
Encumbrance means:
		
	(a)
	any:

		
	(i)
	legal or equitable interest or power created, arising in or reserved in or over an interest in any property or asset; or

		
	(ii)
	security for payment of money, performance of obligations or protection against default (including a mortgage, bill of sale, charge, lien, pledge, trust, power or retention of title arrangement, right of set-off, assignment of income, garnishee order, monetary claim and flawed deposit arrangement); 

		
	(b)
	any thing or preferential interest or arrangement of any kind giving a person priority or preference over claims or other persons with respect to any property or asset;

		
	(c)
	a security interest as defined in the PPSA; or

		
	(d)
	any agreement or arrangement (whether legally binding or not) to grant or create anything referred to in paragraphs (a), (b) or (c);

Event of Default means, in relation to a Shareholder, the occurrence of any one or more of the following events or circumstances:

Shareholders Agreement         page 4

 

		
	(a)
	the Shareholder fails to comply with any of its obligations under this Agreement;

		
	(b)
	an Insolvency Event occurs in relation to the Shareholder;

		
	(c)
	a Change of Control occurs in relation to the Shareholder, other than with the prior written consent of the other Shareholders;

		
	(d)
	a notice of deregistration of the Shareholder (or in the case of a joint shareholding, any person comprising the Shareholder) is given under sections 601AA(5) or 601AB(5) of the Corporations Act.

Excluded Issue means:
		
	(a)
	an issue of Securities expressly contemplated under this document or the Sub-License Agreement;

		
	(b)
	an issue of Securities in connection with the First Close Raising;

		
	(c)
	an issue of Securities to Dyadic pursuant to the Anti-Dilution Right in clause 11;

		
	(d)
	Securities issued in connection with share splits or the issue of dividends which is approved by a Special Majority Vote of the Board;

		
	(e)
	an issue of Securities under an Employee Incentive Plan;

		
	(f)
	Securities issued as part of an IPO which is approved by a Special Majority vote of the Board;

		
	(g)
	Securities constituting all or part of the consideration for a bona-fide acquisition of assets or shares by the Group which is approved by the Required Resolution of the Board; or

		
	(h)
	an issue of Securities approved in writing by all Shareholders.

Financial Year means the 12 months period ending on 30 June or on another day decided by the Board.
First Close Raising means the raising of up to [***] via the issue of Securities provided that the maximum number of Securities that can be issued under the First Closing Raising is capped at [***] of the fully diluted share capital of the Company as at the date of this Agreement.
Founding Shareholder means JCL Biologics Pty Ltd (being an Affiliate of Luina Bio Pty Ltd).
Government Agency means any government or any public, statutory, governmental (including a local government), semi-governmental or judicial body, entity, department or authority and includes any self-regulatory organisation established under statute.
Information means any information, whether oral, graphic, electronic, written or in any other form, including:

Shareholders Agreement         page 5

 

		
	(a)
	forms, memoranda, letters, specifications, processes, procedures, statements, formulae, technology, inventions, trade secrets, research and development information, know how, designs, plans, photographs, microfiche, business records, notes, accounting procedures or financial information, sales and marketing information, names and details of customers, suppliers and agents, employee details, reports, drawings and data;

		
	(b)
	copies and extracts made of or from that information and data, whether translated from the original form, recompiled, partially copied, modified, updated or otherwise altered; and

		
	(c)
	samples or specimens (if any) disclosed either before or after execution of this Agreement.

Insolvency Event means, in respect of a Shareholder, the occurrence of any one or more of the following events or circumstances applying to that Shareholder or, in the case of a joint shareholding, any person comprising that Shareholder:
		
	(a)
	its winding up, liquidation or provisional liquidation;

		
	(b)
	the appointment of an administrator under the Corporations Act;

		
	(c)
	the appointment of a controller (as defined in the Corporations Act) or analogous person to it or any of its property;

		
	(d)
	being deregistered as a company or other body corporate or otherwise dissolved;

		
	(e)
	being unable to pay any of its debts as and when due and payable or being deemed to be insolvent under any Law;

		
	(f)
	seeking protection from its creditors under any Law or entering into a compromise, moratorium, assignment, composition or arrangement with, or for the benefit of, any of its members or creditors;

		
	(g)
	it otherwise becomes a Chapter 5 body corporate, as defined in the Corporations Act;

		
	(h)
	if the Shareholder is an individual, they commit an act of bankruptcy within the meaning of section 40 of the Bankruptcy Act 1966 (Cth) or they are or become bankrupt within the meaning of section 5 of that Act;

		
	(i)
	an analogous event or circumstance to any listed above occurs in any jurisdiction;

		
	(j)
	suspending or threatening to suspend payment of its debts as and when they become due,

unless such event or circumstance occurs as part of a solvent reconstruction, amalgamation, compromise, arrangement, merger or consolidation approved by the other parties (which approval is not to be unreasonably withheld or delayed);

Shareholders Agreement         page 6

 

IPO means an initial public offering of Shares or shares in a holding company of the Company in conjunction with a listing or quotation on a recognised stock exchange.
Law means:
		
	(a)
	principles of law or equity established by decisions of courts;

		
	(b)
	statutes, regulations or by-laws of the Commonwealth, or any State or Territory of the Commonwealth of Australia or a Government Agency; and

		
	(c)
	requirements and approvals (including conditions) of the Commonwealth or any State or Territory of the Commonwealth of Australia or a Government Agency that have the force of law.

Ownership Percentage means Dyadic’s percentage of Shares in the Company as at the date of this Agreement.
Quarter means a period of three consecutive calendar months, with successive Quarters ending on 31 March, 30 June, 30 September and 31 December.
Receiving Party means the party to whom Information is disclosed or who possesses or otherwise acquires Information belonging or relating to a Disclosing Party.
Related Body Corporate has the meaning given to that term in the Corporations Act.
Related Entity has the meaning given to that term in the Corporations Act.
Remaining Shareholders has the meaning given to that term in clause 13.9.
Respective Proportion means, in respect of a Shareholder at a particular time, the proportion of the Shares held by that Shareholder at that time expressed as a percentage of the total number of Shares held by all Shareholders at that time.
Sale Price has the meaning set out in clause 13.3(a).
Sale Shares has the meaning set out in clause 13.3.
Security means a security of the Company and includes Shares, preference shares, options, any convertible notes, warrants or other securities capable of conversion into Shares issued by the Company.
Seller means a Shareholder Transferring or required to Transfer any of its Shares under this Agreement, whether because the Shareholder issues or is taken to have issued a Transfer Notice in respect of the Shares or otherwise.
Shares means fully paid ordinary shares in the capital of the Company.

Shareholders Agreement         page 7

 

Shareholder means a person who holds, or 2 or more persons who together jointly hold, Shares from time to time and being, at the date of this Agreement, each of the shareholders described in Schedule 1.
Simple Majority Vote means a vote or resolution passed by:
		
	(a)
	in the case of a vote or resolution of Shareholders, Shareholders who together hold more than 50% of the Shares (excluding any Shares held by a Defaulting Party); or

		
	(b)
	in the case of a vote or resolution of the Board, Directors who together represent Shareholders who hold more than 50% of the Shares (excluding any Shares held by a Defaulting Party).

Special Majority Vote means a Simple Majority Vote at which the Founding Shareholder has also voted in favour.
Sub-License Agreement means the agreement between the Company, Dyadic International (USA), Inc and Luina Bio Pty Ltd dated on or about the date of this document relating to the sub-licence of certain intellectual property rights to the Company. 
Sub-Licensed IP has the same meaning as defined in the Sub-License Agreement.
Third Party means a person who is not a party to this Agreement or is not otherwise bound by the terms of this Agreement by virtue of a deed of accession entered into under clause 17.1(a).
Third Party Offer means an offer for the purchase of Shares made in good faith and on arms-length terms by a Third Party other than a Related Entity of the Shareholder holding the Shares in question.
Transfer means to sell, assign, transfer, convey or otherwise dispose of.
Transfer Notice means a notice given by a Shareholder who wishes to Transfer its Shares.
		
	1.2
	Rules for interpreting this document 

Headings are for convenience only, and do not affect interpretation.  The following rules also apply in interpreting this document, except where the context makes it clear that a rule is not intended to apply.
		
	(a)
	A reference to:

		
	(i)
	legislation (including subordinate legislation) is to that legislation as amended, re-enacted or replaced, and includes any subordinate legislation issued under it;

		
	(ii)
	a document (including this document) or agreement, or a provision of a document (including this document) or agreement, is to that document, agreement or provision as amended, supplemented, replaced or novated;

Shareholders Agreement         page 8

 

		
	(iii)
	a party to this document or to any other document or agreement includes a permitted substitute or a permitted assign of that party;

		
	(iv)
	a person includes any type of body of persons, whether or not it is incorporated or has a separate legal identity, and any executor, administrator or successor in law of that person; and

		
	(v)
	anything (including a right, obligation or concept) includes each part of it.

		
	(b)
	A singular word includes the plural, and vice versa.

		
	(c)
	A word which suggests one gender includes all other genders.

		
	(d)
	If a word or phrase is defined, any other grammatical form of that word or phrase has a corresponding meaning.

		
	(e)
	If an example is given of anything (including a right, obligation or concept), such as by saying it includes something else, the example does not limit the scope of that thing.

		
	(f)
	A reference to dollars and $ is to Australian currency.

		
	(g)
	The word agreement includes an undertaking or other binding arrangement or understanding, whether or not in writing.

		
	(h)
	The expression this document includes the agreement, arrangement, understanding or transaction recorded in this document. 

		
	(i)
	The expressions subsidiary, holding company and related body corporate each have the same meaning as in the Corporations Act.

		
	1.3
	Business Days

If the day on or by which a person must do something under this document is not a Business Day:
		
	(a)
	if the act involves a payment that is due on demand, the person must do I ton or by the next Business Day; and

		
	(b)
	in any other case, the person must do it on or by the previous Business Day.

		
	1.4
	Multiple parties

If a party is made up of more than one person, or a term is used in this document to refer to more than one party:
		
	(a)
	an obligation of those persons is several;

		
	(b)
	a right of those persons is held by each of them severally; and

		
	(c)
	any other reference to that party or that term is a reference to each of those persons separately, so that (for example) a representation, warranty or undertaking relates to each of them separately.

		
	2
	Operation of this Agreement

Shareholders Agreement         page 9

 

		
	2.1
	Agreement to override the Constitution

If there is any inconsistency between the provisions of this Agreement and the provisions of the Constitution, then the provisions of this Agreement prevail and the Constitution must be read and construed accordingly.
		
	2.2
	Shareholders to observe and implement this Agreement

		
	(a)
	Each Shareholder undertakes with each other party to:

		
	(i)
	exercise all its votes, powers and rights under the Constitution so as to give full force and effect to the provisions and intentions of this Agreement;

		
	(ii)
	exercise all its votes, powers and rights in relation to the Company so as to ensure that the Company fully and promptly observes, complies with and gives effect to the requirements and intentions of this Agreement and the Constitution; and

		
	(iii)
	not unreasonably delay or withhold an action, approval, direction, determination or decision that is required of the Shareholder.

		
	(b)
	The obligations in this clause 2.2 include an obligation to:

		
	(i)
	exercise its powers both as a Shareholder and, where applicable and to the extent permitted by Law, through any Director appointed by it; and

		
	(ii)
	ensure, to the extent permitted by Law, that any Director appointed by it (whether alone or jointly with any other person) does any matter or thing required of that Director or the Board under the Law, this Agreement or otherwise.

		
	2.3
	Company to observe and implement this Agreement

The Company:
		
	(a)
	must do all things necessary or desirable to give effect to the provisions and intentions of this Agreement in accordance with its terms; and

		
	(b)
	is bound by all provisions of this Agreement that expressly or by implication apply to the Company.

		
	3
	Board of Directors

		
	3.1
	Number of Directors

There must at all times be at least 3 Directors (excluding alternate Directors), unless the Shareholders by Special Majority Vote determine otherwise.
		
	3.2
	Current Directors

As at the date of this Agreement, the Board comprises the following Directors:
		
	(a)
	    Chris Burrell;

		
	(b)
	[***]; and

Shareholders Agreement         page 10

 

		
	(c)
	Mark A. Emalfarb..

		
	3.3
	Appointment and removal of Directors

		
	(a)
	For so long as:

		
	(i)
	Luina has a Respective Proportion equal to or more than 40%, it is entitled to appoint up to 3 Directors. In all other circumstances, it is entitled to appoint up to 2 Directors.

		
	(ii)
	Dyadic has a Respective Proportion equal to or more than 20%, it is entitled to appoint 1 Director.

		
	(b)
	Any Shareholder that has a Respective Proportion equal to or more than 20% is entitled to appoint 1 Director.

		
	(c)
	A Shareholder may nominate a person for consideration as a Director of the Company and at the next general meeting of the Company. The Shareholders may elect a nominee as a Director by a Simple Majority Vote. 

		
	(d)
	The Board by a Simple Majority Vote may from time to time appoint a person to be a Director but they will hold office only until the next general Shareholders meeting at which their appointment is to be considered by the Shareholders (again requiring a Simple Majority Vote by Shareholders for appointment to the Board). 

		
	(e)
	A Director may at any time resign from office by written notice to the Board.

		
	3.4
	Chairperson of Board

The Chairperson of the Board will:
		
	(a)
	be Chris Burrell unless removed by a Special Majority Vote of the Board; and

		
	(b)
	if there is an equality of votes, have a casting vote as Chairperson in addition to any vote she or he may otherwise have as a Director.

		
	4
	Board meetings

		
	4.1
	Frequency of Board meetings

		
	(a)
	At least 1 Board Meeting must take place at least every Quarter. 

		
	(b)
	Any Board Meetings in addition to those referred to in clause 4.1(a) may be convened at the written request of any Shareholder or Shareholders that have an aggregate Respective Proportion of more than 20%.  The agenda for a Board Meeting convened under this clause 4.1(b) must be determined by the Shareholder or Shareholders convening the meeting and no business other than that stated on the agenda may be transacted at that Board Meeting.

		
	(c)
	In addition to meetings held under clause 4.1(a) or clause 4.1(b), any Director may convene a meeting of the Board at any time by giving notice in accordance with this clause 4.

Shareholders Agreement         page 11

 

		
	(d)
	Subject to complying with the other provisions of this clause 4.1, the time, date and location of all Board Meetings must be determined by the Chairperson after consultation with the Board or, if there is no Chairperson, by a Simple Majority Vote of the Board.

		
	(e)
	Board meetings may be conducted by telephone conference, video conference or any other means of audio or audio-visual communication.

		
	4.2
	Notice of Board meetings

		
	(a)
	All Directors must be given at least 10 Business Days prior notice of a Board Meeting unless otherwise agreed by all Directors.

		
	(b)
	That notice must include an agenda and any proposed resolutions and, unless all Directors otherwise agree, a Board Meeting may only resolve matters specifically referred to in the agenda.

		
	4.3
	Voting rights at Board meetings

In any Board Meetings, each Shareholder's appointee on the Board will be entitled to exercise 1 vote, regardless of the number of Shares held by that Shareholder.
		
	4.4
	Quorum

Subject to clause 4.5(b), a quorum for Board Meetings is constituted by the attendance (in person or by alternate) of the Director/s nominated by the Founding Shareholder.
		
	4.5
	Quorum not present

		
	(a)
	If a quorum is not present within 30 minutes after the time specified for the Board Meeting, the meeting will be adjourned, by notice from the Chairperson or the Company secretary to all Directors, to a date and time 7 days after the original time of the meeting and at the same place as the original meeting.

		
	(b)
	Any Directors in attendance (in person or by alternate) at that adjourned meeting will constitute a quorum.

		
	(c)
	If no Director attends (in person or by alternate) that adjourned meeting, the meeting is regarded as dissolved.

		
	5
	Decision making

		
	5.1
	Simple Majority Vote

Subject to the Corporations Act and clause 5.2, all decisions of the Board or the Shareholders must be made by Simple Majority Vote.
		
	5.2
	Special Majority Vote required

Each of the matters outlined in Schedule 2, to the extent that they are not expressly covered by the Business Plan (as previously adopted in accordance with clause 1.1(v) of Schedule 2), require a Special Majority Vote before they are implemented or become effective.

Shareholders Agreement         page 12

 

		
	5.3
	Director's decisions

To the extent permitted by Law, a Director may make a decision in the interests of the Shareholder appointing him or her, without being required to have regard to:
		
	(a)
	the interests of the other Shareholders individually; or

		
	(b)
	the interests of the other Shareholders as a whole,

but nothing in this clause operates to relieve a Director from any other duty, liability or obligation owed by that Director to the Company.
		
	5.4
	Resolution without meeting

		
	(a)
	A resolution of the Board which is in writing and signed by all of the Directors who are entitled to vote (Circular Resolution) will be as valid and effective as if it had been passed at a meeting of the Board properly convened and held.

		
	(b)
	A Circular Resolution may consist of one or more documents in identical terms.

		
	6
	Financial reporting

		
	6.1
	Adopt Business Plan

The Shareholders must ensure that the Board considers and adopts a Business Plan before the commencement of each Financial Year.
		
	6.2
	Current Business Plan

If the Board fails to adopt a Business Plan in accordance with clause 6.1, then until a new Business Plan is adopted under clause 6.1, the Business must be conducted on the basis of the then current Business Plan.
		
	6.3
	Provision of financial information

The Company must provide to the Directors sufficient management and financial information and reports to allow them to monitor the efficient conduct of the Business, including:
		
	(a)
	within 10 Business Days after the end of each month, unaudited financial statements (with projections for the balance of the then current Financial Year) for the month just elapsed and for the then current Financial Year to date, which are prepared in reasonable detail and comply with the Accounting Standards;

		
	(b)
	within 15 Business Days after the end of March, June, September and December in each Financial Year:

		
	(i)
	financial statements for the 3 months just elapsed with revised projections for the following 12 months; and

		
	(ii)
	comparisons of the actual results with the projections set out in the current Business Plan and explanations for any variations,

Shareholders Agreement         page 13

 

each prepared in reasonable detail and complying with the Accounting Standards.
		
	(c)
	within 60 Business Days after the end of each Financial Year, financial statements for the Financial Year just elapsed and a statement of financial position as at the end of that Financial Year, each prepared in reasonable detail and complying with the Accounting Standards; and

		
	(d)
	any other reports or statements that the Board may require.

		
	7
	Funding

		
	7.1
	Excluded issues

This clause 7 does not apply to any Excluded Issue.
		
	7.2
	Offer to Shareholders to contribute

Subject to clause 1.1(t) of Schedule 2, if the Board wishes to raise additional funds for the Company, the Board must first offer each Shareholder the opportunity to contribute to the Company’s funding requirements by:
		
	(a)
	the Shareholders applying for the issue to them of new Shares in accordance with their Respective Proportions; or

		
	(b)
	the making of loans to the Company by the Shareholders in accordance with their Respective Proportions,

as determined by the Board from time to time (Funding Contribution).
		
	7.3
	Board's responsibility

The Board must determine:
		
	(a)
	the number of Shares to be issued under clause 7.2(a); and

		
	(b)
	subject to clause 7.4, the terms and conditions (including the amount) of loans to be provided under clause 7.2(b),

in order to satisfy each contribution.
		
	7.4
	Conditions of loans

Unless otherwise determined by the Board, any loans made as at the date of this Agreement or provided under clause 7.2(b) must be:
		
	(a)
	made on identical terms and conditions (except for the amount of the loans if the Shareholders' Respective Proportions are not identical);

		
	(b)
	unsecured;

		
	(c)
	at interest rates to be agreed upon by the Board or, in the absence of agreement, interest-free; and

		
	(d)
	not assignable by the Shareholder or the Company.

		
	7.5
	Non-Contributing Shareholder

Shareholders Agreement         page 14

 

		
	(a)
	If a Shareholder fails to or elects not to provide all or part of its Funding Contribution (Non-Contributing Shareholder), the Board must offer the other Shareholders that have made their Funding Contribution (Contributing Shareholder) the opportunity to:

		
	(i)
	apply for the new Shares which the Non-Contributing Shareholder did not apply for (Shortfall Shares); or

		
	(ii)
	provide the loan which the Non-Contributing Shareholder did not provide (Shortfall Loan),

on a pro-rata basis in accordance with the formula set out in clause 7.6 (Contribution Amount).
		
	(b)
	If a Contributing Shareholder provides a proportion of the Shortfall Loan in accordance with clause 7.5(a)(ii):

		
	(i)
	the loan will be made on terms no more favourable than those originally offered to the Non-Contributing Shareholder; and

		
	(ii)
	clauses 7.4(b) to 7.4(d) will apply to the loan.

		
	7.6
	Proportion

For the purposes of clause 7.5, the Contribution Amount of each Contributing Shareholder must be determined by applying the following formula:
A  =  B  x  C/D 
where:
		
	A
	=    the Contribution Amount (rounded up or down to the nearest whole number at the discretion of the Board if A is not a whole number);

		
	B
	=    the Shortfall Shares (expressed as a whole number rounded up or down at the discretion of the Board) or the Shortfall Loan (expressed as a dollar amount), as the case may be;

		
	C
	=    the number of Shares held by that Contributing Shareholder at that time; and

		
	D
	=    the total number of Shares held by all Contributing Shareholders at that time.

		
	7.7
	Offer of Shares to Third Parties

If an offer by the Board to apply for new Shares under clause 7.2(a) or clause 7.5(a)(i) is not accepted in full by the Shareholders, the Board may for a period of 90 days from the date on which the last offer to the Shareholders expires, offer to issue all or any part of the remaining new Shares not taken up to any Third Party:
		
	(a)
	on terms that are no more favourable than those offered to the Shareholders; and

		
	(b)
	clause 17.1 will apply. 

		
	7.8
	External borrowings

Shareholders Agreement         page 15

 

Subject to clause 9.2, this clause 7 does not prohibit external borrowings by the Company, on terms and conditions approved by the Special Majority Vote.
		
	8
	Dividend policy

		
	8.1
	General rule

The Board will from time to time adopt a prudent policy of distributing to the Shareholders distributable profits of the Company generated by the operations of the Business:
		
	(a)
	consistent with prudent financial management; and

		
	(b)
	having regard to:

		
	(i)
	the Business Plan;

		
	(ii)
	the taxation, working capital, banking covenants and operational requirements of the Company; and

		
	(iii)
	the terms of all loan agreements under which the Company has borrowed funds and all related security instruments, covenants and other contracts to which the Company is a party.

		
	8.2
	Special dividends/distribution

If the Company receives a significant up-front payment from a commercial transaction which would fall outside the scope of being treated as a royalty under the terms of the Sub-Licence Agreement, the Board will, having regard to the parameters in clause 8.1 and its obligations under the Corporations Act, determine whether a special dividend or distribution can be made to the Shareholders.
		
	9
	Encumbrances

		
	9.1
	No Encumbrance

A Shareholder must not create or give any Encumbrance over its Shares in favour of any person without the approval of the Board, which consent may be withheld by the Board at its absolute discretion.
		
	9.2
	Security

		
	(a)
	The Shareholders must ensure that the Company does not undertake any activity, including entering into a contract or arrangement to provide services or obtain external borrowings from a financial institution or other Third Party, that requires the Shareholders to give a guarantee, bond or other security (Security), without the prior written consent of all Shareholders, which consent may be withheld by any Shareholder at its absolute discretion.

		
	(b)
	Where the Shareholders agree to provide such Security and the Shareholders agree with the financial institution or Third Party that any liability is to be assumed jointly, or jointly and severally, by them under the Security, the Shareholders agree that:

		
	(i)
	the amount of that liability will be apportioned between the Shareholders in their Respective Proportions; and

Shareholders Agreement         page 16

 

		
	(ii)
	despite any agreement with or action by the beneficiary of the Security, the Shareholders, between themselves, will be liable to make contributions to and indemnify each other so that any such liability is ultimately borne by the Shareholders in their Respective Proportions.

		
	9.3
	Security irrevocable

Any Security given, either jointly or jointly and severally, by the Shareholders is irrevocable except with the written consent of all Shareholders, which consent is not to be unreasonably withheld.
		
	10
	Employee Incentive Plan

The Shareholders agree that:
		
	(a)
	at any time, the Board may establish a formal written employee incentive plan to issue Securities to eligible service providers (whether Directors, employees or contractors) that result in the issue of that number of shares of an amount up to 10% of the fully diluted share capital of the Company as at the date of this document (Employee Incentive Plan);

		
	(b)
	the Employee Incentive Plan will authorise the Directors to issue Securities under the Employee Incentive Plan to eligible service providers in their discretion; and

		
	(c)
	any issue of Securities under the Employee Incentive Plan will be an Excluded Issue.

Shareholders Agreement         page 17

 

		
	11
	Anti-Dilution Right

		
	(a)
	Where an issue of Securities is completed pursuant to the First Close Raising, the Company will issue to Dyadic for nil consideration such number of Shares that is required for Dyadic to maintain its Ownership Percentage (Anti-Dilution Right).

		
	(b)
	The parties acknowledge and agree that the Anti-Dilution Right:

		
	(i)
	has been granted to Dyadic to reflect the valuation of the Sub-Licensed IP which has been licensed by Dyadic to the Company pursuant to the Sub-Licensed Agreement;

		
	(ii)
	shall not apply to:

		
	(A)
	issue of Securities through pro-rata issues, Shares issued on the exercise of any Securities convertible into Shares, dividend reinvestment plans, share purchase plans, asset acquisition or pursuant to a takeover or scheme of arrangement; or

		
	(B)
	issues of any Shares, options or performance rights under the Employee Incentive Plan;

		
	(iii)
	will immediately terminate in the event that Dyadic suffers an Insolvency Event; and

		
	(iv)
	is non-transferrable other than to an Affiliate in accordance with clause 12.2.   

		
	12
	Transfer of Shares

		
	12.1
	Transfer in accordance with Agreement

		
	(a)
	Unless all the Shareholders otherwise agree, a Shareholder must not Transfer Shares except in accordance with this Agreement.

		
	(b)
	Under this Agreement, Shares may be transferred only:

		
	(i)
	by a Shareholder giving a Transfer Notice under clause 13.1;

		
	(ii)
	where a Transfer Notice is taken to have been issued by a Shareholder under clause 12.3 (Incapacity of Individual Shareholder) or clause 22.2(f) (Consequences of default);

		
	(iii)
	if the Transfer is to an authorised transferee under clause 12.2;

		
	(iv)
	if a Founding Shareholder gives a Drag Along Notice (as defined in clause 14.1) under clause 14 to the Remaining Shareholders;

		
	(v)
	if a Remaining Shareholder gives a notice under clause 15.1 to the Founding Shareholder in response to a Tag Along Notice (as defined in that clause); or

		
	(vi)
	under the provisions of clause 23.4 relating to resolution of deadlocks,

Shareholders Agreement         page 18

 

and the terms of this Agreement relating to the relevant Transfer and to Transfers of Shares generally must be complied with.
		
	(c)
	The Company must not register any Transfer made in breach of this Agreement.  Any purported Transfer so made has no effect.

		
	12.2
	Authorised transferees

		
	(a)
	Subject to clauses 12.4 and 12.5, but despite any other provision of this document:

		
	(i)
	a Shareholder may Dispose any or all of its Securities from time to time to any of its Affiliates without restriction; and

		
	(ii)
	an Affiliate of a Shareholder may Dispose any or all of its Securities from time to time to that Shareholder or another Affiliate of that Shareholder without restriction.

		
	(b)
	If a person to whom a Shareholder has disposed any Securities ceases to be an Affiliate (as applicable) of that Shareholder:

		
	(i)
	that Shareholder must procure that that person immediately disposes the relevant Securities back to the original transferor (who must purchase the Securities); and

		
	(ii)
	all rights attaching to the Securities held by that person will be suspended until the disposal back to the original transferor is completed.

		
	12.3
	Incapacity of individual Shareholder

If a Shareholder who is an individual dies or becomes permanently incapacitated or of unsound mind, other than where the Shareholder is a joint holder of the Shares, then that Shareholder is taken to have issued, under clause 13, a Transfer Notice to the Board for all his or her Shares.
		
	12.4
	Restrictions on Transfers

A Shareholder must not Transfer any legal or beneficial interest in its Shares if the Transfer would breach, or be an event of default under, any provision of the Company's lending facilities or any other agreement to which the Company is a party.
		
	12.5
	Conditions

Unless all the Shareholders agree, no Transfer of Shares by a Shareholder is effective unless the following conditions of Transfer are satisfied:
		
	(a)
	the Transfer relates to all of the Shares held by the Shareholder;

		
	(b)
	subject to compliance with the Corporations Act:

		
	(i)
	all loans from the Company to the Shareholder transferring its Shares are repaid to the Company in full;

		
	(ii)
	all loans from the Shareholder transferring its Shares to the Company are repaid in full to the Shareholder and replaced by 

Shareholders Agreement         page 19

 

equivalent loans from the transferee to the Company in accordance with clause 17.2(c); and
		
	(c)
	the transferee, if a Third Party, complies with clauses 17.1 and 17.2.

		
	13
	Procedure on Transfer of Shares

		
	13.1
	Permitted Transfer

A Shareholder may Transfer its Shares by giving a Transfer Notice to the Board stating that the Shareholder wishes to Transfer its Shares in accordance with this clause 13.
		
	13.2
	Date notice given

A Transfer Notice:
		
	(a)
	given under clause 13.1 is issued on the date the Board receives the Transfer Notice from a Shareholder; or

		
	(b)
	that is taken to have been issued by a Shareholder under clause 12.3 (Incapacity of Individual Shareholder), 22.2(f) (Consequences of default) or any other provision of this Agreement, is issued on the first date that a Director is aware of the circumstances that cause that provision to operate in respect of that Shareholder.

		
	13.3
	Terms of Transfer

A Transfer Notice constitutes the Board as the agent of the Seller for the sale of all the Seller's Shares (Sale Shares) to the other Shareholders:
		
	(a)
	at the price specified in the Transfer Notice or, if none is specified, at the price determined under clause 16 (Sale Price), but in any event the Sale Price must always be a single instalment cash price; and

		
	(b)
	otherwise on terms that comply with this Agreement.

		
	13.4
	Offer to other Shareholders

On or within 5 Business Days after:
		
	(a)
	the date the Board receives a Transfer Notice; or

		
	(b)
	where no Sale Price is specified in the Transfer Notice, the date on which the Sale Price is determined according to clause 16,

whichever is the later, the Board must, on behalf of the Seller, offer for sale to each Shareholder other than the Seller (Recipient) that number of the Sale Shares as is determined by applying the following formula (each a Round 1 Offer):
A  =  B  x  C/D 
where:
		
	A
	=    the number of Sale Shares offered to a Recipient, which number may be rounded up or down to the nearest whole number at the discretion of the Board if A is not a whole number;

Shareholders Agreement         page 20

 

		
	B
	=    the total number of all Sale Shares;

		
	C
	=    the number of Shares held by that Recipient on the date of the Round 1 Offers; and

		
	D
	=    the total number of Shares held by all Recipients on the date of the Round 1 Offers.

Each Round 1 Offer must be on the same terms and at the Sale Price.
		
	13.5
	Acceptance of Round 1 Offers

		
	(a)
	On or within 5 Business Days after receipt of the Round 1 Offers, each Recipient must notify the Board whether it accepts or rejects its Round 1 Offer.  A Round 1 Offer can only be accepted or rejected in full.

		
	(b)
	If a Recipient fails to notify the Board of its acceptance or rejection of the Round 1 Offer within the period set out in clause 13.5(a), that Recipient is taken to have rejected the Round 1 Offer.

		
	(c)
	Subject to clause 13.9(a), if a Recipient accepts its Round 1 Offer, the Seller must sell free from Encumbrances, and the accepting Recipient (Accepting Shareholder) must purchase, the total number of Sale Shares contained in that Round 1 Offer at the Sale Price and otherwise on the terms specified in the Round 1 Offer.

		
	13.6
	Remaining Sale Shares

If there are more than 2 Shareholders and any of the Sale Shares have not been accepted under the Round 1 Offers within the period set out in clause 13.5(a) (Remaining Sale Shares), the Board must re-offer for sale to each Accepting Shareholder at the Sale Price and on the terms set out in the Round 1 Offers, that number of Remaining Sale Shares as is determined by applying the following formula (Round 2 Offer):
A  =  B  x  C/D 
where:
		
	A
	=    the number of Remaining Sale Shares offered to an Accepting Shareholder, which number may be rounded up or down to the nearest whole number at the discretion of the Board if A is not a whole number;

		
	B
	=    the total number of all Remaining Sale Shares;

		
	C
	=    the number of Shares held by that Accepting Shareholder on the date of the Round 2 Offers (including the Sale Shares accepted by the Accepting Shareholder under its Round 1 Offer); and

		
	D
	=    the total number of Shares held by all Accepting Shareholders on the date of the Round 2 Offers (including the Sale Shares accepted by the Accepting Shareholders under the Round 1 Offers).

		
	13.7
	Acceptance of Round 2 Offers

Shareholders Agreement         page 21

 

		
	(a)
	On or within 5 Business Days after receipt of the Round 2 Offers, each Accepting Shareholder must notify the Board whether it accepts or rejects its Round 2 Offer.  A Round 2 Offer can only be accepted or rejected in full.

		
	(b)
	If an Accepting Shareholder fails to notify the Board of its acceptance or rejection of the Round 2 Offer within the period set out in clause 13.7(a), that Accepting Shareholder is taken to have rejected the Round 2 Offer.

		
	(c)
	Subject to clause 13.9(a), if an Accepting Shareholder accepts its Round 2 Offer, the Seller must sell free from Encumbrances, and the Accepting Shareholder must purchase, the total number of Remaining Sale Shares contained in that Round 2 Offer at the Sale Price and otherwise on the terms specified in the Round 2 Offer.

		
	13.8
	Time and place of completion

Subject to clause 13.9(a), Completion of both the sale of those Sale Shares in respect of which a Round 1 Offer has been accepted and any Remaining Sale Shares in respect of which a Round 2 Offer has been accepted must take place:
		
	(a)
	within 10 Business Days after:

		
	(i)
	the date by which Round 1 Offers must be accepted under clause 13.5(a); or

		
	(ii)
	if any Round 2 Offer is made, the date by which Round 2 Offers must be accepted under clause 13.7(a); and

		
	(b)
	at a time and place to be agreed by the Seller and the Recipient or failing agreement, at the registered office of the Company at 10 am on the next Business Day after expiry of the period stated in clause 13.8(a).

		
	13.9
	Transfer to Third Party by Founding Shareholder

		
	(a)
	Subject to clauses 12.4 and 12.5, where:

		
	(i)
	the Founding Shareholder has given a Transfer Notice under clause 13.1 as a result of the Founding Shareholder receiving a Third Party Offer, which it wishes to accept, for the purchase of all of the Founding Shareholder's Shares;

		
	(ii)
	not all of the Round 1 Offers and not all Round 2 Offers (if any) were accepted within the periods set out in clauses 13.5(a) and 13.7(a) respectively; and

		
	(iii)
	the Founding Shareholder gives an Election Notice under clause 13.9(b),

then:
		
	(iv)
	all of the Round 1 Offers and Round 2 Offers, whether accepted or not, are taken to be cancelled and of no effect and no Shares can be Transferred under them; and

		
	(v)
	subject to clause 13.9(b), the Founding Shareholder may sell all the Sale Shares to the Third Party.

Shareholders Agreement         page 22

 

		
	(b)
	The Founding Shareholder must, within 3 Business Days after the expiration of the period set out in clause 13.5(a) or, if any Round 2 Offers are made, clause 13.7(a), give notice (Election Notice) in the same terms, to each of the other Shareholders (Remaining Shareholders):

		
	(i)
	specifying:

		
	(A)
	the details of the Third Party;

		
	(B)
	the price payable for each Share;

		
	(C)
	the date on which the Transfer of the Founding Shareholder's Shares is to occur, which must not be less than 20 Business Days after the date of the Election Notice; and

		
	(D)
	any other material terms of the Third Party Offer;

		
	(ii)
	stating whether the Founding Shareholder wishes to exercise its right under clause 14 to require each Remaining Shareholder to sell to the Third Party all of the Remaining Shareholder's Shares for the price and on the terms specified in the Election Notice, in which case the procedure set out in clause 14 must be followed; and

		
	(iii)
	if the Founding Shareholder does not wish to exercise its right under clause 14, advising each Remaining Shareholder that the Remaining Shareholder may exercise the right conferred on the Remaining Shareholder by clause 15.1 to require the Founding Shareholder to use its best endeavours to cause the Third Party to purchase all of the Remaining Shareholder's Shares, in which case the procedure set out in clause 15 must be followed.

		
	13.10
	Transfer to Third Party

Subject to clauses 12.4 and 12.5:
		
	(a)
	where a Shareholder has given or is taken to have given a Transfer Notice for the purposes of this clause 13 and that Shareholder does not give an Election Notice under clause 13.9(b); and

		
	(b)
	after Round 1 Offers and any Round 2 Offers have been made, there are still Remaining Sale Shares that have not been Transferred as not all of the Round 1 Offers and any Round 2 Offers were accepted within the periods set out in clauses 13.5(a) and 13.7(a) respectively,

the Seller may, at any time before the expiry of 6 months after the Transfer Notice was given or was taken to be given, sell the unsold Sale Shares to a Third Party at a price and on terms no more favourable to the Third Party than those offered to the Recipients.
		
	13.11
	Inconsistency between Agreement and Transfer Notice

If there is any inconsistency between the terms of this clause 13 and the terms of sale set out in a Transfer Notice, then the terms of this clause 13 prevail.

Shareholders Agreement         page 23

 

		
	14
	Drag along rights

		
	14.1
	Remaining Shareholders must sell

If a Founding Shareholder gives an Election Notice under clause 13.9 stating, in accordance with clause 13.9(b)(ii), that the Founding Shareholder wishes to exercise its right under this clause 14 (in which case the Election Notice is a Drag Along Notice), then each Remaining Shareholder must sell all of its Shares to the Third Party for the price and on the terms specified in the Drag Along Notice, subject to the terms set out in this clause 14.
		
	14.2
	Notice irrevocable

A Drag Along Notice, once given, is irrevocable but both the Drag Along Notice and all obligations under it and this clause 14 will lapse and be at an end if for any reason the Founding Shareholder does not Transfer its Shares to the Third Party on the date specified in the Drag Along Notice, or any later date agreed between all the Shareholders and the Third Party.
		
	14.3
	Terms of sale must be the same

The Remaining Shareholders are only obliged to sell their Shares to the Third Party if:
		
	(a)
	for the avoidance of any doubt, the Founding Shareholder has first complied with the procedure set out in clause 13;

		
	(b)
	the Founding Shareholder completes the Transfer of its Shares to the Third Party on the date (or any other date agreed between all the Shareholders and the Third Party) and terms stated in the Drag Along Notice;

		
	(c)
	prior to the Transfer being effected, the Founding Shareholder discloses to the Remaining Shareholders any terms of any proposed transaction between the Founding Shareholder and the Third Party that a reasonable person would think could impact on the price (or other consideration) or terms on which a Shareholder would so sell its Shares; and

		
	(d)
	the price per Share to be paid (or price per Share equivalent if other consideration is provided) and the other terms on which the Third Party offers to acquire the Remaining Shareholders’ Shares are the same as the price and the terms of the Third Party Offer to acquire the Founding Shareholders’ Shares.

		
	14.4
	Appointment of attorney

Each of the Remaining Shareholders irrevocably appoints the Chairperson, or failing the Chairperson, a Director determined by a resolution passed by more than half of the Directors appointed by the Remaining Shareholders, to be their attorney to sign such transfers, consents and other documents as the Founding Shareholder reasonably considers necessary or desirable to give effect to this clause 14 (but for no other purpose).
		
	15
	Tag along rights

		
	15.1
	Remaining Shareholders have option

Shareholders Agreement         page 24

 

If a Founding Shareholder gives an Election Notice under clause 13.9 advising each Remaining Shareholder in accordance with clause 13.9(b)(iii) that the Remaining Shareholder has the right conferred on it by this clause 15.1 to require the Founding Shareholder to use its best endeavours to cause the Third Party to purchase all of the Remaining Shareholders’ Shares (in which case the Election Notice is a Tag Along Notice), then at any time during the period of 10 Business Days after the date on which the Tag Along Notice is given (Exercise Period), each Remaining Shareholder may exercise this right by giving notice to that effect to the Founding Shareholder.
		
	15.2
	Effect of exercise of option

		
	(a)
	Where a Remaining Shareholder gives a notice under clause 15.1 (Minority Seller), the Founding Shareholder must use its best endeavours to cause the Third Party to purchase the Shares of that Minority Seller for the price and on the terms set out in the Tag Along Notice.

		
	(b)
	The Founding Shareholder cannot Transfer any of its Shares to the Third Party unless and until the Founding Shareholder:

		
	(i)
	for the avoidance of any doubt, first complies with the procedure set out in clause 13; and

		
	(ii)
	then complies with the procedure set out in this clause 15.

		
	15.3
	Notice irrevocable

A Tag Along Notice, once given, is irrevocable.
		
	15.4
	Extent of obligations

The requirement in clauses 15.1 and 15.2(a) that the Founding Shareholder use its best endeavours does not oblige the Founding Shareholder to expend any money or commence or continue any litigation or other proceedings to satisfy that requirement.
		
	15.5
	Effect of failure by Third Party

		
	(a)
	If the Third Party for any reason fails to buy all of the Shares of the Founding Shareholder on the terms set out in the Tag Along Notice, a Minority Seller must not Transfer any of its Shares to the Third Party.

		
	(b)
	If the Third Party for any reason fails to buy all of the Shares of a Minority Seller:

		
	(i)
	at the price (or at a greater price) and on the on the terms set out in the Tag Along Notice; and

		
	(ii)
	on the same date as the date for completion of the Transfer of the Founding Shareholder's Shares,

other than because of any delay or default on the part of the Minority Seller, then the Founding Shareholder must not Transfer any of its Shares to the Third Party.
		
	15.6
	Completion of sale of Founding Shareholder's Shares

Shareholders Agreement         page 25

 

After the expiration of the Exercise Period the Founding Shareholder, subject to complying with its obligations under clause 15.2(a) and the provisions of clause 15.5 not applying, may sell its Shares to the Third Party on the same terms specified in the Tag Along Notice.
		
	16
	Determination of Sale Price

		
	16.1
	Appointment of Valuer

Within 5 Business Days after a Transfer Notice is:
		
	(a)
	issued under clause 13.1 such that, in accordance with clause 13.3(a), the price of the Sale Shares must be determined under this clause 16; or

		
	(b)
	taken to have been issued under clause 13.2(b),

the Board must:
		
	(c)
	agree on a person or, failing agreement within 5 Business Days, procure that the Australian Disputes Centre (ADC) in accordance with the ADC Rules for Expert Determination which are operating at the time of referral to ADC, nominates a person to value the Sale Shares (Valuer); and

		
	(d)
	instruct the Valuer to value the Sale Shares, adopting, subject to clause 16.2, the method of valuation that the Valuer considers appropriate.

		
	16.2
	Valuation of Shares

In valuing the Sale Shares the Valuer:
		
	(a)
	must assume that a reasonable time is available within which to obtain a sale of Sale Shares in the open market and for that purpose 90 days is taken to be a reasonable time;

		
	(b)
	must have regard to the following factors (in addition to any other factors that the Valuer believes should properly be taken into account) based on the best information available at the time:

		
	(i)
	the prospects of the Business;

		
	(ii)
	the estimated future maintainable earnings of the Company;

		
	(iii)
	the net tangible assets, earnings before interest and tax and cash flow of the Company as disclosed in the last audited financial statements for the last preceding Financial Year, or to the extent that no audited financial statements of the Company are available, as disclosed in the latest management accounts of the Company; and

		
	(c)
	acts as an expert and not as an arbitrator.

		
	16.3
	Sale Price final and binding

The Sale Price as determined by the Valuer is final and binding on the Seller and the transferee.
		
	16.4
	Cost of Valuer

Shareholders Agreement         page 26

 

The cost of the Valuer's determination must be paid by the Shareholders in their Respective Proportions unless the determination was necessary because of any failure or default on the part of a Shareholder, in which case that Shareholder must pay the cost of the Valuer's determination.
		
	17
	Provisions applying to all Transfers

		
	17.1
	Requirements for Transfer to Third Party

A Transfer of Shares cannot be made to a Third Party unless:
		
	(a)
	the Third Party enters into and delivers to each Shareholder a deed of accession under which it agrees to be bound by the terms of this Agreement, in substantially the same form as the Annexure 1 to this Agreement; 

		
	(b)
	the Third Party is, in the reasonable opinion of the Shareholders (other than the Seller), of good standing, financial substance and reputation.

		
	17.2
	Obligations of parties at completion

At completion of any Transfer of Shares under this Agreement:
		
	(a)
	each transferee (Buyer) must pay to the Shareholder selling or required to Transfer the Shares in question (Seller) the relevant purchase price for those Shares in full;

		
	(b)
	the Seller must deliver to each Buyer:

		
	(i)
	the certificates relating to the Shares being Transferred;

		
	(ii)
	a transfer of those Shares, duly executed by the Seller in favour of the Buyer; and

		
	(iii)
	a release of any Encumbrances affecting the relevant Shares; and

		
	(c)
	subject to the Corporations Act and unless otherwise determined by Special Majority Vote of the Board, the Buyer must provide loans to the Company:

		
	(i)
	to replace the value of any outstanding loans from the Seller to the Company immediately prior to the Transfer of the Seller's Shares to the Buyer; and

		
	(ii)
	on the same terms as the Seller's outstanding loans,

to ensure that the Company is funded to enable it to repay all outstanding loans from the Seller to the Company.
		
	17.3
	Non-Completing Seller

If a Seller defaults in completing the Transfer of any Shares under this Agreement (Non-Completing Seller), the Chairperson or, failing the Chairperson, a Director determined by resolution of all Directors other than the Director appointed by the Non-Completing Seller, is taken to be the Non‐Completing Seller's duly appointed attorney with full power to:

Shareholders Agreement         page 27

 

		
	(a)
	receive the purchase price from the Buyer on behalf of the Non‐Completing Seller;

		
	(b)
	give to the Buyer a valid receipt of the purchase price on behalf of the Non-Completing Seller;

		
	(c)
	ensure that the Buyer's name is entered in the Company's register of members as the holder of the Non-Completing Seller's Shares; and

		
	(d)
	take all further action necessary to complete the Transfer of the Non‐Completing Seller's Shares as required under this Agreement.

		
	17.4
	Registration of Transfer

The Company must register each Transfer of Shares to which this clause 17 applies.
		
	18
	Confidentiality

		
	18.1
	Obligations of confidentiality

Subject to clauses 18.2 and 18.3, the Receiving Party must:
		
	(a)
	keep the Confidential Information confidential and not directly or indirectly disclose, divulge or communicate any Confidential Information to, or otherwise place any Confidential Information at the disposal of, any other person without the prior written approval of the Disclosing Party;

		
	(b)
	take all reasonable steps to secure and keep secure all Confidential Information coming into its possession or control;

		
	(c)
	not memorise, use, modify, reverse engineer or make copies, notes or records of the Confidential Information for any purpose other than in connection with the performance by the Receiving Party of its obligations under this Agreement; and

		
	(d)
	take all reasonable steps to ensure that any person to whom the Receiving Party is permitted to disclose Confidential Information under clause 18.3 complies at all times with the terms of this clause 18 as if that person were a Receiving Party.

		
	18.2
	Exceptions

The obligations of confidentiality under clause 18.1 do not apply to:
		
	(a)
	any Confidential Information that:

		
	(i)
	is disclosed to the Receiving Party by a third party entitled to do so, whether before or after the date of this Agreement;

		
	(ii)
	was already lawfully in the Receiving Party's possession when it was given to the Receiving Party and was not otherwise acquired from the Disclosing Party directly or indirectly; or

		
	(iii)
	is generally available to the public at the date of this Agreement or subsequently becomes so available other than by reason of a breach of this Agreement; or

Shareholders Agreement         page 28

 

		
	(b)
	any disclosure of Confidential Information by the Receiving Party that is necessary to comply with any court order, law, or the applicable rules of any financial market (as defined in the Corporations Act) if, to the extent practicable and as soon as reasonably possible, the Receiving Party:

		
	(i)
	notifies the Disclosing Party of the proposed disclosure;

		
	(ii)
	consults with the Disclosing Party as to its content; and

		
	(iii)
	uses reasonable endeavours to comply with any reasonable request by the Disclosing Party concerning the proposed disclosure.

		
	18.3
	Authorised disclosure

A Receiving Party may disclose Confidential Information to any Related Entity, employee, agent, contractor, officer, professional adviser, banker, auditor or other consultant of the Receiving Party (each a Recipient) only if the disclosure is made to the Recipient strictly on a “need to know basis” and, prior to the disclosure:
		
	(a)
	the Receiving Party notifies the Recipient of the confidential nature of the Confidential Information to be disclosed;

		
	(b)
	the Recipient undertakes to the Receiving Party (for the benefit of the Disclosing Party) to be bound by the obligations in this clause 18 as if the Recipient were a Receiving Party in relation to the Confidential Information to be disclosed to the Recipient; and

		
	(c)
	if requested to do so by the Disclosing Party, the Recipient signs an undertaking or deed in a form acceptable to the Disclosing Party (and for the benefit of the Disclosing Party) agreeing to be bound by the obligations in this clause 18 as if it were a Receiving Party in relation to the Confidential Information to be disclosed to the Recipient.

		
	18.4
	Return or destruction of Confidential Information

Immediately on the written request of the Disclosing Party or on the termination of this Agreement for any reason, a Receiving Party must:
		
	(a)
	cease the use of all Confidential Information of or relating to the Disclosing Party (or any Related Entity of the Disclosing Party);

		
	(b)
	deliver to the Disclosing Party all documents and other materials in its possession or control containing, recording or constituting that Confidential Information or, at the option of the Disclosing Party, destroy, and certify to the Disclosing Party that it has destroyed, those documents and materials; and

		
	(c)
	for Confidential Information stored electronically, permanently delete that Confidential Information from all electronic media on which it is stored, so that it cannot be restored.

		
	18.5
	Warranties

The Disclosing Party warrants to the Receiving Party that:

Shareholders Agreement         page 29

 

		
	(a)
	it has the right to disclose Confidential Information to the Receiving Party and to authorise the Receiving Party to use the Confidential Information as permitted by this Agreement; and

		
	(b)
	the use of the Confidential Information as permitted by this Agreement does not breach the intellectual property rights of any other person.

		
	18.6
	Liability for breach by recipient

The Receiving Party is liable for any breach of this clause 18 by a Recipient as if the Recipient were a Receiving Party in relation to the Confidential Information disclosed to the Recipient.
		
	18.7
	Survival of clause

Despite any other provision of this Agreement, this clause 18 survives the expiry or termination of this Agreement.

Shareholders Agreement         page 30

 

		
	19
	Public announcements

		
	19.1
	Making announcements

A party must not make, or authorise or cause to be made, any public announcement relating to the negotiations between the parties or the terms or the subject matter of this Agreement unless:
		
	(a)
	it has the prior written consent of each other party; or

		
	(b)
	it is required to do so by Law or by the rules of any financial market (as defined in the Corporations Act) to which a party, or a Related Body Corporate of a party, is subject.

		
	19.2
	Requirements

If a party is required to make a public announcement under clause 19.1(b), it must before doing so, to the extent practicable and as soon as reasonably possible:
		
	(a)
	notify each other party of the proposed announcement;

		
	(b)
	consult with each other party as to its content; and

		
	(c)
	use reasonable endeavours to comply with any reasonable request by any other party concerning the proposed announcement.

		
	20
	Indemnity

Each party (Indemnifying Party) indemnifies and must keep indemnified each other party (Indemnified Party), its officers, employees and contractors, against all actions, claims, proceedings, demands, liabilities, losses, damages, expenses and costs (including legal costs on a full indemnity basis) that may be brought against the Indemnified Party or which the Indemnified Party may pay, sustain or incur as a direct or indirect result of any one or more of the following:
		
	(a)
	any breach or non-performance of this Agreement by the Indemnifying Party;

		
	(b)
	any wrongful, wilful or negligent act or omission of the Indemnifying Party or any of its employees, agents or contractors; and

		
	(c)
	any representation or warranty made or repeated by any party under this Agreement being untrue or misleading in any material respect (including by omission) when made or repeated.

Shareholders Agreement         page 31

 

		
	21
	Party as trustee

		
	21.1
	Capacity

If any party (Trustee) enters into this Agreement in the capacity as trustee of any trust (Trust) under any trust deed, deed of settlement or other instrument (Trust Deed), and whether or not the other parties have notice of the Trust, then the Trustee enters into this Agreement both as trustee of the Trust and in its personal capacity.
		
	21.2
	Trustee's warranties

The Trustee represents and warrants that:
		
	(a)
	the Trustee has power under the Trust Deed and, in the case of a corporation, under its constitution, to enter into and execute this Agreement and to perform the obligations imposed under this Agreement as trustee;

		
	(b)
	all necessary resolutions have been passed as required by the Trust Deed and, in the case of a corporate Trustee, by its constitution, in order to make this Agreement fully binding on the Trustee;

		
	(c)
	the execution of this Agreement is for the benefit of the Trust;

		
	(d)
	the Trustee is not in default under the Trust Deed;

		
	(e)
	the Trustee has not done, and the Trustee will not during the term of the Agreement do anything by virtue of which there will be in the future, any restriction or limitation on the right of the Trustee to be indemnified out of the assets of the Trust; and

		
	(f)
	there is no material fact or circumstance relating to the assets, matters or affairs of the Trust that might, if disclosed, be expected to affect the decision of the other parties, acting reasonably, to enter into this Agreement.

		
	21.3
	Change of Trustee

No change of Trustee can occur without the prior written consent of the other parties, which consent must not be unreasonably withheld or delayed.
		
	22
	Default

		
	22.1
	Default Notice

If an Event of Default, other than an Insolvency Event or Change of Control, occurs in relation to a Shareholder (Relevant Party), any other Shareholder may give a notice (Default Notice) to all other Shareholders specifying the Event of Default and requiring the Relevant Party to remedy the default within 10 Business Days after the Default Notice is given to the Relevant Party.
		
	22.2
	Consequences of default

If a Shareholder (Defaulting Party):
		
	(a)
	receives a Default Notice and does not comply with the notice within the period referred to in clause 22.1;

Shareholders Agreement         page 32

 

		
	(b)
	is the subject of an Insolvency Event; or

		
	(c)
	is the subject of a Change of Control that has not had the prior written approval of the other Shareholders,

then, without limiting any other rights or remedies that the other Shareholders may have against the Defaulting Party:
		
	(d)
	despite any other provision of this Agreement, any Director appointed by the Defaulting Party cannot formally consider nor vote on any matter considered at Board meetings during that period or whilst the default in question continues;

		
	(e)
	other than the Defaulting Party's right to receive sale proceeds if its Shares are sold as contemplated by clause 22.2(f), all rights under this Agreement or otherwise attaching to the Shares (including voting rights) held by the Defaulting Party or its appointed Director will be suspended until the default is remedied (if applicable) and otherwise will be suspended indefinitely; and

		
	(f)
	the Defaulting Party is taken to have issued a Transfer Notice to the Board for all the Defaulting Party's Shares and clause 13 and any other applicable provisions of this Agreement will apply to the sale of those Shares, except that the Shares will not be offered to the Defaulting Party or any Shareholder that is also a Related Entity of the Defaulting Party.

		
	23
	Resolution of deadlocks

		
	23.1
	Adjourned meeting 

If a matter requiring the Special Majority Vote of the Directors or the Shareholders is raised in good faith, but not passed, the Directors or Shareholders (as the case may be) must cause the following procedure to be followed:
		
	(a)
	the meeting will, at the request of a Director or a Shareholder (as applicable), be adjourned to a date not earlier than 5 Business Days and not later than 10 Business Days after the date of the original meeting; and

		
	(b)
	the resolution must be proposed again and reconsidered at the adjourned meeting.

		
	23.2
	Deadlock 

If on 3 or more occasions in any period of 6 consecutive months a resolution is reconsidered at an adjourned meeting under clause 23.1 but is not passed, then any Director or Shareholder (as the case may be) may at any time within 30 days after the end of that  6 month period notify the other Directors or Shareholders (as applicable) under this clause 23.2, in which case a deadlock is taken to have occurred (Deadlock).
		
	23.3
	Mediation 

If a Deadlock occurs, then the Deadlock must be referred to mediation in accordance with the following:

Shareholders Agreement         page 33

 

		
	(a)
	The Directors or Shareholders (as applicable) must agree on a mediator within 5 Business days.  If they fail to do so, any party may request the Australian Dispute Centre (ADC) to appoint a mediator.

		
	(b)
	Any mediator agreed by the parties or appointed byADC must be independent and impartial and have appropriate qualifications and experience relevant to negotiating a resolution of the Deadlock.

		
	(c)
	The mediation must be commenced within 20 Business Days after the mediator has been appointed and must be concluded within 30 Business Days after the mediator has been appointed, unless otherwise agreed between the parties to the Dispute.

		
	(d)
	The mediation must take place in Brisbane, Australia.

		
	(e)
	The parties must in good faith co-operate with the mediator and must comply with requests by the mediator including requests to submit written materials, provide evidence, attend meetings and pay the mediator's fees. Each party must pay its own costs of complying with this clause 23.3.  The Company must pay the costs of any Mediator engaged.

		
	(f)
	The parties agree that the mediation will be private and confidential and they undertake not to rely on or introduce as evidence in any arbitral or judicial proceedings, whether or not such proceedings relate to the Dispute that is the subject of the mediation, any matter relating to the mediation (including the existence of the mediation), any settlement agreement, materials created for the purpose of the mediation and documents produced by another party in the mediation except:

		
	(i)
	for the purpose of making an application to a court of competent jurisdiction to enforce the settlement agreement;

		
	(ii)
	pursuant to the order of a court of competent jurisdiction; or

		
	(iii)
	if required by the law of any State which is binding on the party making the disclosure.

		
	(g)
	Without limiting any other right that a Shareholder may have to Transfer Shares under this Agreement, if after exhausting the procedure set out in this clause 23.3, the Deadlock has not been resolved, then clause 23.4 applies without the necessity of first complying with clause 13.

		
	23.4
	Party may offer to Sell Shares

		
	(a)
	If the Deadlock is not resolved within the period set out in clause 23.3(c), then within 10 Business Days after that period expires, any Shareholder (Offeror) may make an unconditional written offer (Offer Notice) to the other Shareholders (Receiving Parties) to either:

		
	(i)
	sell all of the Offeror's Shares to the Receiving Parties at the price and on the terms specified in the Offer Notice; or

		
	(ii)
	buy all of the Receiving Parties' Shares at the price and on the terms specified in the Offer Notice,

and otherwise on the terms set out in this clause 23.4. 

Shareholders Agreement         page 34

 

		
	(b)
	The Receiving Parties must, within 5 Business Days after receipt of an Offer Notice under clause 23.4(a)(i), either:

		
	(i)
	purchase all the Offeror's Shares (with the number of Shares to be purchased by each Receiving Party being calculated under clause 23.4(f)) for the price and on the terms specified in the Offer Notice; or

		
	(ii)
	collectively give notice (Counter Purchase Notice) to the Offeror stating that the Receiving Parties:

		
	(A)
	do not intend to purchase the Offeror's Shares; and

		
	(B)
	instead requiring the Offeror to purchase all of the Receiving Parties' Shares at the price per Share and on the other terms set out in the Offer Notice.

If the Receiving Parties do not comply with this clause 23.4(b) within that 5 Business Day period, the Receiving Parties will be taken to have made an election under, and must comply with, clause 23.4(b)(i).
		
	(c)
	Not later than 10 Business Days after receipt of a Counter Purchase Notice given under clause 23.4(b)(ii), the Offeror must purchase the Receiving Parties' Shares at the price per Share and on the terms set out in the Offer Notice.

		
	(d)
	The Receiving Parties must, within 5 Business Days after receipt of an Offer Notice under clause 23.4(a)(ii), either:

		
	(i)
	sell all of their Shares to the Offeror for the price and on the terms specified in the Offer Notice; or

		
	(ii)
	give notice (Counter Sale Notice) to the Offeror stating that the Receiving Parties:

		
	(A)
	do not intend to sell their Shares; and

		
	(B)
	instead require the Offeror to sell all of its Shares to the Receiving Parties (with the number of Shares to be sold to each Receiving Party being calculated under clause 23.4(f)) at the price per Share and on the other terms set out in the Offer Notice.

If the Receiving Parties do not comply with this clause 23.4(d) within that 5 Business Day period, the Receiving Parties will be taken to have made an election under, and must comply with, clause 23.4(d)(i).
		
	(e)
	Not later than 10 Business Days after receipt of a Counter Sale Notice given under clause 23.4(d)(ii), the Offeror must sell all of its Shares to the Receiving Parties at the price per Share and on the terms set out in the Offer Notice.

		
	(f)
	For the purposes of clauses 23.4(b)(i) and 23.4(d)(ii), the number of Shares to be purchased by or sold to each Receiving Party must be determined by applying the following formula:

Shareholders Agreement         page 35

 

A  =  B  x  C/D 
where:
		
	A
	=    the number of Shares to be purchased by or sold to a Receiving Party, which number may be rounded up or down to the nearest whole number at the discretion of the Board if A is not a whole number;

		
	B
	=    the total number of the Offeror’s Shares;

		
	C
	=    the number of Shares held by that Receiving Party at that time; and

		
	D
	=    the total number of Shares held by all Receiving Parties at that time.

		
	(g)
	Completion of the Transfer of Shares under clause 23.4(b)(i), clause 23.4(c), clause 23.4(d)(i) or clause 23.4(e) as applicable must take place in accordance with clause 17.

		
	24
	Termination

		
	24.1
	When terminated

Subject to clause 24.3, this Agreement will be terminated:
		
	(a)
	by mutual agreement in writing of all Shareholders;

		
	(b)
	for any Shareholder, if and when it ceases to hold, directly or indirectly, any Shares;

		
	(c)
	if and when the Company is deregistered or wound up voluntarily or by an order of a court; or

		
	(d)
	if the Company is listed on any financial market (as that term is defined in the Corporations Act).

		
	24.2
	Consequences generally

Subject to clause 24.3, on the termination of this Agreement, this Agreement is at an end as to its future operation except for the enforcement of any right or claim that arises on, or has arisen before, the termination.
		
	24.3
	Clauses surviving termination

Despite any other provision of this Agreement, this clause 24 and clauses 1, 17, 18, 19, 20, 25 and 26 survive the expiry or termination of this Agreement.
		
	25
	Notices

Any notice or other communication to or by a party under this Agreement:
		
	(a)
	must be given in accordance with this clause 25;

		
	(b)
	may be given by personal service, post or facsimile;

Shareholders Agreement         page 36

 

		
	(c)
	must be in writing, legible and in English addressed (depending on the manner in which it is given) as shown in Schedule 2 or addressed in accordance with any updated details last notified by the party to the sender by notice given in accordance with this clause;

		
	(d)
	must be signed:

		
	(i)
	in the case of a corporation registered in Australia, by any authorised representative or by the appropriate office holders of that corporation in accordance with the Corporations Act; or

		
	(ii)
	in the case of a corporation registered outside of Australia, by a person duly authorised by the sender in accordance with the laws governing the place of registration of that corporation;

		
	(e)
	is taken to be given by the sender and received by the addressee:

		
	(i)
	if delivered in person, when delivered to the addressee;

		
	(ii)
	if posted, at 9.00 am on the third Business Day after the date of posting to the addressee whether delivered or not; or

		
	(iii)
	if sent by email the earlier of:

		
	(A)
	the time that the sender receives an automated message from the recipient’s information system confirming delivery of the email; or

		
	(iv)
	the time that the email is first opened or read by the recipient, or an employee or officer of the recipient

but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time), it is taken to have been received at 9.00 am on the next Business Day.

Shareholders Agreement         page 37

 

		
	26
	General

		
	26.1
	Obligations are several

The rights, duties, obligations and liabilities of the Shareholders under this Agreement are several and not joint or joint and several.  Each Shareholder is individually responsible only for its obligations as specified in this Agreement.
		
	26.2
	Time of the essence

In this Agreement, time is of the essence unless otherwise stated.
		
	26.3
	Entire understanding

		
	(a)
	This Agreement contains the entire understanding between the parties concerning the subject matter of this Agreement and supersedes, terminates and replaces all prior agreements and communications between the parties concerning that subject matter.

		
	(b)
	Each party acknowledges that, except as expressly stated in this Agreement, it has not relied on any representation, warranty, undertaking or statement made by or on behalf of another party in relation to this Agreement or its subject matter.

		
	26.4
	No adverse construction

No provision of this Agreement is to be construed to the disadvantage of a party solely because that party was responsible for preparing or proposing this Agreement or the provision.
		
	26.5
	Further assurances

A party, at its own expense and within a reasonable time of being requested by another party to do so, must do all things and execute all documents that are reasonably necessary to give full effect to this Agreement.  
		
	26.6
	No waiver

		
	(a)
	A failure to exercise, a delay in exercising or partially exercising any power, right or remedy conferred on a party by or in respect of this Agreement does not operate as a waiver by that party of the power, right or remedy.

		
	(b)
	A single or partial exercise of any power, right or remedy does not preclude a further exercise of it or the exercise of any other power, right or remedy.  A waiver of a breach does not operate as a waiver of any other breach.

		
	26.7
	Remedies cumulative

Except as set out in this Agreement, the powers, rights and remedies under this Agreement are cumulative with and not exclusive of any powers, rights and remedies provided by Law independently of this Agreement.
		
	26.8
	Severability

Any provision of this Agreement which is invalid in any jurisdiction must, in relation to that jurisdiction, be:

Shareholders Agreement         page 38

 

		
	(a)
	read down to the minimum extent necessary to achieve its validity, if applicable; and

		
	(b)
	severed from this Agreement in any other case,

without invalidating or affecting the remaining provisions of this Agreement or the validity of that provision in any other jurisdiction.
		
	26.9
	No assignment

A party cannot assign or otherwise deal with the benefit of this Agreement without the prior written consent of each other party, which consent may be withheld by a party in its absolute discretion.
		
	26.10
	Consents and approvals

Unless this Agreement provides otherwise, where anything depends on the consent or approval of a party, then that consent or approval may be given conditionally, unconditionally or withheld, in the absolute discretion of that party.
		
	26.11
	Variation

This Agreement may be varied (Shareholder Variation) at any time as approved by a Special Majority Vote of the Shareholders or as evidenced by a written document signedf by at least that number of shareholders which in respect of their Shares would in aggregate constitute a Special Majority Vote.  A Shareholder Varation is binding on all Shareholders (whether or not they have approved the variation or signed a document incorporating the variation).  
		
	26.12
	Costs

The Company must pay all legal costs of and incidental to the preparation and completion of this Agreement, other than any costs and expenses that arise from a Shareholder obtaining independent advice which must be paid by that Shareholder.
		
	26.13
	Duty

Any duty (including related interest or penalties) payable in respect of this Agreement or any instrument created in connection with it must be paid by the Company.
		
	26.14
	Conflicting provisions

If there is any conflict between the main body of this Agreement and any schedules or annexures comprising it, then the provisions of the main body of this Agreement prevail.
		
	26.15
	No merger

Unless otherwise provided in this Agreement, the representations, undertakings, warranties and indemnities of the parties in, or the rights and remedies of the parties under, this Agreement will not merge on the completion of any transaction contemplated by this Agreement but will survive and remain enforceable to the fullest extent.
		
	26.16
	Relationship of parties

Shareholders Agreement         page 39

 

		
	(a)
	Except as otherwise expressly stated in this Agreement, nothing in this Agreement may be construed as creating a relationship of partnership, of principal and agent or of trustee and beneficiary between the parties or any of them.

		
	(b)
	A Shareholder must not act, represent or hold itself out as having authority to act as the agent of or in any way bind or commit the other Shareholders to any obligation.

		
	26.17
	Counterparts

If this Agreement consists of a number of signed counterparts, each is an original and all of the counterparts together constitute the same document.  A party may sign a counterpart by executing a signature page and electronically transmitting a copy of the signed page to each other party or their authorised representative.
		
	26.18
	Governing law and jurisdiction

		
	(a)
	This Agreement is governed by and must be construed in accordance with the Laws of Queensland.

		
	(b)
	The parties submit to the exclusive jurisdiction of the courts of that State and the Commonwealth of Australia in respect of all matters arising out of or relating to this Agreement, its performance or subject matter.

		
	(c)
	Each party waives any rights to:

		
	(i)
	object to the venue of any proceedings; or

		
	(ii)
	claim that the proceedings have been brought in an inconvenient forum or that the courts of another place are a more convenient forum,

if the proceedings have been brought in a court referred to in clause 26.18(b).

Shareholders Agreement         page 40

Schedule 1 – Shareholders

	
				
	Name
	Defined term used in this document
	Address for service
	Class and number of Shares held at date of this document (if any)

	Dyadic International (USA), Inc
	Dyadic
	Address
140 Intracoastal Pointe Drive, Suite 404 
Jupiter, FL 33477
Email Address
memalfarb@dyadic.com 
Contact
Mark Emalfarb
	Ordinary Shares
1,500,000

	JCL Biologics Pty Ltd
	JCL
	Address
2806 Ipswich Road 
Darra QLD 4076 Australia
Email Address
chris.burrell@luinabio.com.au 
Contact
Chris Burrell
	Ordinary Shares
6,000,000

Shareholders Agreement        page 41

Schedule 2 - Matters requiring Special Majority Approval

The following matters require a "Special Majority Approval" before being implemented by the Company:
any change, suspension, cessation or abandonment of the Business or any substantial part of it;
the submission of any tender, bid or proposal relating to any contract or commitment with a value of $100,000 or more or duration of more than 1 year;
the execution of any contract or entering into any commitment with a value of $200,000 or more or duration of more than 1 year;
incurring any capital expenditure or liability of $100,000 or more in any Financial Year for an individual transaction or for a series of transactions in aggregate;
the acquisition of any freehold land;
entering into leases of real property with rental payments of more than $50,000 for any Financial Year or duration of more than 1 year;
the appointment or removal of a Director;
the payment of remuneration or granting of other benefits to Directors or other officers of the Company;
the provision of guarantees or any other security by the Company to any Third Party;
obtaining new or increasing existing borrowings from any Third Party;
the sale of the whole or part of any material undertaking of the Company, including the sale of any assets with a value of $500,000 or more;
entering into any transaction (including with a Shareholder (or any Related Entity) that is:
not proposed on a commercial "arms-length" basis;
of any unusual or onerous nature; or
outside the ordinary course of the Business;
the issue of any shares or other securities, or options to take up unissued shares or other securities, in the capital of the Company other than under clause 7;
any declaration of dividends;
the execution of or entry into any service, employment or consultancy contract with:
a term of more than 12 months; or
a financial commitment of $100,000 or more;

Shareholders Agreement        page 42

        

the provision of any Encumbrance by the Company over any of its assets, property or undertaking securing an amount in excess of $100,000;
any application for, or acquisition or sale of, any shares or other securities in any company (other than the Company), including the formation, sale or acquisition of any company as a subsidiary of the Company;
the commencement of any new business (other than the Business);
a modification, variation or amendment to any agreement or arrangement (other than this Agreement) referred to in this clause 5.2;
subject to clause 7 a determination by the Board on any of the matters relating to funding of the Company;
the number and identity of signatories to any cheque or other bank accounts of the Company;
the adoption or variation of a Business Plan;
settling or proceeding with any litigation or other form of dispute resolution;
the compromising, compounding, releasing or discharging (except on payment in full) of any debt exceeding $50,000 due to the Company; and
any other matter that the Shareholders determine from time to time requires a decision by Special Majority Vote.

Shareholders Agreement         page 43

        

Execution page

Executed as an Agreement.

	
		
	 
	Signed by 
Novovet Pty Ltd 
by

	
sign here ►
	 
/s/ Chris Burrell_________________________ 
Director

	
print name ►
	_Chris Burrell_______________________

	
Sign here ►
	 /s/ Robbie White________________________ 
Company Secretary

	
print name ►
	Robbie White_______________________

	
		
	 
	Signed by 
JCL Biologics Pty Ltd 
by

	

sign here ►
	 
/s/ Chris Burrell_________________________ 
Director

	

print name ►
	_Chris Burrell___________________________

	

Sign here ►
	 /s/ Robbie White________________________ 
Company Secretary

	

print name ►
	Robbie White___________________________

Shareholders Agreement         page 44

        

	
		
	 
	Signed by 
Dyadic International (USA), Inc 
by

	

sign here ►
	 
/s/ Mark A Emalfarb    ____________________ 
Director

	

print name ►
	Mark A. Emalfarb

	 
	 

	
sign here ►
	 
/s/ Ping Rawson_________________________ 
Company Secretary

	
print name ►
	Ping Rawson

Shareholders Agreement         page 45

        

Annexure 1 – Deed of Accession

[Acceding Party's name] of [Acceding Party's address] (New Shareholder)

In favour of the parties to the Shareholders Agreement from time to time.

RECITALS
		
	A.
	The New Shareholder has acquired or will acquire securities in Novovet Pty Ltd ACN 631 032 749 (the Company).

		
	B.
	This deed poll is supplemental to the shareholders’ agreement dated 26 April 2019 between the Company and its shareholders in relation to the Company (Shareholders Agreement).

		
	C.
	The New Shareholder agrees to become a party to the Shareholders Agreement and to be bound by the terms and conditions of the Shareholders Agreement.

OPERATIVE PART
		
	1
	Definitions and Interpretation

Unless the context otherwise requires:
		
	(a)
	terms defined in the Shareholders Agreement have the same meaning when used in this deed; and

		
	(b)
	the interpretation provisions in the Shareholders Agreement apply to the interpretation of this deed.

		
	2
	New Shareholder’s Shareholding

The New Shareholder confirms that:
		
	(a)
	it has been given a copy of the Shareholders Agreement; and

		
	(b)
	it will hold Securities in the capacity of a Shareholder.

		
	3
	Covenant

The New Shareholder covenants and agrees with the parties to the Shareholders Agreement (whether or original or by accession) that, as from the date of this deed, the New Shareholder will comply with the provisions of the Shareholders Agreement as fully and in the same manner as if it were a party to the Shareholders Agreement from the date of the Shareholders Agreement.
		
	4
	Notices

The notice details of the New Shareholder are as follows:
		
	(a)
	address: [insert address]; 

Shareholders Agreement         page 46

        

		
	(b)
	and attention: [insert name of person notices should be sent to]; and

		
	(c)
	email: [insert email address].

		
	5
	Costs

The New Shareholder is responsible for all legal and other costs and expenses of and incidental to the preparation and execution of this deed and any stamp duty payable in connection with this deed.
		
	6
	Governing law

This deed is governed by the laws in force from time to time in the State of Queensland.

EXECUTED as a deed poll

[insert appropriate execution clause]

Shareholders Agreement         page 47Wells Fargo & Company 8-K

 

Exhibit
4.1

  

[Face
of Note]

 

Unless
this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”),
to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

 

	CUSIP NO. 95001H4M0	FACE AMOUNT: $__________
	REGISTERED NO. __	 

  

WELLS
FARGO FINANCE LLC

 

MEDIUM-TERM
NOTE, SERIES A

Fully
and Unconditionally Guaranteed by Wells Fargo & Company

 

Partial
Principal at Risk Securities Linked to the S&P 500® Index

due May 2, 2024

 

WELLS
FARGO FINANCE LLC, a limited liability company, duly organized and existing under the laws of the State of Delaware (hereinafter
called the “Company,” which term includes any successor corporation under and as defined in the Indenture hereinafter
referred to), for value received, hereby promises to pay to CEDE & Co., or registered assigns, an amount equal to the Maturity
Payment Amount (as defined below), in such coin or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, on the Stated Maturity Date. The “Initial Stated Maturity Date”
shall be May 2, 2024. If the Calculation Day (as defined below) is not postponed, the Initial Stated Maturity Date will be the
“Stated Maturity Date.” If the Calculation Day is postponed, the “Stated Maturity Date”
shall be the later of (i) the Initial Stated Maturity Date and (ii) three Business Days (as defined below) after the Calculation
Day as postponed. This Security shall not bear any interest.

 

Any
payments on this Security at Maturity will be made against presentation of this Security at the office or agency of the Company
maintained for that purpose in the City of Minneapolis, Minnesota and at any other office or agency maintained by the Company
for such purpose.

 

“Face
Amount” shall mean, when used with respect to this Security, the amount set forth on the face of this Security as its
“Face Amount.”

 

     

     

    

 

Determination
of Maturity Payment Amount

 

The
“Maturity Payment Amount” of this Security will equal:

 

		•	if
                                         the Ending Level is greater than the Starting Level: the Face Amount plus the lesser
                                         of:

 

	(i)	 	Face
    Amount x	 	Ending
    Level – Starting Level

    Starting Level	 	    x
    Participation Rate	 	  ;
    and

 

(ii)
the Maximum Return; or

 

		•	if
                                         the Ending Level is less than the Starting Level: the greater of: 

 

	(i)
    	Face
    Amount — 	 	Face
    Amount x	Starting
    Level - Ending Level

    Starting Level	 	  ;
    and

 

(ii)
the Minimum Payment at Maturity

 

All
calculations with respect to the Maturity Payment Amount will be rounded to the nearest one hundred-thousandth, with five one-millionths
rounded upward (e.g., 0.000005 would be rounded to 0.00001); and the Maturity Payment Amount will be rounded to the nearest cent,
with one-half cent rounded upward.

 

“Index”
shall mean the S&P 500® Index.

 

The
“Pricing Date” shall mean April 29, 2019.

 

The
“Starting Level” is 2943.03, the Closing Level of the Index on the Pricing Date.

 

The
“Closing Level” of the Index on any Trading Day means the official closing level of the Index reported by the
Index Sponsor on such Trading Day, as obtained by the Calculation Agent on such Trading Day from the licensed third-party market
data vendor contracted by the Calculation Agent at such time; in particular, taking into account the decimal precision and/or
rounding convention employed by such licensed third-party market data vendor on such date, subject to the provisions set forth
below under “Adjustments to the Index,” “Discontinuance of the Index” and “Market Disruption Events.”

 

The
“Ending Level” will be the Closing Level of the Index on the Calculation Day.

 

The
“Participation Rate” is 100%.

 

The
“Minimum Payment at Maturity” is 95% of the Face Amount of this Security.

 

The
“Maximum Return” is 60% of the Face Amount of this Security.

 

“Index
Sponsor” shall mean S&P Dow Jones Indices LLC. 

 

    2 

     

    

 

“Business
Day” shall mean a day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or regulation to close in New York, New York.

 

A
“Trading Day” means a day, as determined by the Calculation Agent, on which (i) the Relevant Stock Exchanges
with respect to each security underlying the Index are scheduled to be open for trading for their respective regular trading sessions
and (ii) each Related Futures or Options Exchange is scheduled to be open for trading for its regular trading session.

 

The
“Related Futures or Options Exchange” for the Index means an exchange or quotation system where trading has
a material effect (as determined by the Calculation Agent) on the overall market for futures or options contracts relating to
the Index.

 

The
“Relevant Stock Exchange” for any security underlying the Index means the primary exchange or quotation system
on which such security is traded, as determined by the Calculation Agent.

 

The
“Calculation Day” shall be April 29, 2024. If such day is not a Trading Day, the Calculation Day will be postponed
to the next succeeding Trading Day. The Calculation Day is also subject to postponement due to the occurrence of a Market Disruption
Event (as defined below). If a Market Disruption Event occurs or is continuing with respect to the Index on the Calculation Day,
such Calculation Day will be postponed to the first succeeding Trading Day on which a Market Disruption Event has not occurred
and is not continuing; however, if such first succeeding Trading Day has not occurred as of the eighth Trading Day after the originally
scheduled Calculation Day, that eighth Trading Day shall be deemed to be the Calculation Day. If the Calculation Day has been
postponed eight Trading Days after the originally scheduled Calculation Day and a Market Disruption Event occurs or is continuing
on such eighth Trading Day, the Calculation Agent will determine the Closing Level of the Index on such eighth Trading Day in
accordance with the formula for and method of calculating the Closing Level of the Index last in effect prior to commencement
of the Market Disruption Event, using the closing price (or, with respect to any relevant security, if a Market Disruption Event
has occurred with respect to such security, its good faith estimate of the value of such security at the Scheduled Closing Time
of the Relevant Stock Exchange for such security or, if earlier, the actual closing time of the regular trading session of such
Relevant Stock Exchange) on such date of each security included in the Index. As used herein, “closing price”
means, with respect to any security on any date, the Relevant Stock Exchange traded or quoted price of such security as of the
Scheduled Closing Time of the Relevant Stock Exchange for such security or, if earlier, the actual closing time of the regular
trading session of such Relevant Stock Exchange.

 

“Calculation
Agent Agreement” shall mean the Calculation Agent Agreement dated as of May 18, 2018 between the Company and the Calculation
Agent, as amended from time to time.

 

“Calculation
Agent” shall mean the Person that has entered into the Calculation Agent Agreement with the Company providing for, among
other things, the determination of the Ending Level and the Maturity Payment Amount, which term shall, unless the context otherwise

 

    3 

     

    

 

requires,
include its successors under such Calculation Agent Agreement. The initial Calculation Agent shall be Wells Fargo Securities,
LLC. Pursuant to the Calculation Agent Agreement, the Company may appoint a different Calculation Agent from time to time after
the initial issuance of this Security without the consent of the Holder of this Security and without notifying the Holder of this
Security.

 

Adjustments
to the Index

 

If
at any time the method of calculating the Index or a Successor Equity Index, or the closing level thereof, is changed in a material
respect, or if the Index or a Successor Equity Index is in any other way modified so that such index does not, in the opinion
of the Calculation Agent, fairly represent the level of such index had those changes or modifications not been made, then the
Calculation Agent will, at the close of business in New York, New York, on each date that the closing level of such index is to
be calculated, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary
in order to arrive at a level of an index comparable to the Index or Successor Equity Index as if those changes or modifications
had not been made, and the Calculation Agent will calculate the closing level of the Index or Successor Equity Index with reference
to such index, as so adjusted. Accordingly, if the method of calculating the Index or Successor Equity Index is modified so that
the level of such index is a fraction or a multiple of what it would have been if it had not been modified (e.g., due to
a split or reverse split in such equity index), then the Calculation Agent will adjust the Index or Successor Equity Index in
order to arrive at a level of such index as if it had not been modified (e.g., as if the split or reverse split had not
occurred).

 

Discontinuance
of the Index

 

If
the Index Sponsor discontinues publication of the Index, and the Index Sponsor or another entity publishes a successor or substitute
equity index that the Calculation Agent determines, in its sole discretion, to be comparable to the Index (a “Successor
Equity Index”), then, upon the Calculation Agent’s notification of that determination to the Trustee and the Company,
the Calculation Agent will substitute the Successor Equity Index as calculated by the Index Sponsor or any other entity and calculate
the Ending Level as described above. Upon any selection by the Calculation Agent of a Successor Equity Index, the Company will
cause notice to be given to the Holder of this Security.

 

In
the event that the Index Sponsor discontinues publication of the Index prior to, and the discontinuance is continuing on, the
Calculation Day and the Calculation Agent determines that no Successor Equity Index is available at such time, the Calculation
Agent will calculate a substitute Closing Level for the Index in accordance with the formula for and method of calculating the
Index last in effect prior to the discontinuance, but using only those securities that comprised the Index immediately prior to
that discontinuance. If a Successor Equity Index is selected or the Calculation Agent calculates a level as a substitute for the
Index, the Successor Equity Index or level will be used as a substitute for the Index for all purposes, including the purpose
of determining whether a Market Disruption Event exists.

 

If
on the Calculation Day the Index Sponsor fails to calculate and announce the level of the Index, the Calculation Agent will calculate
a substitute Closing Level of the Index in 

 

    4 

     

    

 

accordance
with the formula for and method of calculating the Index last in effect prior to the failure, but using only those securities
that comprised the Index immediately prior to that failure; provided that, if a Market Disruption Event occurs or is continuing
on such day, then the provisions set forth above under the definition of “Calculation Day” shall apply in lieu of
the foregoing.

 

Market
Disruption Events 

 

A
“Market Disruption Event” means any of the following events as determined by the Calculation Agent in its sole
discretion:

 

		(A)	The
                                         occurrence or existence of a material suspension of or limitation imposed on trading
                                         by the Relevant Stock Exchanges or otherwise relating to securities which then comprise
                                         20% or more of the level of the Index or any Successor Equity Index at any time during
                                         the one-hour period that ends at the Close of Trading on that day, whether by reason
                                         of movements in price exceeding limits permitted by those Relevant Stock Exchanges or
                                         otherwise.

 

		(B)	The
                                         occurrence or existence of a material suspension of or limitation imposed on trading
                                         by any Related Futures or Options Exchange or otherwise in futures or options contracts
                                         relating to the Index or any Successor Equity Index on any Related Futures or Options
                                         Exchange at any time during the one-hour period that ends at the Close of Trading on
                                         that day, whether by reason of movements in price exceeding limits permitted by the Related
                                         Futures or Options Exchange or otherwise.

 

		(C)	The
                                         occurrence or existence of any event, other than an early closure, that materially disrupts
                                         or impairs the ability of market participants in general to effect transactions in, or
                                         obtain market values for, securities that then comprise 20% or more of the level of the
                                         Index or any Successor Equity Index on their Relevant Stock Exchanges at any time during
                                         the one-hour period that ends at the Close of Trading on that day.

 

		(D)	The
                                         occurrence or existence of any event, other than an early closure, that materially disrupts
                                         or impairs the ability of market participants in general to effect transactions in, or
                                         obtain market values for, futures or options contracts relating to the Index or any Successor
                                         Equity Index on any Related Futures or Options Exchange at any time during the one-hour
                                         period that ends at the Close of Trading on that day.

 

		(E)	The
                                         closure on any Exchange Business Day of the Relevant Stock Exchanges on which securities
                                         that then comprise 20% or more of the level of the Index or any Successor Equity Index
                                         are traded or any Related Futures or Options Exchange prior to its Scheduled Closing
                                         Time unless the earlier closing time is announced by the Relevant Stock Exchange or Related
                                         Futures or Options Exchange, as applicable, at least one hour prior to the earlier of
                                         (1) the actual closing time for the regular trading session on such Relevant Stock Exchange
                                         or Related Futures 

 

    5 

     

    

 

			or
                                         Options Exchange, as applicable, and (2) the submission deadline for orders to be entered
                                         into the Relevant Stock Exchange or Related Futures or Options Exchange, as applicable,
                                         system for execution at such actual closing time on that day.

 

		(F)	The
                                         Relevant Stock Exchange for any security underlying the Index or Successor Equity Index
                                         or any Related Futures or Options Exchange fails to open for trading during its regular
                                         trading session.

 

For
purposes of determining whether a Market Disruption Event has occurred:

 

		(1)	the
                                         relevant percentage contribution of a security to the level of the Index or any Successor
                                         Equity Index will be based on a comparison of (x) the portion of the level of such Index
                                         attributable to that security and (y) the overall level of the Index or Successor Equity
                                         Index, in each case immediately before the occurrence of the Market Disruption Event;

 

		(2)	the
                                         “Close of Trading” on any Trading Day for the Index or any Successor
                                         Equity Index means the Scheduled Closing Time of the Relevant Stock Exchanges with respect
                                         to the securities underlying the Index or Successor Equity Index on such Trading Day;
                                         provided that, if the actual closing time of the regular trading session of any
                                         such Relevant Stock Exchange is earlier than its Scheduled Closing Time on such Trading
                                         Day, then (x) for purposes of clauses (A) and (C) of the definition of “Market
                                         Disruption Event” above, with respect to any security underlying the Index or Successor
                                         Equity Index for which such Relevant Stock Exchange is its Relevant Stock Exchange, the
                                         “Close of Trading” means such actual closing time and (y) for purposes of
                                         clauses (B) and (D) of the definition of “Market Disruption Event” above,
                                         with respect to any futures or options contract relating to the Index or Successor Equity
                                         Index, the “close of trading” means the latest actual closing time of the
                                         regular trading session of any of the Relevant Stock Exchanges, but in no event later
                                         than the Scheduled Closing Time of the Relevant Stock Exchanges;

 

		(3)	the
                                         “Scheduled Closing Time” of any Relevant Stock Exchange or Related
                                         Futures or Options Exchange on any Trading Day for the Index or any Successor Equity
                                         Index means the scheduled weekday closing time of such Relevant Stock Exchange or Related
                                         Futures or Options Exchange on such Trading Day, without regard to after hours or any
                                         other trading outside the regular trading session hours; and

 

		(4)	an
                                         “Exchange Business Day” means any Trading Day for the Index or any
                                         Successor Equity Index on which each Relevant Stock Exchange for the securities underlying
                                         the Index or any Successor Equity Index and each Related Futures or Options Exchange
                                         are open for trading during their respective regular trading sessions, notwithstanding
                                         any such Relevant Stock Exchange or Related Futures or Options Exchange closing prior
                                         to its Scheduled Closing Time.

 

    6 

     

    

 

Calculation
Agent

 

The
Calculation Agent will determine the Maturity Payment Amount and the Ending Level. In addition, the Calculation Agent will (i)
determine if adjustments are required to the Closing Level of the Index under the circumstances described in this Security, (ii)
if publication of the Index is discontinued, select a Successor Equity Index or, if no Successor Equity Index is available, determine
the Closing Level of the Index under the circumstances described in this Security, and (iii) determine whether a Market Disruption
Event or non-Trading Day has occurred.

 

The
Company covenants that, so long as this Security is Outstanding, there shall at all times be a Calculation Agent (which shall
be a broker-dealer, bank or other financial institution) with respect to this Security.

 

All
determinations made by the Calculation Agent with respect to this Security will be at the sole discretion of the Calculation Agent
and, in the absence of manifest error, will be conclusive for all purposes and binding on the Company and the Holder of this Security.

 

Redemption
and Repayment

 

This
Security is not subject to redemption at the option of the Company or repayment at the option of the Holder hereof prior to May
2, 2024. This Security is not entitled to any sinking fund.

 

Acceleration

 

If
an Event of Default, as defined in the Indenture, with respect to this Security shall occur and be continuing, the Maturity Payment
Amount (calculated as set forth in the next sentence) of this Security may be declared due and payable in the manner and with
the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture
will be equal to the Maturity Payment Amount hereof calculated as provided herein as though the date of acceleration was the Calculation
Day. 

 

 

 

Reference
is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

 

Unless
the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature
or its duly authorized agent under the Indenture referred to on the reverse hereof by manual signature, this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

    7 

     

    

 

IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

DATED:

 

	 	WELLS FARGO FINANCE LLC
	 	 	 
	 	By:	 
	 	 	 
	 	 	Its:

 

	 	Attest:	 
	 	 	 
	 	 	Its:

 

	TRUSTEE’S
    CERTIFICATE OF

 AUTHENTICATION

 This is one of the Securities of the series designated therein described in the within-mentioned
    Indenture.	 
	 	 	 
	CITIBANK,
    N.A.,	 
	 	as Trustee	 
	 	 	 
	By:	 	 
	 	Authorized Signature	 
	 	 	 
	 	                    OR	 
	 	 	 
	WELLS FARGO
    BANK, N.A.,	 
	 	as Authenticating Agent
    for the Trustee	 
	 	 	 
	By:	 	 
	 	Authorized Signature	 

 

    8 

     

    

 

[Reverse
of Note]

 

WELLS
FARGO FINANCE LLC

 

MEDIUM-TERM
NOTE, SERIES A

Fully
and Unconditionally Guaranteed by Wells Fargo & Company

 

Partial
Principal at Risk Securities Linked to the S&P 500® Index

due May 2, 2024

 

This
Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued
and to be issued in one or more series under an indenture dated as of April 25, 2018, as amended or supplemented from time to
time (herein called the “Indenture”), among the Company, as issuer, Wells Fargo & Company, as guarantor
(the “Guarantor”) and Citibank, N.A., as trustee (herein called the “Trustee,” which term
includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor,
the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series of the Securities designated as Medium-Term Notes, Series A, of the Company. The
amount payable on the Securities of this series may be determined by reference to the performance of one or more equity-, commodity-
or currency-based indices, exchange traded funds, securities, commodities, currencies, statistical measures of economic or financial
performance, or a basket comprised of two or more of the foregoing, or any other market measure or may bear interest at a fixed
rate or a floating rate. The Securities of this series may mature at different times, be redeemable at different times or not
at all, be repayable at the option of the Holder at different times or not at all and be denominated in different currencies.

 

The
Securities are issuable only in registered form without coupons and will be either (a) book-entry securities represented by one
or more Global Securities recorded in the book-entry system maintained by the Depositary or (b) certificated securities issued
to and registered in the names of, the beneficial owners or their nominees.

 

The
Company agrees, to the extent permitted by law, not to voluntarily claim the benefits of any laws concerning usurious rates of
interest against a Holder of this Security.

 

Guarantee

 

The
Securities of this series are fully and unconditionally guaranteed by the Guarantor as and to the extent set forth in the Indenture.

 

Modification
and Waivers 

 

The
Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Company and the Guarantor and the rights of the Holders of the Securities of each series to be affected under the Indenture
at any time by the 

 

    9 

     

    

 

Company,
the Guarantor and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected, acting together as a class. The Indenture also contains provisions permitting the Holders
of a majority in principal amount of the Securities of all series at the time Outstanding affected by certain provisions of the
Indenture, acting together as a class, on behalf of the Holders of all Securities of such series, to waive compliance by the Company
or the Guarantor with those provisions of the Indenture. Certain past defaults under the Indenture and their consequences may
be waived under the Indenture by the Holders of a majority in principal amount of the Securities of each series at the time Outstanding,
on behalf of the Holders of all Securities of such series. Solely for the purpose of determining whether any consent, waiver,
notice or other action or Act to be taken or given by the Holders of Securities pursuant to the Indenture has been given or taken
by the Holders of Outstanding Securities in the requisite aggregate principal amount, the principal amount of this Security will
be deemed to be equal to the amount set forth on the face hereof as the “Face Amount” hereof. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security
and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.

 

Defeasance

 

Section
403 and Article Fifteen of the Indenture and the provisions of clause (ii) of Section 401(1)(B) of the Indenture, relating to
defeasance at any time of (a) the entire indebtedness on this Security and (b) certain restrictive covenants, upon compliance
by the Company or the Guarantor with certain conditions set forth therein, shall not apply to this Security. The remaining provisions
of Section 401 of the Indenture shall apply to this Security.

 

Authorized
Denominations

 

This
Security is issuable only in registered form without coupons in denominations of $1,000 or any amount in excess thereof which
is an integral multiple of $1,000.

 

Registration
of Transfer

 

Upon
due presentment for registration of transfer of this Security at the office or agency of the Company in the City of Minneapolis,
Minnesota, a new Security or Securities of this series, with the same terms as this Security, in authorized denominations for
an equal aggregate Face Amount will be issued to the transferee in exchange herefor, as provided in the Indenture and subject
to the limitations provided therein and to the limitations described below, without charge except for any tax or other governmental
charge imposed in connection therewith.

 

This
Security is exchangeable for definitive Securities in registered form only if (x) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for this Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a successor depositary is not appointed within 90 days after
the Company receives such notice or becomes aware of such ineligibility, (y) the Company in its sole discretion determines that
this Security shall be exchangeable for definitive Securities in registered form and notifies the Trustee thereof or (z) an Event
of Default with respect 

 

    10 

     

    

 

to
the Securities represented hereby has occurred and is continuing. If this Security is exchangeable pursuant to the preceding sentence,
it shall be exchangeable for definitive Securities in registered form, having the same date of issuance, Stated Maturity Date
and other terms and of authorized denominations aggregating a like amount.

 

This
Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor of the Depositary
or a nominee of such successor. Except as provided above, owners of beneficial interests in this Global Security will not be entitled
to receive physical delivery of Securities in definitive form and will not be considered the Holders hereof for any purpose under
the Indenture.

 

Prior
to due presentment of this Security for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the
Company, the Guarantor or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall
be affected by notice to the contrary.

 

Obligation
of the Company Absolute

 

No
reference herein to the Indenture and no provision of this Security or the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the Maturity Payment Amount at the times, place and rate, and in the coin
or currency, herein prescribed, except as otherwise provided in this Security.

 

No
Personal Recourse

 

No
recourse shall be had for the payment of the Maturity Payment Amount, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or any successor corporation or of the Guarantor or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly
waived and released.

 

Defined
Terms

 

All
terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless
otherwise defined in this Security.

 

Governing
Law

 

This
Security shall be governed by and construed in accordance with the law of the State of New York, without regard to principles
of conflicts of laws.

 

    11 

     

    

 

ABBREVIATIONS

 

The
following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:

 

	TEN
    COM 	--	as tenants in common	 
	 	 	 	 
	TEN ENT	--	as tenants by the entireties	 
	 	 	 	 
	JT TEN	--	as joint tenants with right

    of survivorship and not

    as tenants in common	 

  

UNIF
GIFT MIN ACT -- ______________________________ Custodian _____________________________

(Cust)                                                                        (Minor)

	Under
    Uniform Gifts to Minors Act	 
	 	 
	(State)	 

  

Additional
abbreviations may also be used though not in the above list.

 

FOR
VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

 

Please
Insert Social Security or

Other
Identifying Number of Assignee

 

	 	 
	 	 
	 	 

  

(Please
print or type name and address including postal zip code of Assignee)

 

    12 

     

    

 

the
within Security of WELLS FARGO FINANCE LLC and does hereby irrevocably constitute and appoint __________________ attorney to
transfer the said Security on the books of the Company, with full power of substitution in the premises.

 

	Dated:	 	 	 
	 	 	 	 
	 	 	 	 

 

NOTICE:
The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular,
without alteration or enlargement or any change whatever.

 

    13

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