Document:

Exhibit 10.3.3

 

	
   

  	
   

  	
  Major Client Group

  
	
  Tel:
  (02) 9237 9731

  	
   

  	
   

  
	
  Fax:
  (02) 9237 9773

  	
   

  	
  Level
  23

  255 George Street

  SYDNEY NSW 2000

  

 

 

13th July 2004

 

The Directors

Channell Pty Limited

Q3, 391 Park Road

REGENTS PARK NSW 2143

 

Dear Sirs,

 

BANKING
FACILITIES

 

Further to our
recent discussions we are pleased to advise that National Australia Bank
Limited ABN 12 004 044 937 (the Bank) has
agreed to provide the facilities (each a Facility and
collectively the Facilities) described below to
Channell Pty Limited ABN 29 002 735 622 (the Company).
The word Borrower used in this letter means the.

 

The Facilities
are offered subject to the terms and conditions of this letter of offer and the
normal conditions applicable to Bank facilities of this sort and this letter of
offer supersedes all prior understandings and agreements between the Bank and
the Borrower, whether written or oral, unless specified in this letter of
offer.

 

DEBTOR
FINANCE FACILITY

 

	
  Company:

  	
   

  	
  Channell
  Pty Limited ABN 29 002 735 622

  
	
   

  	
   

  	
   

  
	
  Limit:

  	
   

  	
  $1,200,000
  (One million two hundred thousand dollars).

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  To
  cover financial requirements of the day to day operations of the Borrower.

  
	
   

  	
   

  	
   

  
	
  Purchase Charge:

  	
   

  	
  1.25%
  per annum, charged monthly. This fee is calculated on the Limit or peak debt,
  whichever is the greater.

  
	
   

  	
   

  	
   

  
	
  Interest:

  	
   

  	
  The
  30 day BBSY bid rate shown at approximately 10.10 am (Sydney time) on page “BBSY on the Reuters Monitor System” on the day the
  facility is drawn and then monthly thereafter, plus a margin of 1.25%.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  BBSY Rate is currently 5.47% per annum, variable.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest
  is payable monthly in arrears on the last business day of each month, and
  will be debited to the Participating Company’s account.

  

 

1

 

	
  Expiry Date:

  	
   

  	
  31st
  July 2005. The availability of this Facility and its repayment are at
  all times at the Bank’s discretion.

  
	
   

  	
   

  	
   

  
	
  Conditions:

  	
   

  	
  The
  terms contained in the Annexure F, Debtor
  Finance Facility Agreement (“Agreement”)- Terms attached to this
  letter of offer.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fundamentally,
  the Agreement sets out the procedure and conditions for the future sale to
  the Bank of debts arising out of your business. Under the Agreement, you may
  from time to time offer to sell the Bank debts by delivering an offer
  document called an Invoice Statement. It is then up to the Bank, in its
  discretion, whether or not to accept your offer.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Agreement sets our all the terms and conditions of the facility. The terms of
  this letter are in addition to the Agreement.

  
	
   

  	
   

  	
   

  

 

GUARANTEES
BY BANK FACILITY

 

	
  Company:

  	
   

  	
  Channell
  Pty Limited ABN 29 002 735 622

  
	
   

  	
   

  	
   

  
	
  Limit:

  	
   

  	
  $342,048
  (Three hundred and forty two thousand and forty eight dollars).

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  To
  allow for the issue of performance guarantees in the form of the Bank’s usual
  Bank Guarantee.

  
	
   

  	
   

  	
   

  
	
  Fees:

  	
   

  	
  An
  establishment fee of 3.00% per annum is payable on establishment of each
  guarantee and thereafter calendar half-yearly in advance calculated by
  reference to the aggregate of all guarantees then on issue and adjusted each
  subsequent half-year until the Bank’s liability under all guarantees has
  terminated.

  
	
   

  	
   

  	
   

  
	
  Conditions:

  	
   

  	
  Subject
  to the Bank’s usual terms and conditions documented in Annexure D.
  Guarantees will not be issued unless the Bank receives an executed Guarantee
  by Bank Indemnity and Request Form. No guarantee will be issued after the
  Expiry Date.

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  31st
  July 2005.

  

 

STANDBY
LETTER OF CREDIT FACILITY

 

	
  Company:

  	
   

  	
  Channell
  Pty Limited ABN 29 002 735 622

  
	
   

  	
   

  	
   

  
	
  Limit:

  	
   

  	
  USDL45,000
  (Forty five thousand United States dollars).

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  To
  enable the establishment of documentary letter of credit.

  
	
   

  	
   

  	
   

  
	
  Fees:

  	
   

  	
  An
  establishment fee of 3.00% per annum is payable on

  

 

2

 

	
   

  	
   

  	
  establishment
  of each guarantee and thereafter calendar half-yearly in advance calculated
  by reference to the aggregate of all guarantees then on issue and adjusted
  each subsequent half-year until the Bank’s liability under all guarantees has
  terminated.

  
	
   

  	
   

  	
   

  
	
  Conditions:

  	
   

  	
  Subject
  to the Bank’s usual terms and conditions documented in Annexure D
  and including without limitation a duly executed Documentary Credit
  Agreement.

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  15th
  March 2005.

  

 

REVOLVING
LEASE LIMIT

 

	
  Company:

  	
   

  	
  Channell
  Pty Limited ABN 29 002 735 622

  
	
   

  	
   

  	
   

  
	
  Limit:

  	
   

  	
  $250,000
  (Two hundred and fifty thousand dollars).

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  To
  purchase equipment under lease arrangements.

  
	
   

  	
   

  	
   

  
	
  Fee:

  	
   

  	
  As
  agreed for each individual lease.

  
	
   

  	
   

  	
   

  
	
  Conditions:

  	
   

  	
  Subject
  to the Bank’s usual terms and conditions documented separately, and including
  without limitation the Bank’s duly executed lease documentation.

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  31st
  July 2005

  

 

TREASURY
FACILITIES

 

In addition to the above facilities, the Bank’s
Treasury Operations have been allocated the necessary authority to quote for
the Company’s risk management requirements. 
Such facilities will remain uncommitted.

 

SECURITY

 

The documentation required by the Bank as security for
the Facilities is set out in the Schedule and
must be provided in a form and substance acceptable to the Bank.

 

REVIEW
DATE

 

All Facilities are subject to annual review by 31st
July 2005.  If the Bank decides to
extend one or all of the Facilities, it may do so on whatever terms it thinks
fit, in its absolute discretion after consulting with the Company and will
notify the Company accordingly.

 

GENERAL

 

In addition to the normal banking terms and conditions
applicable to the Facilities, the special terms and conditions set out in the
following annexures will also apply:

 

3

 

	
   

  	
  Annexure

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A

  	
   

  	
  General
  Terms and Conditions

  	
   

  
	
   

  	
  B

  	
   

  	
  Financial
  Undertakings

  	
   

  
	
   

  	
  C

  	
   

  	
  Conditions
  Precedent

  	
   

  
	
   

  	
  D

  	
   

  	
  Letters
  of Credit and Guarantees by Bank - Terms and Conditions

  	
   

  
	
   

  	
  E

  	
   

  	
  Schedule

  	
   

  
	
   

  	
  F

  	
   

  	
  Debtor
  Finance Facility Agreement

  	
   

  

 

VARIATION OF INTEREST RATES, MARGINS AND FEES

 

Unless specifically stated, interest rates, margins
and fees may be varied by the Bank in the light of conditions, prevailing from
time to time.  Although we will endeavour
to notify the Company of any change to fees as it occurs, if the Bank does not
do so for any reason, this will not prevent the charging of the new or adjusted
fee.

 

ACCEPTANCE

 

This offer remains available for acceptance until 31st
July 2004 after which it will at the Bank’s option lapse.

 

Acceptance of these Facilities and all the terms and
conditions of this letter of offer is required by way of a certified extract of
resolution of directors of the Company.

 

THE CODE OF BANKING PRACTICE

 

The Bank has adopted the Code of Banking Practice and
relevant provisions of the Code apply to this Letter of Offer if the Borrower
is a small business customer (as defined by the Code).  The Borrower can obtain from the Bank upon
request:

 

(a)                        information on the Bank’s current interest rates and standard fees
and charges relating to the Facilities as described in this Letter of Offer if
any;

 

(b)                       general descriptive information concerning the Bank’s banking
services including:

 

(i)                           for accounts with cheque access, general descriptive information
about cheques;

 

(ii)                        account opening procedures;

 

(iii)                     the Bank’s obligations regarding the confidentiality of the
Borrower’s information;

 

(iv)                    complaint handling procedures;

 

(v)                       bank cheques;

 

(vi)                    the advisability of the Borrower informing the Bank promptly when
the Borrower is in financial difficulty;

 

(vii)                 the
advisability of the Borrower reading the terms and conditions applying to each
banking service the Bank provides to the Borrower;

 

4

 

(c)                        general descriptive information above:

 

(i)                           the identification requirements of the Financial Transactions
Reports Act 1988;

 

(ii)                        the options available to the Borrower under the tax file number
legislation; and

 

(d)                       a copy of the Code of Banking Practice.

 

GENERAL

 

Please note that the terms, conditions and pricing
detailed in this letter have been provided for the sole use of the Borrower on
the understanding that none of the material will be divulged to outside parties
without the prior written consent of the Bank.

 

We trust that
the Facilities meet Borrower’s current requirements.  If any matter needs clarification, please do
not hesitate to contact me or Sam Mandoukos.

 

	
  Yours
  faithfully

  
	
   

  
	
   

  
	
  Graeme Johnson

  
	
  Senior
  Relationship Manager

  

 

5

 

ANNEXURE A

 

GENERAL
TERMS AND CONDITIONS

 

	
   

  	
  CONTENTS

  	
   

  
	
   

  	
   

  
	
   

  	
  1.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
  2.

  	
  GENERAL UNDERTAKINGS

  	
   

  
	
   

  	
  3.

  	
  ACCOUNTS

  	
   

  
	
   

  	
  4.

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
  5.

  	
  POTENTIAL
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
  6.

  	
  OPEN TREASURY
  TRANSACTIONS

  	
   

  
	
   

  	
  7.

  	
  NON-WAIVER

  	
   

  
	
   

  	
  8.

  	
  CLASS ORDER

  	
   

  
	
   

  	
  9.

  	
  COSTS AND EXPENSES

  	
   

  
	
   

  	
  10.

  	
  PAYMENTS AND TAXES

  	
   

  
	
   

  	
  11.

  	
  LATE PAYMENTS

  	
   

  
	
   

  	
  12.

  	
  ILLEGALITY

  	
   

  
	
   

  	
  13.

  	
  CHANGE IN
  CIRCUMSTANCE

  	
   

  
	
   

  	
  14.

  	
  TRUSTS

  	
   

  
	
   

  	
  15.

  	
  SET-OFF

  	
   

  
	
   

  	
  16.

  	
  CHANGE OF OWNERSHIP

  	
   

  
	
   

  	
  17.

  	
  APPOINTMENT OF
  CONSULTANTS

  	
   

  
	
   

  	
  18.

  	
  BREAK COSTS

  	
   

  
	
   

  	
  19.

  	
  HOLDING OVER

  	
   

  
	
   

  	
  20.

  	
  ASSIGNMENT

  	
   

  
	
   

  	
  21.

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
  22.

  	
  INCONSISTENCY

  	
   

  
	
   

  	
  23.

  	
  GOVERNING
  LAW AND JURISDICTION

  	
   

  
	
   

  	
  24.

  	
  DEFINITIONS

  	
   

  

 

6

 

1.                           REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Bank that as at the date of
this letter of offer and at all times thereafter:

 

(a)                        (incorporation)  It is duly incorporated and validly existing
under the laws of its place of incorporation;

 

(b)                       (power)  It has full power, authority and legal right
to carry on its business as presently conducted;

 

(c)                        (information is accurate)  All financial accounts, reports and factual
information furnished to the Bank at any time are true and accurate and not
misleading in any material respect, and no material change has taken place in
respect to any of them since the date they were presented to the Bank;

 

(d)                       (no default)   It is not in material default of any law or
any agreement, security or instrument with the Bank or any other financial
institution, and it is not in default in respect of any material monetary
obligation contracted by or imposed upon it;

 

(e)                        (no litigation)   No litigation, arbitration or administrative
proceedings are current or pending or, to its knowledge, threatened against it;

 

(f)                          (solvency)   It is solvent;

 

(g)                       (no potential event of default)  No Potential Event of Default has occurred
and is continuing;

 

(h)                       (no undisclosed trusts)  Except as disclosed to and agreed to by the
Bank in writing, it is not trustee of any trust;

 

(i)                           (insurance)  It has
taken out and kept in full force and effect insurance over all of its physical
assets and its premises for such amounts and against such risks as a reasonably
prudent person in the Borrower’s position would take out including, without
limitation, terrorism insurance.

 

The Borrower also gives the above representations and warranties in
respect of every guarantor and Security Provider.

 

These representations and warranties are deemed to be repeated with
reference to the facts and circumstances then existing at each date of
utilisation of any financial accommodation, rollover of any bills of exchange
or notes, at the beginning of each new interest period and at the date of
execution of each new document under which credit or financial accommodation is
granted by the Bank.

 

2.                           GENERAL UNDERTAKINGS

 

The Borrower undertakes to the Bank that, except with the prior written
consent of the Bank:

 

(a)                        (notify defaults)  It
will promptly advise the Bank of any Event of Default or potential Event of
Default;

 

7

 

(b)                       (insurance)  It will
take out and keep in full force and effect the insurance policies referred to
in sub-paragraph 1(i) above, and further:

 

(i)                          provide
evidence to the Bank of the currency of all insurances on each annual review,
or upon request by the Bank, whichever is the earlier, and promptly comply with
any request to take out further insurance cover as the Bank may reasonably
require to supplement the existing insurance policies of the Borrower; and

 

(ii)                       not do or omit
to do, or suffer or permit to be done or not done, anything which may
materially prejudice any insurance policy; and

 

(iii)                    not vary, rescind,
terminate or cancel any insurance policy without the written consent of the
Bank;

 

(c)                        (comply with laws)  It
will comply with all applicable laws and pay all obligations that if unpaid
might result in a lien or claim against any of the Borrower’s assets;

 

(d)                       (plant and machinery) 
It will maintain its plant and machinery in a state of good repair, fair
wear and tear excepted;

 

(e)                        (other financial accommodation)  It will not raise any financial accommodation
from any other party, or give any security in relation to it;

 

(f)                          (disposal of assets) 
it will not dispose of any assets having an aggregate value greater than
$100,000 other than in its usual and ordinary course of business;

 

(g)                       (continue to stay in business)  It will not engage in any other business
other than that in which it is presently operating;

 

(h)                     (no merger or acquisition)  It will not merge with or acquire another
company or entity;

 

(i)                         (no disposal of subsidiaries)  It will not dispose of any of its
subsidiaries; and

 

(j)                         (not give security)  It will not give any security over its
assets.

 

3.                           ACCOUNTS

 

The Borrower will prepare its financial accounts in accordance with
generally accepted Accounting Standards

 

The Borrower will deliver to the Bank:

 

(a)                        (annual accounts) within 
four months after the close of each financial year a copy of the annual
report of the Borrower, and an audited consolidated balance sheet and
consolidated profit and loss account of the Borrower for that financial year;

 

(b)                       (quarterly management accounts) within 30 days after the
close of each financial quarter, a copy of the unaudited quarterly balance
sheet and profit and loss account of the Borrower;

 

(c)                        (Budgets) by 30th November each year the
borrower is to provide a copy of the annual budget projected monthly for the
ensuing 12 months with assumptions attached; and

 

8

 

(d)                       (other information) such other financial information as the
Bank may reasonably require, within fourteen days after request.

 

4.                           EVENTS OF DEFAULT

 

If an Event of Default occurs, the Borrower will immediately notify the
Bank.  The notice will contain full
details of the Event of Default, and such further information as the Bank may
require from the Borrower regarding the Event of Default.

 

If an Event of Default occurs, the Bank may, by written notice to the
Borrower, terminate the Facilities and demand repayment of the Money Owing.

 

Event
of Default means:

 

(a)                        (payment default) the Borrower fails to pay to the Bank any Money
Owing from time to time due and payable to the Bank;

 

(b)                       (other defaults) the Borrower fails to perform and observe
any other terms or conditions of the Documents;

 

(c)                        (representations and warranties) a representation or warranty
given to the Bank in a Document or otherwise is incorrect or false in a
material respect when made or deemed to be repeated;

 

(d)                       (other financial accommodation) the Borrower fails to duly
perform or observe any of the terms and conditions of any other financial
accommodation (whether provided by the Bank or any other person);

 

(e)                        (orders and judgments) an order for payment is made or
judgment is entered or signed against the Borrower and is not satisfied within
7 days;

 

(f)                          (receivers) a receiver, manager, receiver and manager,
liquidator, provisional liquidator or administrator is appointed in respect of
the Borrower for the whole or any part of its undertaking, property or assets;

 

(g)                       (investigators) a person is appointed under legislation to
investigate or manage any part of the affairs of the Borrower;

 

(h)                       (winding up) a ground for winding up or bankruptcy of the
Borrower arises;

 

(i)                           (stop payment) the Borrower or any Security Provider stops
payment generally or ceases or threatens to cease to carry on its business or the
material part of its business;

 

(j)                           (meeting of creditors) the Borrower convenes a meeting of its
creditors or proposes or enters into any arrangement or composition for the
benefit of its creditors;

 

(k)                        (winding up resolution) a resolution is passed for the
winding up of the Borrower, other than for the purpose of a reconstruction or
amalgamation previously approved in writing by the Bank;

 

9

 

(l)                           (material adverse change) a change occurs in the financial
condition or in the whole or a major part of the operations of the Borrower,
which has had or could reasonably be expected to have a materially adverse
effect on the ability of the Borrower to perform its obligations to the Bank;

 

(m)                     (other security providers) any of the above events occurs in
relation to any person or Borrower  who
is a guarantor, or Security Provider in connection with the Facilities;

 

(n)                       (loss of security) anything occurs which in the Bank’s
reasonable opinion terminates or reduces the enforceability of any part of the
Security Documents.

 

5.                           POTENTIAL EVENT OF DEFAULT

 

If a
Potential Event of Default occurs, the Borrower will keep the Bank fully
informed of all developments in resolving the matter.

 

If a Potential Event of Default occurs, the Bank retains the right to
review the availability of the Facilities and to notify the Borrower of the
outcome of the review.

 

6.                           OPEN TREASURY TRANSACTIONS

 

If the Bank terminate the Facilities following the occurrence of an
Event of Default, and if at that time there are any Treasury Transactions in
existence between the Bank and the Borrower (Open
Positions) then:

 

(a)                        the Bank may close out the Open Positions, by entering into opposite
positions for the balance of the unexpired term, or by such other means as may
be usual in the relevant market.  Any
such close out shall be at market rates prevailing at the time;

 

(b)                       any costs incurred by the Bank in closing out Open Positions under paragraph (a) will be paid by the Borrower to the Bank upon
demand by the Bank.  Any gain derived
from the closing out of the Open Positions will be credited to the Borrower and
set off against the Money Owing;

 

(c)                        the Bank will give to the Company reasonable particulars of the
manner of close out of the Open Positions, and the basis of calculation of any
amounts payable by or to the Borrower arising from that close out.

 

7.                           NON-WAIVER

 

The liabilities of the Borrower and the rights of the Bank are not
affected by anything which might otherwise have that effect at law or in equity
including, without limitation, one or more of the following (whether occurring
with or without the consent of a person):

 

(a)                        any
inaccuracy, insufficiency or forgery of or in any certificate or other
instrument which purports to be made, issued or delivered under the Documents
or under any letter of credit, Bank guarantee or other instrument issued under
the Documents; or

 

(b)                       the Bank or
another person granting time or other indulgence (with or without the
imposition of an additional burden) to, compounding or compromising with or
wholly or partially releasing the Borrower or another person in any way; or

 

10

 

(c)                        laches,
acquiescence, delay, acts, omissions or mistakes on the part of the Bank or
another person; or

 

(d)                       any variation
or novation of a right of the Bank or another person, or alteration of a
document, in respect of the Borrower or another person including, without
limitation, an increase in the maximum liability of or other variation in
connection with a letter of credit or guarantee; or

 

(e)                        the invalidity
or unenforceability of an obligation or liability of a person other than the
Borrower; or

 

(f)                          invalidity
or irregularity in the execution of this agreement by the Borrower or any
deficiency in the powers of the Borrower to enter into or observe its
obligations under this letter of offer.

 

8.                           CLASS ORDER

 

If the Borrower applies for a Class Order, it will notify the Bank
immediately in writing.  The Bank may
review (and if considered appropriate, terminate) all or any of the Facilities
made available to the Borrower.

 

In this paragraph a “Class Order” means an order made by the Australian
Securities and Investments Commission pursuant to Part 2M.6 of the Corporations
Act.

 

9.                           COSTS AND EXPENSES

 

The Borrower will pay to the Bank on demand all Taxes, costs and
expenses of any nature incurred by the Bank in relation to the Documents and
the Facilities, whether payable directly or indirectly.  These amounts are payable regardless of whether
the Facilities are ever drawn down.

 

The Borrower will pay to the Bank all legal costs incurred in relation
to the preparation, negotiation, execution, registration, administration and
enforcement of the Documents (including the Bank’s solicitors’ fees on a
solicitor and own client basis).

 

10.                    PAYMENTS AND TAXES

 

All payments due by the Borrower to the Bank must be made on the due
date in immediately available funds.

 

If payment is due on a day on which the Bank is not open for business
in the relevant State, then payment must be made on the next business day in
that State.

 

Notwithstanding, and without limitation to, any other provision of this
letter of offer:

 

(a)                        if GST is imposed on any supply made by
the Bank under or in connection with this letter of offer or the facilities
offered in this letter of offer, where any amount or consideration (“consideration”)
payable or to be provided by or on behalf of the Borrower under or in
connection with this letter of offer or the facilities offered in this letter
of offer in relation to that supply is exclusive of GST (“GST-exclusive consideration”), the Bank may in addition to that GST-exclusive consideration,
recover from the Borrower, or from a person acting on its behalf, an additional
amount on account of GST, such additional

 

11

 

amount to be calculated by multiplying the
GST-exclusive consideration for the relevant supply by the prevailing GST rate.
This sub-paragraph (a) does not apply to a supply for which the consideration
is inclusive of GST; or

 

(b)                       where the Bank
makes a supply under or in connection with this letter of offer or the
facilities offered in this letter of offer which is not a taxable supply and
the Bank is not entitled to an input tax credit (whether in whole or in part)
in respect of the amount of any GST charged to or recovered from the Bank by
any person, or payable by the Bank, or in respect of any amount which is
recovered from the Bank by way of reimbursement of GST referable directly or
indirectly to that supply, the Bank shall be entitled to increase any amount or
consideration payable by the Borrower on account of such input tax and recover
from the Borrower the amount of any such increase.

 

Any
additional amount on account of GST, or on account of an amount for which the
Bank is not entitled to an input tax credit, recoverable from the Borrower
pursuant to sub-paragraph (a) or sub-paragraph (b) of this paragraph shall be
calculated without any deduction or set-off of any other amount and is payable
by the Borrower upon demand by the Bank whether such demand is by means of an
invoice or otherwise.

 

In
relation to any consideration payable or to be provided under or in connection
with this letter of offer or the facilities offered in this letter of offer
that is inclusive of GST (“the existing GST inclusive
consideration”) in the event of an increase in the GST rate, the
Bank may, subject to issuing a Tax Invoice or Adjustment Note, as appropriate,
recover from the Borrower an additional amount on account of the increase in
the GST rate. This additional amount is to be determined by converting the
existing GST inclusive consideration to a GST exclusive amount (“value”) and multiplying it by the new prevailing GST rate
and by subtracting from that result the previous GST component.

 

For the
purposes of the above paragraph:

 

(i)                           the existing GST inclusive consideration is to be converted to the
value by using the GST rate immediately prior to the new prevailing GST rate;
and

 

(ii)                        the previous
GST component is equal to the difference between the existing GST inclusive
consideration and the value.

 

11.                    LATE PAYMENTS

 

If any amount is not paid to the Bank when due, it will accrue interest
at the Default Rate until it is paid. 
That interest will be calculated on daily balances and added to the debt
monthly if not paid.  This paragraph does
not relieve the Borrower of its obligation to make payments when due.

 

All payments must be made without set-off or counter-claim, and be free
and clear of any withholding or deduction for taxes, levies, imposts or
government charges of any kind unless prohibited by law.  If any deduction is required by Law, the
Borrower will make the deduction, pay the Tax, and pay to the Bank further
amount(s) sufficient to ensure that the Bank receives the same net amount as it
would have received if no deduction had been made.

 

12

 

12.                    ILLEGALITY

 

If any change in Law makes it unlawful or impossible for the Bank to
maintain or give effect to its obligations under the Documents, then the Bank
shall promptly notify the Borrower.

 

The Bank and the Borrower will negotiate in good faith to restructure
each affected Facility in a manner which resolves the problem.  If no agreement is reached within 30 (thirty)
days after the Bank notified the Borrower, then the Borrower will repay to the
Bank on demand so much of the Money Owing as relates to the affected Facility.

 

13.                    CHANGE IN CIRCUMSTANCE

 

This
paragraph applies if any order of any court or any change in Law, or in the
official interpretation or application of Law by any government authority:

 

(a)                        subjects the
Bank to any Taxes or duties with respect to the Facilities or any part of them,
or changes the basis  of taxation of the
Bank for payment under the Documents (except for taxes on the overall net
income of the Bank); or

 

(b)                       imposes,
modifies or deems applicable any reserve, capital, adequacy or liquidity
adequacy requirements against any asset of, deposit with or for the account of
or loans by the Bank; or

 

(c)                        imposes on the
Bank any other condition with respect to the Documents or the obligations of
the Bank under them, or if the Bank complies with any request from any
applicable fiscal or monetary authority (whether or not having the force of
law);

 

If the
result of the above is to increase the cost to the Bank of making available or
maintaining a Facility, or to reduce the amount receivable in respect of a
Facility, or reduce any other amount due to the Bank in connection with a
Facility by an amount which the Bank considers material, then:

 

I.                               the
Bank will use its best efforts to notify the Borrower of that event; and

 

II.                           the
Borrower and the Bank will negotiate in good faith to restructure each affected
Facility in a manner which resolves the problem; and

 

III.                       if no agreement
is reached within 30 days after the Bank notified the Borrower, the Borrower
will pay to the Bank on demand, as additional interest or charges, an amount
which will compensate the Bank for the additional costs, calculated from the
date of that notification.

 

14.                    TRUSTS

 

The Borrower warrants to the Bank that it is not the
trustee of any trust.

 

15.                    SET-OFF

 

If an Event of Default occurs, the Bank may at any time without notice
to the Borrower combine, consolidate or merge all or any of the Borrower’s
accounts, and may set off the whole or any part of the Money Owing against any
credit balance in those accounts.

 

13

 

For that purpose, the Bank may redeem and/or appropriate all or any
part of any account, deposit or other arrangement between the Bank and the
Borrower under which the Bank may be indebted to the Borrower, even if the
balance on any such account and the Money Owing are not expressed in the same
currencies.  The Bank may make any
currency conversion it considers necessary or desirable for this purpose.

 

16.                    CHANGE OF OWNERSHIP

 

If the Borrower is listed on a stock exchange, the Borrower will
promptly notify the Bank if a majority of the shares in the Borrower becomes
held by a person who did not hold a majority of the shares as at the date of
the letter of offer.  For this purpose,
associates shall be treated as the one person.

 

In the case of a company which is not listed on a stock exchange, no
transfer of shares (or issue of shares) in that company may be made, without
the Bank’s prior written consent.  That
consent will not apply to a transfer or issue to any company which is a related
corporation of the Company.

 

The Bank may review (and if considered appropriate terminate) all
Facilities made available to the Borrower upon the occurrence of a change in
shareholdings or an issue of shares referred to in this paragraph.

 

17.                    APPOINTMENT OF CONSULTANTS

 

The Bank may at any time appoint accounting, financial management and
other consultants to examine the affairs of the Borrower and to make
recommendations relating to the manner in which the Borrower carries on its
business.  The Borrower will provide all
assistance considered necessary or desirable by the consultant to enable the
consultant to conduct a proper examination of the affairs of the Borrower.  This includes, without limitation, making the
Borrower’s financial records available to the Consultant.  The Borrower shall pay the fees of the
Consultant.

 

18.                    BREAK COSTS

 

The Borrower indemnifies the Bank against any loss, cost, charge, loss
of profit or expense incurred by the Bank in connection with:

 

(a)                        the Borrower
making a payment under any Document on a date which is not expressly contemplated
in the Document, whether that payment is made as a result of demand by the Bank
following an Event of Default or any other reason; and

 

(b)                       any financial
accommodation provided by the Bank at a fixed rate being repaid in whole or in
part during the period to which that fixed rate applies.

 

19.                    HOLDING OVER

 

If the Bank continues to make a Facility available to the Borrower
after its Expiry Date, and this letter of offer has not been extended, amended
or replaced, then the terms of this letter of offer will continue to apply to
the Facility unless the Bank otherwise notifies the Borrower.  The previous sentence is not a waiver of any
Event of Default, or a waiver of any of the Bank’s rights under this letter of
offer.

 

14

 

20.                    ASSIGNMENT

 

The Bank may assign, novate, sub-participate or sell down by whatever
form, all its rights under the Documents with the prior consent of the  Borrower, which consent will not be unreasonably withheld
or delayed.

 

The Borrower may not assign its rights or novate its obligation under
the Documents.

 

21.                    CONFIDENTIALITY

 

The Bank and the Borrower will keep confidential the terms of the
Facilities, the Documents, and any information which either of them may provide
to the other.  This obligation does not
prevent disclosure:

 

(a)                        if allowed or
required by Law, or required by any stock exchange;

 

(b)                       in connection
with legal proceedings relating to the Documents;

 

(c)                        if the
information is generally and publicly available;

 

(d)                       to a subsidiary
of the Bank, in which case this paragraph 21
will apply to the subsidiary.

 

22.                    INCONSISTENCY

 

                                      If
any provision of this letter of offer is inconsistent with any provision of the
Documents, this letter of offer will prevail.

 

23.                    GOVERNING LAW AND JURISDICTION

 

                                      This
letter of offer is governed by the Laws of New South Wales.  Each party submits to the jurisdiction of the
Laws of that state, including appeal courts.

 

24.                    DEFINITIONS

 

The following terms shall have the following meanings in this letter of
offer:

 

Accounting
Standards means the accounting standards
prescribed under the Corporations Act, Chapter 2M to the Corporations
Regulations and, where not inconsistent with those accounting standards and
schedule, the accounting standards adopted from time to time by the major
accounting bodies in Australia in respect of the preparation of accounts and
financial statements.

 

Authorised
Officer means:

 

(a)                        in the case of
the Bank, a director, secretary or an officer whose title contains the word manager or a person performing the functions of any of them;
and

 

(b)                       in the case of
the Borrower or a Security Provider, a person appointed by the Borrower or that
Security Provider to act as an Authorised Officer under the Documents to which
it is a party and whose specimen signature as Authorised Officer has been
provided to the Bank.

 

15

 

Base
Lending Rate means the rate described as
such or any rate replacing that rate as published from time to time by the Bank
in the financial press and includes any rate adopted by the Bank to replace it.

 

Bill has the same meaning as in the Bills of Exchange Act 1909 (Cwlth)
and a reference to the drawing or acceptance or endorsement of, or other
dealing with, a Bill is to be interpreted in accordance with that act.

 

Business
Day means a day (not being a Saturday or a
Sunday) on which the Bank is open for general banking business in Sydney.

 

Default
Rate means 4.50% per annum above the Bank’s
Base Lending Rate from time to time.

 

Documents means this letter of offer, the Security Documents and each
security document (however described) including every guarantee, mortgage,
charge, debenture, set-off agreement and other instrument, notice, form,
agreement or encumbrance from time to time held by the Bank from the Borrower
and any Security Provider.

 

Dollars, $ or A$ means the lawful currency
of Australia.

 

Law means any law or regulation (including any policy, directive or
guidelines, whether or not having the force of law, but compliance with which
is in accordance with the practice of responsible bankers).

 

Money
Owing means all money owing to the Bank by
the Borrower on any account, and includes without limitation:

 

(a)                        all money lent
or advanced by the Bank to the Borrower, in any currency, and which have not
been repaid to the Bank;

 

(b)                       all money owing
by the Borrower to the Bank in respect of any bills accepted and/or endorsed
and/or discounted facility made available by the Bank, including the face value
of all bills of exchange which are from time to time outstanding (although the
maturity dates of such outstanding bills has not occurred);

 

(c)                        the aggregate
amount of the Bank’s liability under any documentary letter of credit, standby
letter of credit, performance bond or bank guarantee issued by the Bank on
behalf of or at the request of the Borrower, although no payment under it shall
have been made or demanded;

 

(d)                       the aggregate
amount of money unpaid to the Bank in respect of any Treasury Transaction, in
any currency;

 

(e)                        all interest,
fees, charges and other money which the Borrower is required to pay to Bank
under any Document, and which are from time to time owing or unpaid to the
Bank; and

 

(f)                          Break Costs
being any loss, cost, charge or expense incurred pursuant to paragraph 18 of
this Annexure.

 

16

 

The term includes, without limitation, any money and amounts owing by
the Borrower to the Bank which:

 

(a)                        are presently
owing and payable, are owing but not presently payable or are owing upon a
contingency;

 

(b)                       may become
owing or remain unpaid or for which the Bank may become liable by reason wholly
or partly of past events or by reason of anything done or omitted by the Bank
or the Borrower;

 

(c)                        may reasonably,
foreseeably become owing or remain unpaid on any account or in any manner
whatsoever by reason of the relation of bank and customer or by operation of
law or equity or otherwise by reason of anything done by the Bank with the
consent or at the express or implied request of the Borrower.

 

Potential
Event of Default means an event omission or
circumstance which with the giving of notice and/or lapse of time and/or other
condition would become an Event of Default.

 

Schedule means the schedule to this letter of offer set out as Annexure E.

 

Security
Documents means the various documents
described in the Schedule to this letter of
offer.

 

Security
Provider means each person who is party to
any of the Security Documents  but excluding
the Bank and the Company.

 

Taxes or Tax means any tax, levy, impost,
deduction, charge, withholding and duty imposed by any authority and includes
without limitation any withholding tax, financial institutions duty, stamp
duty, transaction duty and other government charges or any kind (including
penalties) payable in respect of the Documents, or any payments, or
transactions under them.  It does not
include income tax on the Bank’s own income.

 

Treasury
Transaction includes, without limitation,
any interest rate or currency forward rate agreement, swap, financial option,
futures contract, currency exchange agreement, reciprocal purchase agreement,
swaption, floor, collar, cap and any similar type of interest rate or currency
risk management or forward purchase or sale agreement, however described.

 

17

 

ANNEXURE B

 

FINANCIAL
UNDERTAKINGS

 

1.                           FINANCIAL RATIOS

 

The Borrower undertakes to the Bank to comply with the following
financial undertakings unless the Bank otherwise consents in writing:

 

(a)                        Interest
Cover Ratio: earnings before interest and tax
(EBIT) must not at any time fall below a figure of 2 times the total amount of
interest payable by the Borrower.

 

2.                            The
ratios in paragraph 1 will be determined on an
annualised basis, based on the most recent accounts of the Borrower available
at that time.

 

3.                           TERMS USED

 

In this Annexure, the terms Total Liabilities, Contingent Liabilities,
Total Tangible Assets, Total Current Assets, Total Current Liabilities,
Earnings before Interest, Tax and Finance Lease Repayments, Gross Interest
Expense plus Finance Lease Repayments and Net Profit after Tax and any other
accounting or financial terminology will be interpreted in accordance with the
Accounting Standards in respect of the accounts of the Borrower on a
consolidated basis.

 

4.                           DEPARTURES FROM ACCOUNTING STANDARDS

 

If the Borrower wishes to depart from the Accounting Standards in
preparing its accounts, the parties will consult with each other on the changes
(if any) required to the undertakings in paragraph 1 to
ensure that they remain consistent.

 

5.                           COMPLIANCE CERTIFICATE

 

The Borrower will also deliver to the Bank on a calendar quarterly
basis a certificate as to compliance, with Financial Undertakings, giving
reasonable particulars of any calculations. 
The certificate will be signed by a director or chief financial officer
of the Borrower.

 

18

 

ANNEXURE C

 

CONDITIONS
PRECEDENT

 

The Bank is
not obliged to make the Facilities available to the Borrower unless the Bank
has received the following in form and substance acceptable to the Bank:

 

(a)                       (board minutes) a certified copy
of:

 

(i)                           an extract
of the minutes of a meeting of the board of directors of the Borrower which
evidences the resolutions authorising the acceptance and observance of
obligations under (and acknowledgment that the Borrower will benefit from) this
letter of offer and the appointment of Authorised Officers of the Borrower; and

 

(ii)                        an extract of
the minutes of a meeting of the board of directors of each Security Provider
which evidences the resolution authorising the appointment of Authorised
Officers of the Security Provider;

 

(b)                       (other authorisations) a certified
copy of each authorisation necessary to enter into, observe obligations under
and enforce the Documents;

 

(c)                        (power of attorney) the original of
each power of attorney under which any person signs and delivers a Document for
the Borrower or any Security Provider and, if required by the Bank, evidence of
its stamping and registration;

 

(d)                       (specimen signatures) a certified
specimen signature of each Authorised Officer of each Borrower and of every
Security Provider;

 

(e)                        (signed Documents) each Document
signed and delivered and, if required by the Bank, evidence of its stamping and
registration;

 

(f)                          (solvency declaration) a statutory
declaration that each Borrower is solvent, signed by a director of the
Borrower;

 

(g)                       (securities) the Security
Documents;

 

(h)                       (no Events of Default) evidence
that no Event of Default or event which with the giving of notice, lapse of
time or fulfilment of any conditions would be likely to become an Event of
Default continues unremedied or would result from the provision of the proposed
drawing;

 

(i)                           (other documents) the Bank has
received the other approvals, opinions or documents which it has reasonably
requested;

 

(j)                           (establishment fee) payment of the
establishment fee, if any and however described;

 

(k)                        (other requirements) such other
conditions precedent as the Bank may specify by notice to the Company;

 

(l)                           (legal opinion) if requested, a
legal opinion from solicitors for the Bank, the Borrower and each Security
Provider; and

 

(m)                     (payment of costs) evidence that
all legal and other costs and expenses (including stamp duty and registration
fees) incurred by the Bank in connection with the Facilities have been paid.

 

19

 

ANNEXURE
D

 

LETTERS OF CREDIT AND GUARANTEES BY BANK -
TERMS

 

References to Borrower in this Annexure are references to the company or
companies specified as Participating Companies
in respect of any Letters Of Credit or Guarantees By Bank Facility in the
letter of offer.

 

1.                           REQUEST FOR ISSUE

 

The Borrower may request the Bank to issue a letter of credit or
guarantee by delivering to the Bank a properly signed request (in a form
specified by the Bank from time to time) stating:

 

(a)                        the amount;

 

(b)                       the
beneficiary;

 

(c)                        the contract
in respect of which the letter of credit or guarantee is requested; and

 

(d)                       the expiry date,
if applicable.

 

Each letter of credit and guarantee will be in the Bank’s usual form,
unless otherwise agreed and the Borrower agrees to execute such additional
documentation or forms required by the Bank’s normal practice.

 

2.                           AUTHORITY TO MAKE PAYMENTS

 

The Borrower irrevocably authorises the Bank to immediately pay any
amount for which a demand or request is made at any time under a letter of
credit or guarantee without reference to or further authority from the
Borrower.  The Bank need not investigate
or enquire whether a claim or demand on the Bank has been properly made.  The Bank may meet any claim or demand on the
Bank notwithstanding that the Borrower may dispute the validity of the claim or
demand.

 

3.                           BORROWER’S UNDERTAKING TO REIMBURSE

 

The Borrower agrees to pay to the Bank on demand an amount equal to
each amount demanded from or paid by the Bank under any letter of credit or
guarantee together with any incidental costs or expenses.

 

4.                           INDEMNITY BY THE BORROWER

 

As a separate obligation, the Borrower indemnifies the Bank against all
actions, proceedings, claims and demands brought or made against the Bank and
against all losses, costs, charges, damages and expenses which the Bank incurs
or sustains or for which the Bank becomes liable, directly or indirectly,
because of the issue of any letter of credit or guarantee.

 

5.                           PRESERVATION OF BORROWER’S LIABILITY

 

The liabilities of the Borrower and the rights of the Bank under this Annexure D are not affected by anything which might
otherwise have that effect at law or in equity including,

 

20

 

without limitation, one or more of the following (whether occurring
with or without the consent of a person):

 

(a)                        any
inaccuracy, insufficiency or forgery or in any certificate or other instrument
which purports to be made, issued or delivered under this letter of offer or
under any letter of credit or guarantee; or

 

(b)                       the Bank or
another person granting time or other indulgence (with or without the imposition
of an additional burden) to, compounding or compromising with or wholly or
partially releasing the Borrower or another person in any way; or

 

(c)                        laches,
acquiescence, delay, acts, omissions or mistakes on the part of the Bank or
another person; or

 

(d)                       any variation
or novation of a right of the Bank or another person, or alteration of a
document, in respect of the Borrower or another person including, without
limitation, an increase in the maximum liability of or other variation in
connection with a letter of credit or guarantee; or

 

(e)                        the invalidity
or unenforceability of an obligation or liability of a person other than the
Borrower; or

 

(f)                          invalidity
or irregularity in the execution of this letter of offer by the Borrower or any
deficiency in the powers of the Borrower to enter into or observe its
obligations under this letter of offer.

 

6.                           LATE PAYMENTS

 

If a drawing is made under a letter of credit or guarantee and is not
promptly reimbursed by the Borrower to the Bank, an interest rate of 4.50% per
annum over the Bank’s Base Rate shall apply to the amount of the drawing.  That amount together with interest shall be
debited to any account in the name of the Borrower.

 

7.                           INSURANCE UNDERTAKINGS

 

The Borrower undertakes to:

 

(a)                        insure goods relating to each letter of credit to the Bank’s
satisfaction; and

 

(b)                       deliver to the Bank a copy of any insurance policy or certificate
relating to those goods when received or at a time agreed to by the Bank.

 

8.                           UNIFORM CUSTOMS AND PRACTICE

 

Each documentary letter of credit will be subject to the terms of the
Uniform Customs and Practice for Documentary Letters of Credit (1993 Revision)
International Chamber of Commerce Publication No. 500, or any subsequent
revision of it and otherwise must be in a form satisfactory to the Bank.

 

21

 

ANNEXURE
E

 

SCHEDULE

 

GROUP
MEMBERS:

 

	
  Company Name

  	
   

  	
  ABN

  	
   

  	
  Registered office

  	
   

  
	
  Channell
  Pty Ltd

  	
   

  	
  29
  002 735 622

  	
   

  	
  5/391
  Park Rd Regents Park NSW 2143

  	
   

  

 

SECURITIES:

 

The following
Security Documents must be held in a form and substance satisfactory to the
Bank prior to drawdown of the Facilities.

 

1.                             First
ranking registered charge given to the Bank by Channell Pty Ltd ABN 29 002 735
622 over all its assets and undertakings.

 

2.                             Debtor Finance Agreement

 

3.                             Master
Lease Agreement between the Bank and Channell Pty Ltd ABN 29 002 735 622

 

22Exhibit 10.3.4

 

Investment and Shareholders’ Agreement

 

between

 

Channell Bushman Pty Limited

(ACN 109 821 614)

 

and

 

Channell Commercial Corporation

 

and

 

Australia and New Zealand Banking Group Limited

(ABN 11 005 357 522)

 

BAKER   29 07 2004
Solicitors

 

 

	
  Level 26,
  AMP Centre

  	
  Level 39,
  Rialto

  
	
  50 Bridge
  Street

  	
  525 Collins
  Street

  
	
  SYDNEY NSW
  2000

  	
  MELBOURNE
  VIC  3000

  
	
  Tel: (02)
  9225-0200

  	
  Tel:  (03) 9617-4200

  
	
  Fax: (02)
  9225-1595

  	
  Fax:  (03) 9614-2103

  

 

 

Contents

 

	
  Clause

  number

  	
   

  	
  Heading

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Definitions and
  interpretation

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  
	
  1.2

  	
   

  	
  Interpretation

  	
   

  
	
  1.3

  	
   

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Conditions

  	
   

  
	
  2.1

  	
   

  	
  Conditions

  	
   

  
	
  2.2

  	
   

  	
  Best endeavours to fulfil

  	
   

  
	
  2.3

  	
   

  	
  Waiver of certain
  Conditions

  	
   

  
	
  2.4

  	
   

  	
  Termination
  for failure of Conditions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Completion

  	
   

  
	
  3.1

  	
   

  	
  Time and place of
  Completion

  	
   

  
	
  3.2

  	
   

  	
  Investment and
  other obligations

  	
   

  
	
  3.3

  	
   

  	
  Consent to investments

  	
   

  
	
  3.4

  	
   

  	
  Use of investment funds

  	
   

  
	
  3.5

  	
   

  	
  Parties bound by
  the Constitution

  	
   

  
	
  3.6

  	
   

  	
  Post-Completion

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Warranties

  	
   

  
	
  4.1

  	
   

  	
  Warranties

  	
   

  
	
  4.2

  	
   

  	
  Reliance

  	
   

  
	
  4.3

  	
   

  	
  Disclosures

  	
   

  
	
  4.4

  	
   

  	
  Assignment of Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Non-compete

  	
   

  
	
  5.1

  	
   

  	
  Channell
  obligations

  	
   

  
	
  5.2

  	
   

  	
  ANZ
  obligations

  	
   

  
	
  5.3

  	
   

  	
  Restraints fair and
  reasonable

  	
   

  
	
  5.4

  	
   

  	
  Acknowledgments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Financial
  information

  	
   

  
	
  6.1

  	
   

  	
  Annual
  business plan

  	
   

  
	
  6.2

  	
   

  	
  Management
  accounts

  	
   

  
	
  6.3

  	
   

  	
  Audited
  accounts

  	
   

  
	
  6.4

  	
   

  	
  Other information and
  access

  	
   

  
	
  6.5

  	
   

  	
  Confidentiality

  	
   

  
	
  6.6

  	
   

  	
  D&O Policy

  	
   

  
	
  6.7

  	
   

  	
  Other
  insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Future conduct of the
  Company

  	
   

  
	
  7.1

  	
   

  	
  Management of the
  Business

  	
   

  
	
  7.2

  	
   

  	
  Board

  	
   

  
	
  7.3

  	
   

  	
  Conduct of
  the Board and Director fees

  	
   

  
	
  7.4

  	
   

  	
  Matters
  requiring unanimous approval

  	
   

  

 

i

 

	
  7.5

  	
   

  	
  The Chairman

  	
   

  
	
  7.6

  	
   

  	
  Day-to-day management

  	
   

  
	
  7.7

  	
   

  	
  Senior Executives

  	
   

  
	
  7.8

  	
   

  	
  Observer at Board
  meetings

  	
   

  
	
  7.9

  	
   

  	
  Guarantees for financiers

  	
   

  
	
  7.10

  	
   

  	
  Quorum for Member
  meetings

  	
   

  
	
  7.11

  	
   

  	
  Buyer’s representative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Disposal of Shares

  	
   

  
	
  8.1

  	
   

  	
  Requirements
  for Disposal of Shares

  	
   

  
	
  8.2

  	
   

  	
  Permitted transfers

  	
   

  
	
  8.3

  	
   

  	
  Pre-emptive right

  	
   

  
	
  8.4

  	
   

  	
  Tag along rights

  	
   

  
	
  8.5

  	
   

  	
  Sale of Shares by
  Channell Member

  	
   

  
	
  8.6

  	
   

  	
  Perfection of Transfers

  	
   

  
	
  8.7

  	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Issue of
  Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Exit

  	
   

  
	
  10.1

  	
   

  	
  Intention
  to exit

  	
   

  
	
  10.2

  	
   

  	
  Sale or
  Listing

  	
   

  
	
  10.3

  	
   

  	
  Call Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  New
  Shareholders

  	
   

  
	
  11.1

  	
   

  	
  Deed
  of Adherence

  	
   

  
	
  11.2

  	
   

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Fees and
  costs

  	
   

  
	
  12.1

  	
   

  	
  Capital
  raising fee

  	
   

  
	
  12.2

  	
   

  	
  Investors’
  costs

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Duration

  	
   

  
	
  13.1

  	
   

  	
  Termination

  	
   

  
	
  13.2

  	
   

  	
  Continuing
  rights and obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Confidentiality
  and announcements

  	
   

  
	
  14.1

  	
   

  	
  Provisions to
  remain confidential

  	
   

  
	
  14.2

  	
   

  	
  Permitted disclosures

  	
   

  
	
  14.3

  	
   

  	
  Public Announcements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Investors’
  obligations and rights

  	
   

  
	
  15.1

  	
   

  	
  Several and not Joint

  	
   

  
	
  15.2

  	
   

  	
  Separate
  Warranties and undertakings

  	
   

  
	
  15.3

  	
   

  	
  Exercise of
  Investors’ rights

  	
   

  
	
  15.4

  	
   

  	
  Waiver of Investors’
  rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Notices

  	
   

  
	
  16.1

  	
   

  	
  Requirements

  	
   

  
	
  16.2

  	
   

  	
  Receipt

  	
   

  

 

ii

 

	
  17.

  	
   

  	
  General
  provisions

  	
   

  
	
  17.1

  	
   

  	
  Entire
  agreement

  	
   

  
	
  17.2

  	
   

  	
  Further
  assurances

  	
   

  
	
  17.3

  	
   

  	
  Conflict with the
  Constitution

  	
   

  
	
  17.4

  	
   

  	
  Invalid or
  unenforceable provisions

  	
   

  
	
  17.5

  	
   

  	
  No merger

  	
   

  
	
  17.6

  	
   

  	
  Waiver and exercise
  of rights

  	
   

  
	
  17.7

  	
   

  	
  Rights
  Cumulative

  	
   

  
	
  17.8

  	
   

  	
  Acknowledgment

  	
   

  
	
  17.9

  	
   

  	
  Amendment

  	
   

  
	
  17.10

  	
   

  	
  Counterparts

  	
   

  
	
  17.11

  	
   

  	
  Governing
  law

  	
   

  
	
  17.12

  	
   

  	
  Jurisdiction

  	
   

  
	
  17.13

  	
   

  	
  Consents or approvals

  	
   

  
	
  17.14

  	
   

  	
  GST

  	
   

  
	
  17.15

  	
   

  	
  Constitution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annexure 1

  	
   

  
	
   

  	
   

  	
  The Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annexure 2

  	
   

  
	
   

  	
   

  	
  Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annexure 3

  	
   

  
	
   

  	
   

  	
  Deed of Adherence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annexure 4

  	
   

  
	
   

  	
   

  	
  Agreed Form Documents

  	
   

  

 

iii

 

Investment and Shareholders’ Agreement

 

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

 

Between

 

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

 

and

 

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

 

and

 

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

 

Recitals

 

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

 

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

 

Operative
provisions

 

1.                                      Definitions
and interpretation

 

1.1                               Definitions

 

In this Agreement, unless the
context requires another meaning:

 

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

 

“Accounting Standards” means:

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

“Agreement” means this investment and shareholders’ agreement;

 

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

 

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

 

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

 

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

 

“ANZ
Member” means:

 

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

 

(b)                                                   where ANZ holds Shares, ANZ;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

“Channell Directors” means any Directors appointed by Channell;

 

“Channell
Member” means:

 

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

 

(b)                                                   where Channell holds Shares, Channell;

 

“Completion” means completion under clause
3.2;

 

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

 

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

 

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

 

“Constitution” means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                                    not take account of whether the Shares to be transferred comprise a
majority or minority interest in the Company;

 

(b)                                                   ignore the fact that the transferability of the Shares to be
transferred is restricted by this Agreement or the Constitution; and

 

(c)                                                    assume that the Shares to be transferred are being sold by a willing
(but not anxious) vendor and are being purchased by a willing (but not anxious)
purchaser.

 

6

 

The
Company will bear the costs of the Independent Valuer in making the
determination;

 

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

 

“Government Agency” means:

 

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

 

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

 

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

 

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

 

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

 

“Independent Adviser” means:

 

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

 

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

 

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

 

“Independent Valuer” means:

 

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

 

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

 

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

 

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

 

“Investors” means ANZ and Channell;

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Sale” means:

 

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

 

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

 

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

 

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

 

8

 

“Security Interest” means an interest in
an asset which provides security for,
or protects against default by, a person for the payment or satisfaction of a
debt, obligation or liability including a mortgage, charge, bill of sale,
pledge, deposit, lien, encumbrance, hypothecation, first right of refusal,
voting right or arrangement for the retention of title or any agreement, option
or other arrangement to grant such an interest or right;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

1.2                                                 Interpretation

 

(a)                                                    In this Agreement, unless the context requires another meaning, a
reference:

 

(i)                                                         to the singular includes the plural and vice versa;

 

(ii)                                                      to a gender includes all genders;

 

(iii)                                                   to a document (including this Agreement) is a reference to that
document (including any Schedules and Annexures) as amended, consolidated,
supplemented, assigned, novated or replaced;

 

(iv)                                                  to an agreement includes any undertaking, representation, deed,
agreement or legally enforceable arrangement or understanding whether written
or not;

 

(v)                                                     to a party means a party to this Agreement;

 

(vi)                                                  to an item, Recital, clause, Schedule or Annexure is to an item,
Recital, clause, Schedule or Annexure of or to this Agreement;

 

(vii)                                               to a notice means a notice, approval, demand, request, nomination or
other communication given by one party to another under or in connection with
this Agreement;

 

(viii)                                            to a person (including a party) includes:

 

(A)                                                    an individual, company, other body corporate, association,
partnership, firm, joint venture, trust, fund or Government Agency;

 

(B)                                                      the person’s successors, permitted assigns, substitutes, executors
and administrators; and

 

(C)                                                      a reference to the representative member of the GST group to which
the person belongs to the extent that the representative member has assumed
rights, entitlements, benefits, obligations and liabilities which would remain
with the person if the person were not a member of a GST group;

 

(ix)                                                    to a law includes any legislation, judgment, rule of common law or
equity or rule of any applicable stock exchange, and is a reference to that law
as amended, consolidated, supplemented or replaced, and includes a reference to
any regulation, by-law or other subordinate legislation;

 

(x)                                                       to proceedings includes litigation, arbitration and investigation;

 

(xi)                                                    to a judgement includes an order, injunction, decree, determination
or award of any court or tribunal;

 

(xii)                                                 to time is to Sydney time;

 

10

 

(xiii)                                              to an accounting term is to be interpreted according to the
Accounting Standards;

 

(xiv)                                             the word “including” or “includes” means “including, but not limited
to,” or “includes, without limitation, respectively”.

 

(b)                                                   Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning.

 

(c)                                                    Headings are for convenience only and do not affect the
interpretation of this Agreement.

 

(d)                                                   If a payment or other act must (but for this clause) be made or done
on a day that is not a Business Day, then it must be made or done on the next
Business Day.

 

(e)                                                    If a period starts from, after or before a day or the day of an act
or event, it excludes that day.

 

(f)                                                      This Agreement must not be construed adversely to a party only
because that party was responsible for preparing it.

 

1.3                                                 Payments

 

(a)                                                    All payments required to be made under this Agreement must be
tendered, as agreed by the recipient in respect of each payment, by:

 

(i)                                                         a draft or cheque drawn by a bank as defined in the Banking Act 1959 (Cth); or

 

(ii)                                                      by way of a direct transfer of immediately available funds to the
bank account nominated prior to the due date for payment by the party to whom
the payment is due; or

 

(iii)                                                   to the extent that the Company’s lawyers hold funds to the order of
a party (or its representative), the Company’s lawyers receiving a signed
irrevocable authorisation from the party to whose order the funds are held (in
a form acceptable to the Company’s lawyers) unconditionally authorising the
Company’s lawyers to immediately hold those funds to the order of the Company.

 

(b)                                                   If clause 1.3(a)(ii)
applies, unless otherwise agreed by the recipient, payment will be deemed to
have been made only when the receipt of the relevant funds is confirmed orally
or in writing by the bank operating the nominated account.

 

11

 

2.                                                        Conditions

 

2.1                                                 Conditions

 

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

 

(a)                                                    ANZ having completed its due diligence investigations in respect of
the Target Companies, the Purchased Assets and the Business and being
reasonably satisfied with those due diligence investigations, including being
reasonably satisfied with its ability to rely on any due diligence report
prepared in respect of the Target Companies, the Purchased Assets or the
Business which is addressed to ANZ;

 

(b)                                                   ANZ having obtained the approval of the ANZPE Investment Committee
to the investments it proposes to make under this Agreement;

 

(c)                                                    the approval by the board of directors of each party of the
execution and delivery of this Agreement;

 

(d)                                                   the approval by the Board of the transactions contemplated under
this Agreement (including the issue and allotment of Shares under clause 3.2);

 

(e)                                                    the passing of a Board resolution confirming the matters referred to
in section 260A(1)(a) of the Act in relation to the costs to be paid by the
Company under clause 12 or Member approval of the payment of those costs in
accordance with section 260A(1)(b) of the Act;

 

(f)                                                      all conditions precedent to drawdown under the Financing Documents
having been satisfied or waived (save for any condition relating to the
completion of this Agreement or the Acquisition Agreement);

 

(g)                                                   the terms of the Acquisition Agreement having been approved by all
parties and the Acquisition Agreement having been exchanged in accordance with
its terms and having become unconditional (save for any condition relating to
completion of this Agreement or the Financing Documents) and all completion
obligations under the Acquisition Agreement having been satisfied or waived;
and

 

(h)                                                   the Company having adopted the Constitution and no amendment to the
Constitution having been effected since the Company’s incorporation unless in
accordance with the Act.

 

2.2                                                 Best
endeavours to fulfil

 

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

 

12

 

2.3                                                 Waiver
of certain Conditions

 

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

 

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

 

2.4                                                 Termination
for failure of Conditions

 

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

 

3.                                                        Completion

 

3.1                                                 Time
and place of Completion

 

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

 

3.2                                                 Investment
and other obligations

 

At Completion:

 

(a)                                                    Channell must, subject to the Company fulfilling its obligations
pursuant to clause 3.2(c)(i):

 

(i)                                                         subscribe for 11,249,998 A Class Ordinary Shares at $1.00 per Share;
and

 

(ii)                                                      at its option either:

 

(A)                                                    pay to the Company $11,249,998 for the A Class Ordinary Shares
subscribed for pursuant to clause 3.2(a)(i); or

 

(B)                                                      pay to the Company $10,249,998 and issue to the Company (or its
nominee) that number of ordinary shares in Channell calculated by dividing
$1,000,000 by the average closing price of Channell’s ordinary shares on The
Nasdaq Stock Market Inc’s National Market for the trading days included within
the thirty day calendar period ending on the Business Day immediately prior to
the closing date under the Acquisition Agreement, for the A Class Ordinary
Shares subscribed for pursuant to clause 3.2(a)(i);

 

13

 

(b)                                                   ANZ must, subject to the Company fulfilling its obligations pursuant
to clause 3.2(c)(ii):

 

(i)                                                         subscribe in cash for 3,750,000 B Class Ordinary Shares at $1.00 per
Share; and

 

(ii)                                                      pay to the Company $3,750,000 for the B Class Ordinary Shares
subscribed for pursuant to clause 3.2(b)(i);

 

(c)                                                    the Company must issue:

 

(i)                                                         11,249,998 A Class Ordinary Shares (and a certificate for those
Shares) to Channell free of Security Interests (except those set out in the
Constitution and/or this Agreement) and credited as fully paid and will
register Channel in the Members Register as the holder of those Shares;

 

(ii)                                                      3,750,000 B Class Ordinary Shares (and a certificate for those
Shares) to ANZ free of Security Interests (except those set out in the
Constitution and/or this Agreement) and credited as fully paid and will
register ANZ in the Members Register as the holder of those Shares;

 

(d)                                                   the Company must take all steps necessary to drawdown funds under
the Financing Documents and to complete the Acquisition Agreement; and

 

(e)                                                    the Company must pay the fees and costs described in clause 12 to
the extent payable at Completion and otherwise arrange for payment of any fees
payable under clause 12 which can only be paid after the period described in
section 260B(6) of the Act has expired.

 

3.3                                                 Consent
to investments

 

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

 

3.4                                                 Use
of investment funds

 

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

 

(a)                                                    paying the consideration due by the Company under the Acquisition
Agreement;

 

(b)                                                   paying the fees and costs described in clause 12 to the extent
payable at Completion; and

 

(c)                                                    in respect of the balance, providing working capital for the Group
Companies or otherwise in accordance with a budget approved by the Board.

 

3.5                                                 Parties
bound by the Constitution

 

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

 

14

 

3.6                                                 Post-Completion

 

(a)                                                    Following Completion, the Company must:

 

(i)                                                         if requested by the ANZ Member, procure the appointment of Kevin
Cooney or another ANZ employee agreed by the Investors (acting reasonably) as a
Director of the Company; and

 

(ii)                                                      enter into and deliver to each Director a Deed of Access and
Indemnity in favour of the Director and effective from the time of his
appointment.

 

(b)                                                   As soon as practicable following Completion, and in any event within
applicable time limits, the Company must lodge with the Australian Securities
and Investments Commission and any other appropriate regulatory authorities all
appropriate documents and forms.

 

4.                                                        Warranties

 

4.1                                                 Warranties

 

(a)                                                    The Company represents, warrants and covenants to and with the
Investors that each of the statements contained in Annexure 2 (each a
“Warranty”) is now and will be true, accurate and not misleading at Completion
(except that where any statement is expressed to be made only at a particular
date it is given only at that date).

 

(b)                                                   Each Warranty is separate and independent and unless expressly
provided is not limited by any other Warranty or provision of this Agreement.

 

(c)                                                    Each Investor represents and warrants to each of the other parties
that each of the following statements is true and accurate and not misleading
at:

 

(i)                                                         Completion:

 

(A)                                                    it is validly existing under the laws of its place of incorporation;

 

(B)                                                      it has the power to enter into and perform its obligations under
this Agreement and to carry out the transactions contemplated by this
Agreement; and

 

(C)                                                      it has taken all necessary action to authorise its entry into and
performance of this Agreement and to carry out the transactions contemplated by
this Agreement; and

 

(ii)                                                      the date of this Agreement: it is up to date with all NASDAQ and SEC
continuous disclosure requirements.

 

15

 

(d)                                                   Channell represents and warrants to ANZ that each of the following
statements is true and accurate and not misleading at:

 

(i)                                                         Completion:

 

(A)                                                    it is not aware of any current, threatened or potential breach of
the warranties by the vendors under the Acquisition Agreement; and

 

(B)                                                      it is not insolvent or subject to any current, threatened or pending
bankruptcy proceedings, winding up applications, administration, receivership
or liquidation;

 

(e)                                                    the date of this Agreement: there is no current, threatened or
pending material litigation involving Channell which may adversely impact on
the operations of the Company. If between the date of this Agreement and
Completion Channell becomes aware of any matter or circumstance which would be
a breach of the warranties given under clauses 4.1(c)(ii) or 4.1(d)(ii) if they
were given at Completion, Channell must promptly disclose the matter or
circumstance to ANZ.

 

4.2                                                 Reliance

 

(a)                                                    The Company acknowledges that the Investors have been induced to
enter into this Agreement by the Warranties and have relied on the truth and
accuracy of the Warranties.

 

(b)                                                   Channell acknowledges that ANZ has been induced to enter into this
Agreement by the warranties given by Channell in clauses 4.1(c) and 4.1(d) and
has relied on the truth and accuracy of those warranties.

 

(c)                                                    ANZ acknowledges that Channell has been induced to enter into this
Agreement by the warranties given by ANZ in clause 4.1(c) and has relied on the
truth and accuracy of those warranties.

 

4.3                                                 Disclosures

 

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

 

4.4                                                 Assignment
of Warranties

 

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

 

5.                                                        Non-compete

 

5.1                                                 Channell
obligations

 

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

 

16

 

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

 

(a)                                                    carry on or be engaged or involved in within Australia any business
or activity that competes with the Business (or any part of it); or

 

(b)                                                   attempt, counsel, procure or otherwise assist any person to carry on
or be engaged or involved in within Australia any business or activity that
competes with the Business (or any part of it).

 

5.2                                                 ANZ
obligations

 

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

 

5.3                                                 Restraints
fair and reasonable

 

The Investors acknowledge and
agree that:

 

(a)                                                    the covenants in clauses 5.1 and 5.2 are material to the Company’s
decision to enter into this Agreement;

 

(b)                                                   the restraints contained in clauses 5.1 and 5.2 are:

 

(i)                                                         fair and reasonable regarding the subject matter, area and duration;
and

 

(ii)                                                      reasonably required by the Company to protect the business,
financial and proprietary interests of the Group Companies; and

 

(c)                                                    each of the obligations in clauses 5.1 and 5.2 is severable and
independent so that if clause 5.1 or clause 5.2 or any part of them is held
invalid or unenforceable by a court of law then clause 5.1, clause 5.2 and/or
such part as the case may be will be considered to be automatically deleted
from this Agreement.  Any such deletion
shall apply only to that part of clause 5.1 and/or clause 5.2 so adjudicated,
and the operation of such part will only be deemed inapplicable in the
particular jurisdiction in which the adjudication is made.

 

5.4                                                 Acknowledgments

 

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

 

(a)                                                    provides a range of banking, funds management and advisory services
internationally;

 

(b)                                                   is the responsible entity and/or manager of a number of managed
funds and trusts and has obligations and duties in relation to each of those
managed funds and trusts;

 

17

 

(c)                                                    may, subject to clause 5.2, invest funds in companies or other
entities that may compete directly or indirectly with the Company;

 

(d)                                                   cannot foster and promote the Business where such conduct would
breach its obligations to, or adversely impact on, the shareholdings of the ANZ
Group in any such competing company or entity referred to in clause 5.4(c) in
which funds managed by the ANZ Group have been invested, provided that:

 

(i)                                                         ANZ to the best of its knowledge warrants that at the Completion
Date it is not aware of any such directly conflicting and/or competing business
interest in relation to which a member of the ANZ Group has a shareholding; and

 

(ii)                                                      without limiting clause 5.2, after the Completion Date, if a member
of the ANZ Group proposes to enter into a transaction which will have, or which
is likely have, the effect of creating a conflicting and/or competing business
interest then ANZ will notify Channell and the Company prior to that member
entering into the transaction; and

 

(e)                                                    may hold marketable securities quoted at the time of acquisition on
a recognised stock exchange representing collectively not more than 10% of the
issued capital of the listed entity.

 

6.                                                        Financial
information

 

6.1                                                 Annual
business plan

 

(a)                                                    Subject to clause 6.1(b), the Company must procure that before the
start of each financial accounting period of the Company a business plan
incorporating an annual projected statement of financial position, statement of
financial performance and statement of cash flows for the Group Companies
(“Business Plan”) is prepared and delivered to the Board and the
Investors.  The Business Plan must be
approved (in form and content) by the Board before being delivered to the
Investors.

 

(b)                                                   The initial business plan for the Group Companies for the period
from the Completion Date to 30 June 2005 is attached at Annexure 4.

 

6.2                                                 Management
accounts

 

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

 

18

 

6.3                                                 Audited
accounts

 

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

 

6.4                                                 Other
information and access

 

The Company must:

 

(a)                                                    procure that the Directors are kept fully informed of all material
developments regarding the Group Companies;

 

(b)                                                   provide any information reasonably requested by an Investor to
satisfy any reporting or auditing requirements of the Investor; and

 

(c)                                                    upon reasonable notice being served on the Company, provide the
Investors and their respective officers, employees, agents and representatives,
with such access to the books and records, officers, employees and premises of
the Group Companies as they may reasonably require.

 

The format,
timing and regularity of the reporting set out in clauses 6.1 to 6.4 may be
varied by mutual agreement of ANZ and Channell.

 

6.5                                                 Confidentiality

 

(a)                                                    Subject to clauses 6.5(b), 6.5(c) and 6.5(d), the Investors must
keep, and the Company must procure that the Directors keep, the information
referred to in clauses 6.1 to 6.4 strictly confidential.

 

(b)                                                   Subject to clause 6.5(e), any:

 

(i)                                                         Channell Director may pass any information concerning the Company or
any other Group Company received by him to Channell, the Channell Member and/or
any employee or officer of Channell or the Channell Member; and

 

(ii)                                                      ANZ Director may pass any information concerning the Company or any
other Group Company received by him to relevant employees and officers of the
ANZ Group.

 

(c)                                                    Subject to clause 6.5(e), the Investors and the Investor Members may
pass any information received from the Company or a Director to:

 

(i)                                                         any of their respective Related Bodies Corporate;

 

(ii)                                                      in the case of an Investor which is a fund or which holds Shares on
behalf of a fund, any adviser to, nominee, custodian, trustee, manager or
general partner of, or investor or prospective investor in, the fund;

 

(iii)                                                   its investment adviser or any other professional adviser;

 

19

 

(iv)                                                  any potential purchaser of, or potential investor in, a Group
Company, provided that a confidentiality undertaking is first obtained from the
recipient on terms satisfactory to the Company and the other Investor and
Investor Member; and

 

(v)                                                     any Government Agency where the disclosure to the Government Agency
is required by law provided that the form and terms of that disclosure have
been notified to the other parties and the other parties have had a reasonable
opportunity to comment on the form and terms and all reasonable requests
contained in such comments have been complied with.

 

(d)                                                   Channell may disclose any information received from the Company or a
Director in quarterly press releases and analyst conference calls which in the
ordinary course is appropriate for disclosure.

 

(e)                                                    The parties acknowledge that the recipients may use the information
received under clauses 6.5(b) and 6.5(c) to inform their investment and lending
decisions but may not:

 

(i)                                                         use that information in any way that may cause detriment to a Group
Company or the Business;

 

(ii)                                                      use that information to inform any decision regarding investing in
or lending to a person or business that competes with the Business (or any part
of it); or

 

(iii)                                                   provide that information to any person or business that competes
with the Business (or any part of it).

 

6.6                                                 D&O
Policy

 

(a)                                                    Subject to clause 6.6(b), Channell agrees to take out and maintain,
or procure the Company to take out and maintain, a Directors and Officers
Insurance Policy (“D&O Policy”) in respect of each Director and to pay the
premiums in respect of that D&O Policy during the Director’s term in office.

 

(b)                                                   Nothing in clause 6.6(a) constitutes an agreement by the Company to
pay a premium which it is prohibited from paying under the Act or otherwise.

 

(c)                                                    The insurer under the D&O Policy and the amount and terms of the
D&O Policy will be subject to approval by the Board.

 

(d)                                                   If Channell takes out and maintains the D&O Policy, Channell may
charge the entire cost, or any pro rated portion of the cost, of the premiums
paid or payable in respect of the D&O Policy to the Company.

 

6.7                                                 Other
insurance

 

The
Company must take out and maintain such other insurances as are required by the
Board.  The Company will maintain valid
and adequate insurance in respect of all risks which are

 

20

 

normally
insured against by companies carrying on similar businesses to the Company for
such amounts as determined by the Board.

 

7.                                                        Future conduct of the Company

 

7.1                                                 Management
of the Business

 

The
Company undertakes to the Investors that it will (and the Investors confirm
that they will procure the Company to), unless the Investors otherwise consent
in writing, procure that the Business will be properly managed in accordance
with usual good commercial practice and will comply with all applicable laws
and the Group Companies will maintain all licences, consents and authorisations
whatsoever which are required or necessary to carry on the Business from time
to time.

 

7.2                                                 Board

 

(a)                                                    Unless otherwise agreed in writing by the Investors, and subject to
the relevant positions being occupied, the Board will comprise no more than 4
Directors, consisting of:

 

(i)                                                         three Channell Directors; and

 

(ii)                                                      one ANZPE Director.

 

(b)                                                   For so long as Channell or the Channell Member continues to hold any
A Class Ordinary Shares, Channell is solely entitled to appoint, substitute and
remove the Channell Directors.

 

(c)                                                    For so long as ANZ or the ANZ Member continues to hold any B Class
Ordinary Shares, ANZ is solely entitled to appoint, substitute and remove the
one ANZ Director.

 

(d)                                                   Each appointment, substitution and removal of a Director will be
carried out by depositing at the Company’s registered office or at a Board
meeting a written notice, signed by or on behalf of the party or Directors
entitled to appoint, substitute or remove the Director confirming that appointment,
substitution or removal.

 

(e)                                                    The parties must take all steps reasonably within their power
promptly to procure any such appointments, removals and substitutions in
accordance with this clause 7.

 

(f)                                                      As soon as practicable after the appointment of a Director, the
Company must enter into and deliver to such Director a Deed of Access and
Indemnity in favour of the Director and effective from the time of his
appointment.

 

(g)                                                   A failure by a Member or class of Members to appoint a Director does
not constitute a waiver of the rights of that Member or class of Members to
appoint a Director under this clause.

 

21

 

7.3                                                 Conduct
of the Board and Director fees

 

(a)                                                    The Company undertakes to:

 

(i)                                                         send to the Directors (with a copy to the Investors):

 

(A)                                                    at least 5 Business Days’ advance notice of each meeting of the
Board or of the board of any Group Company and an agenda of the business to be
transacted at the meeting (together with all papers to be circulated or
presented); and

 

(B)                                                      as soon as practicable after each meeting of the Board or of the
board of any Group Company, a copy of the minutes of the meeting; and

 

(ii)                                                      procure that the Board meets at least once every quarter at the
Company’s registered office (or other venue approved by the Directors);

 

(iii)                                                   pay for or reimburse any expenses reasonably and properly incurred
by each non-executive Director on the business of a Group Company; and

 

(iv)                                                  procure that, if a Director requests to participate in any meeting
of the Board or the board of any Group Company using telephone or other
technology in accordance with clause 18.2 of the Constitution, any such meeting
be held using technology that will allow that participation.

 

(b)                                                   Subject to clause 7.4, at each Board meeting resolutions must be
passed by simple majority vote.  Each
Director has one vote for each resolution.

 

(c)                                                    No meeting of the Board may proceed to business or transact any
business unless a quorum is present at the start of and throughout the
meeting.  A quorum of the Board is two
Directors, at least one of which must be a Channell Director and one of which
must be the ANZ Director.

 

(d)                                                   If a quorum of Directors is not present at the start of a duly
convened Board meeting, that meeting is adjourned to the same time and place on
the same day in the next week and the Directors then present will be a quorum
at the adjourned meeting.

 

(e)                                                    Each Director may in accordance with and subject to the
Constitution, appoint an alternate to represent him at Board meetings that he
is unable to attend.  An alternate is
entitled to receive notice of and attend Board meetings (regardless of whether
the Director who appointed the alternate is present).  However, an alternate can only be counted
towards a quorum and vote at meetings where the Director who appointed the
alternate is not present.

 

(f)                                                      Subject to clause 7.4, a Board resolution will be validly passed if
the written text of the resolution has been given to all Directors and signed
or approved by a majority of the Directors.

 

(g)                                                   The Company shall pay the reasonable cost of:

 

22

 

(i)                                                         domestic travel and other expenses properly incurred by the
non-executive Directors resident in Australia (and in accordance with the
Company’s policy concerning travel) in relation to their travel to, attendance
at, and return from each Board Meeting;

 

(ii)                                                      overseas travel up to a maximum of two business class return fares
per year, unless each Investor otherwise gives their prior written approval,
and other expenses properly incurred by the non-executive Directors resident
overseas (and in accordance with the Company’s policy concerning travel) in
relation to their travel to, attendance at, and return from each Board Meeting;
and

 

(iii)                                                   expenses incurred by the non-executive Directors in respect of other
travel related to the Business of the Company as determined by the Board from
time to time.

 

7.4                                                 Matters
requiring unanimous approval

 

(a)  The
parties agree that the following acts, unless required or provided for by this
Agreement, must not be carried out unless approved by all Directors (which
approval must not be unreasonably withheld) and each party must use its
respective rights and powers to procure that no such act is carried out unless
such unanimous approval has been given:

 

(i)                                                     subject to clause 7.4(b), the disposal or acquisition by any Group
Company in any financial year of an asset where the disposal or acquisition is
not contemplated in a business plan referred to in clause 6.1 for that
financial year and the asset (when aggregated with all other disposals, in the
case of a disposal, or acquisitions, in the case of an acquisition, for that
financial year not contemplated in the business plan referred to in clause 6.1 for
that financial year) exceeds the amount of any asset whose disposal or
acquisition is contemplated in the business plan referred to in clause 6.1 for
that financial year by more than $150,000;

 

(ii)                                                  any proposal to sell all (or substantially all) of the assets or
business undertaking of the Group Companies;

 

(iii)                                               any proposal to limit the Company’s right to carry on the Business
or a substantial part of the Business or to wind-up or dissolve the Company or
to take advantage of any law providing for the relief of debtors in adverse
financial circumstances, and this paragraph will be deemed to include making an
application or commencing any proceedings or taking any other steps for the
winding-up, dissolution, or appointment of an administrator of the Company or
any Subsidiary or the entering into by the Company or any Subsidiary of an
arrangement, compromise or composition with or assignment for the benefit of
its creditors, a class of them or any of them;

 

(iv)                                              the issue of any securities in any Group Company to a person other
than the Company;

 

23

 

(v)                                                 any restructure of the capital of any Group Company, including any
buy-back, reduction, consolidation or split of the capital of any Group
Company;

 

(vi)                                              any transaction between a Group Company and a Related Party other
than a transaction that falls within the exception under clause 210 of the Act
as if a reference to a public company in that section were a reference to any
Group Company; and

 

(vii)                                           the grant of any mortgage, charge or other security interest over or
negative pledge in respect of any assets of the Company in excess of $500,000
or the issue of any guarantee for debts of third parties except under the
Financing Documents.

 

(b)                                                   The ANZ Member grants to the Company, Channell and the Channell
Member an option to acquire all (but not some) of the Shares held by the ANZ
Member if the ANZ Directors do not approve any acquisition of an asset under
clause 7.4(a)(i) at any time on or before the second anniversary of the
Completion Date.  The call option granted
under this clause 7.4(b) may be exercised in accordance with the procedure set
out in clause 10.3 and the price per Share to be paid to the ANZ Member for the
transfer of its Shares pursuant to the call option is the same price per Share
referred to in clause 10.3(c)(iii).

 

7.5                                                 The Chairman

 

(a)                                                    The initial Chairman of the Board will be William H. Channell
Jr.  Thereafter, the Chairman of the
Board from time to time will be the Chairman of Channell, or if the Channell
Member no longer holds Shares or no person occupies that position, a person
appointed by the Board.

 

(b)                                                   The Chairman is not entitled to any casting vote in addition to any
vote to which he is entitled as a Director.

 

7.6                                                 Day-to-day management

 

(a)                                                    Executive management of the day-to-day
affairs and business of the Group Companies will be managed by the managing director of the Company
under the guidance of the Board.

 

(b)                                                   The Board may delegate authority (on such
terms as it considers appropriate) to members of the executive management team
of the Group Companies as the Board decides from time to time.  A delegated authority may be revoked by the
Board at any time.

 

7.7                                                 Senior Executives

 

(a)                                                    Within 12 months of the Completion Date and prior to the expiry of
the Retention Period, the Board must adopt a plan for incentivising the Senior
Executives in the performance of their duties and obligations in respect of the
Group Companies.

 

24

 

(b)                                                   The ANZ Director must be notified before the Board appoints,
substitutes or removes any chief executive officer or chief financial officer
of the Company and the ANZ Director must be provided with a reasonable
opportunity to comment on the appointment, substitution or removal.

 

7.8                                                 Observer
at Board meetings

 

(a)                                                    If ANZ has not appointed a Director in accordance with clause 7.2 or
no person occupies the position of ANZ Director, Kevin Cooney or another ANZ
employee acceptable to the Investors (acting reasonably) may attend Board
meetings as an observer.  The Company has
no obligation to pay the costs and expenses of the observer.

 

(b)                                                   The observer:

 

(i)                                                         will be entitled to receive all information that a Director is
entitled to receive and will be subject to the same obligations of
confidentiality as a Director;

 

(ii)                                                      must be given the same notice of board meetings as a Director;

 

(iii)                                                   will be entitled to convey all information obtained by it in its
capacity as an observer to the appointor or its nominee without restriction,
provided that any person to whom such information is conveyed will be subject
to the same obligations of confidentiality as the observer; and

 

(iv)                                                  will be entitled to participate in any Board meeting but is not
entitled to vote.

 

7.9                                                 Guarantees
for financiers

 

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

 

7.10                                          Quorum
for Member meetings

 

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

 

7.11                                          Buyer’s
representative

 

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

 

25

 

8.                                                        Disposal
of Shares and assets

 

8.1                                                 Requirements
for Disposal of Shares

 

(a)                                                    A Member must not Dispose of any Share
registered in the Member’s name, unless the Disposal is permitted under this
Agreement and the Constitution.

 

(b)                                                   Before a transfer of any Share is
effective or can be registered:

 

(i)                                                         the transfer must comply with the
requirements of this Agreement and the Constitution; and

 

(ii)                                                      the transferee must, if it is not already
a party to this Agreement, enter into a Deed of Adherence and deliver it to the
Company.

 

(c)                                                    The Board must sanction any transfer made
which is permitted under this Agreement and the Constitution unless:

 

(i)                                                         the registration of the transfer would
permit the registration of a transfer of Shares on which the Company has a
lien; or

 

(ii)                                                      the Board is otherwise entitled to refuse
to register the transfer pursuant to this Agreement or the Constitution.

 

(d)                                                   Notwithstanding any other provision of
this Agreement but subject to clause 8.2:

 

(i)                                                         no Member may Dispose of its Shares on or
prior to the first anniversary of the Completion Date without
the prior written consent (such consent not to be withheld unreasonably) of the
Investors to the transfer; and

 

(ii)                                                      so long as an ANZ Member holds Shares, the Channell Member may not
Dispose of any Shares without the prior written consent of ANZ to the Disposal,

 

and the Board
may refuse to register any such Disposal which is a transfer of Shares without
obtaining such consent.

 

(e)                                                    Any Member wishing to transfer Shares to
another person may only transfer all, not some only, of its Shares.

 

(f)                                                      For the purposes of this clause, the
following is deemed to be a Disposal by a Member:

 

(i)                                                         any direction (by way of renunciation or
otherwise) by a Member entitled to an issue or transfer of Shares that a Share
be issued or transferred to some person other than that Member;

 

(ii)                                                      any transfer, sale or other disposal of
any right or interest in a Share (including any voting or dividend right
attached to it):

 

(A)                                                    whether or not by the relevant Member;

 

26

 

(B)                                                      whether or not for consideration; and

 

(C)                                                      whether or not effected by an instrument
in writing;

 

(iii)                                                   the creation of any Security Interest over the Share;

 

(iv)                                                  any person becoming entitled to appoint a director of the Company;
or

 

(v)                                                     any person acquiring a legal or equitable right against the Member
which has the effect of placing that person in the same position as if that
person had acquired a legal or equitable interest in the Share.

 

8.2                                                 Permitted transfers

 

(a)                                                    Notwithstanding any other provision of this Agreement but subject to
clauses 8.1(b) and 8.2(b), any Member is entitled to transfer all (but not
some) of its Shares to:

 

(i)                                                         a Related Body Corporate of the Investor;

 

(ii)                                                      in the case of an ANZ Member:

 

(A)                                                    a trustee, custodian or nominee of ANZ provided that the ANZ Member
retains the beneficial interest in the Shares; or

 

(B)                                                      a company, trust, fund or other entity (including a pooled
development fund) which is owned, managed or controlled by an ANZ Member or ANZ
Private Equity; or

 

(C)                                                      a company, trust, fund or other entity (including a pooled
development fund) which is owned, managed or controlled by an entity formed as
part of a management buyout of ANZ Private Equity from ANZ.

 

(b)                                                   If the transferee under clause 8.2(a)(i) ceases to be a Related Body
Corporate of the Investor, the ANZ Member ceases at any time to retain its
beneficial interest or if the ANZ Member or ANZ Private Equity ceases to own,
manage or control any entity referred to in clause 8.2(a)(ii), it must, within
15 Business Days of so ceasing, transfer the Shares held by it to that Investor
or a Related Body Corporate of that Investor.

 

(c)                                                    Clauses 8.3 and 8.4 do not apply to transfers pursuant to this
clause 8.2.

 

8.3                                                 Pre-emptive right

 

(a)                                                    A Member (“Pre-emption Vendor”) who wishes
to transfer its Shares to a third party (“Pre-emption Purchaser”) must first
comply with the procedure in this clause 8.3.

 

(b)                                                   The Pre-emption Vendor must give a notice
(“Pre-emption Notice”) to the other Member (the “Pre-emption Member”) and the
Company specifying:

 

(i)                                                         the name of the Pre-emption Purchaser;

 

27

 

(ii)                                                      the number of Shares (“Sale Shares”)
proposed to be transferred by the Pre-Emption Vendor, which must be all the
Shares held by the Pre-emption Vendor;

 

(iii)                                                   the price (“Pre-emption Price”) at which
the Pre-emption Vendor wishes to transfer the Sale Shares and any other
material terms of the proposed transaction (which, together with the Pre-emption Price, are the
“Pre-emption Terms”);

 

(iv)                                                  that the Sale Shares are offered to the
Pre-emption Member on the Pre-emption Terms; and

 

(v)                                                     that the Pre-emption Member has 15 Business
Days following receipt of the Pre-emption Notice to notify the Pre-emption
Vendor and the Company in writing whether it or an Alternative Purchaser is
willing to purchase the Sale Shares.

 

(c)                                                    No Pre-emption Notice once given in
accordance with this Agreement may be withdrawn or revoked without the approval
of the Board.

 

(d)                                                   The Pre-emption Notice constitutes the
Company as the agent of the Pre-emption Vendor for the sale of the Sale Shares
on the Pre-emption Terms.

 

(e)                                                    If the Pre-emption Member notifies the
Pre-emption Vendor and the Company in accordance with clause 8.3(b)(v) that it
or an Alternative Purchaser is willing to purchase the Sale Shares, the Company must promptly give a notice (“Completion Notice”) to
the Pre-emption Vendor and the Pre-emption Member specifying the place and time
(being not less than 10 Business Days and not more than 20 Business Days after
the date of the Completion Notice) at which the transfer of the Sale Shares is
to be completed.

 

(f)                                                      Upon receipt of a Completion Notice
complying with clause 8.3(e), the Pre-emption Vendor is obliged, subject to
receipt of the cash consideration offered under the Pre-emption Terms, to
transfer all of its Shares to the Pre-emption Member.

 

(g)                                                   If all the Sale Shares have not been sold
under the preceding paragraphs of this clause, the Pre-emption Vendor may, at
any time within three months after receiving confirmation from the Company that
the pre-emption procedure under this clause 8.3 has been exhausted, transfer
the remaining Sale Shares to any person or persons on terms that are no more
favourable (to those persons) than the Pre-emption Terms.

 

(h)                                                   A Pre-emption Member may, during the 15
Business Day period referred to in clause 8.3(b)(v), find an alternative
purchaser (“Alternative Purchaser”) for the Sale Shares provided that the
Alternative Purchaser offers to buy those Sale Shares on the same or better
terms (to the Pre-emption Vendor) than the Pre-emption Terms.  In the event that a Pre-emption Member
notifies the Pre-emption Vendor under clause 8.3(b)(v) that an Alternative
Purchaser is willing to buy the Sale Shares, references to a Pre-emption Member
in clauses 8.3(e) and 8.3(f) above will be deemed to be references to the
Alternative Purchaser.

 

28

 

(i)                                                       This clause 8.3 above does not apply to a transfer of Shares:

 

(i)                                                         permitted under clause 8.2;

 

(ii)                                                      pursuant to clause 8.4 if the pre-emption procedure under this clause 8.3 above has already been
observed in respect of the proposed transfer under that clause; or

 

(iii)                                                   required under clauses 8.5 or 10.3; or

 

(iv)                                                  under any Sale or Listing unless a Member
has made a notification under clause 10.2(g).

 

8.4                                                 Tag along rights

 

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

 

(a)                                                    the pre-emption procedure under clause 8.3
has first been observed;

 

(b)                                                   if the Transferring Member is the Channell
Member, the Transferring Member complies with its obligation under clause 8.5;

 

(c)                                                    the Transferring Member confirms in
writing to the Company and the other Member the price at which and all of the
other material terms on which the Transferee proposes to acquire the Transfer
Shares (the “Transfer Terms”); and

 

(d)                                                   the Transferring Member procures the
Transferee to make a binding unconditional offer (a “Tag Along Offer”) to the
other Member:

 

(i)                                                         for all of that Member’s Shares; and

 

(ii)                                                      on the same terms as the Transfer Terms;
and

 

(e)                                                    the Tag Along Offer is reasonably capable
of acceptance and completion by the other Member prior to or contemporaneously
with the transfer of the Transfer Shares to the Transferee.

 

8.5                                                 Sale of Shares by Channell Member

 

If the Channell Member receives an offer to acquire all of
its Shares from a bona fide third party, the Channell Member must, before
transferring its Shares to that third party, exercise the Call Option on the
basis that:

 

(a)                                                    the limitation on the time for exercise of
the Call Option under clause 10.3(b) does not apply to any exercise of the Call
Option required under this clause 8.5; and

 

(b)                                                   the price per Share which the issuer of the Call Option Notice proposes to pay to the
ANZ Member for the transfer of its Shares pursuant to the Call Option must be
equal to the higher of the Fair Market Value divided by the total number of
Shares

 

29

 

and the
price per Share offered by the bona fide third party to the Channell Member.

 

8.6                                                 Perfection of Transfers

 

(a)                                                    If a Member (the “Transferor”) becomes
bound to transfer any Shares under this Agreement or the Constitution, the
Transferor must promptly deliver to the transferee executed transfers for those
Shares in favour of the transferee together with the relevant share
certificate(s) against payment by the transferee of the price due for them.

 

(b)                                                   The Company is not bound to earn or pay
interest on any money held and will not pay any money to the Transferor until
the Transferor has delivered the Transferor’s share certificates (or an
appropriate indemnity for, and any other document required under Law in respect
of any lost certificates) to the Company.

 

(c)                                                    The receipt by the Company of the purchase
money for the Shares will release the other Members who will not be bound to
see to the application of that money, and after the name of the transferee has
been entered in the Members Register the validity of the proceedings may not be
questioned or disputed by any person.

 

8.7                                                 Miscellaneous

 

Upon a
transfer of any Shares:

 

(a)                                                    the transferor Member is entitled to all
dividends and interest accrued on those Shares up to and including the date of
transfer;

 

(b)                                                   the transferee Member is entitled to all
dividends and interest accrued on those Shares after the date of transfer; and

 

(c)                                                    any amount paid to either the transferor
Member or the transferee Member in excess of their entitlement is held by that
party on trust for the other party.

 

8.8                                                 Disposal of assets

 

(a)                                                    The parties agree that if all (or
substantially all) of the assets or business undertaking of the Group Companies
are disposed of (Asset Sale), the
proceeds of the sale must be distributed so that the ANZ Member is entitled to
the first $3,750,000 (after payment of all costs and expenses of the sale) (Preferred Distribution).

 

(b)                                                   The Preferred Distribution in paragraph (a) shall be distributed in
such a manner as the Members agree (acting reasonably), provided that if within
60 Business Days of completion of the Asset
Sale the Members have not agreed the method of distribution, then the Company
shall be wound-up and the available assets shall be distributed in accordance
with clause 34 of the Constitution.

 

(c)                                                    The Company shall not (and the Members shall procure that the Company does not) make any
distributions after an Asset Sale other than in accordance with this clause
8.8.

 

30

 

(d)                                                   Any amendment to clause 34 of the
Constitution must have the prior written approval of the ANZ Member.

 

9.                                                        Issue
of Shares

 

(a)                                                    If the Company wishes to issue any Shares, other than the Shares
under clause 3.2, (“Subscription Shares”), it must first comply with the
procedure in this clause 9.

 

(b)                                                   The Company must give a notice (“Subscription Notice”) to each
Member specifying:

 

(i)                                                         the name of the person(s) to whom it proposes to issue the
Subscription Shares (the “Subscribers”);

 

(ii)                                                      the number of Subscription Shares proposed to be issued to each
Subscriber;

 

(iii)                                                   the price at which the Company wishes to issue the Subscription
Shares to each Subscriber and any other material terms of the proposed
transaction (the “Subscription Terms”);

 

(iv)                                                  that the Subscription Shares are offered to the Member on the Subscription
Terms in proportion to the amount of Shares held by that Member relative to the
total number of Shares; and

 

(v)                                                     that the Member has 10 Business Days following receipt of the
Subscription Notice to notify the Company in writing whether it is willing to
subscribe for the Subscription Shares.

 

(c)                                                    If the Member notifies the Company in
accordance with clause 9(b)(v) that it is willing to subscribe for the
Subscription Shares offered under clause 9(b)(iv), the Company is
obliged, subject to receipt of the cash consideration offered under the
Subscription Terms, to issue the Subscription Shares offered to the Member
under clause 9(a)(iv) to the Member.

 

(d)                                                   If all the Subscription Shares have not
been issued under the preceding paragraphs of this clause, the Company must
offer in writing (Second Notice)
the shortfall to the Member which subscribed under paragraph (c) the right to
subscribe for the balance of the Subscription Shares and that Member has 10 Business Days following receipt of the Second Notice
to notify the Company in writing whether it is willing to subscribe for the
Subscription Shares.

 

(e)                                                    If all the Subscription Shares have not
been issued under paragraph (d), the Company may, at any time within 25
Business Days after the pre-emption procedure under this clause 9 has been
exhausted, issue the Subscription Shares to any person or persons on terms that
are no more favourable (to those persons) than the Subscription Terms.

 

31

 

10.                                                 Exit

 

10.1                                          Intention
to exit

 

(a)                                                    It is ANZ’s intention that it exit its investment in the Group
Companies within 5 years of Completion.

 

(b)                                                   The parties will use their respective best endeavours to facilitate
ANZ exiting its investment in the Group Companies within 5 years of Completion
in accordance with the mechanisms provided for in this clause 10, however
nothing in this clause 10.1(b) requires Channell, the Channell Member or the
Company to exercise the Call Option.

 

10.2                                          Sale
or Listing

 

(a)                                                    At any time on or after the fifth anniversary of the Completion
Date, either the ANZ Member or the Channell Member (the “Exit Member”) may
notify the other parties in writing that it wishes the Company to undertake a
Sale or Listing (an “Exit Notice”).

 

(b)                                                   Within 40 Business Days of receipt of an Exit Notice, any party
receiving the Exit Notice (“Receiver”) may issue a notice in writing to the
Exit Member that it wishes to buy all (but not some) of the Exit Member’s
Shares, specifying:

 

(i)                                                         the date for completion of the transfer of the Exit Member’s Shares,
which must not be less than 15 Business Days and not more than 2 months after
the date of the notice; and

 

(ii)                                                      the price per Share which the Receiver proposes to pay to the Exit
Member for the transfer of its Shares.

 

(c)                                                    Within 10 Business Days of the receipt of
the notice under paragraph (b), the Exit Member must:

 

(i)                                                         notify the Receiver that it accepts the
price per Share offered by the Receiver for the transfer of its Shares under
clause 10.2(b)(ii); or

 

(ii)                                                      appoint an Independent Valuer to determine
the Fair Market Value.

 

(d)                                                   The Exit Member is obliged, subject to
receipt of the cash consideration offered under the notice, to transfer all of
its Shares to the issuer of the notice at either:

 

(i)                                                         the price per Share offered by the
Receiver for the transfer of its Shares under clause 10.2(b)(ii), if that price
was accepted by the Exit Member under clause 10.2(c)(i); or

 

(ii)                                                      the price per Share equal to the Fair
Market Value divided by the total number of Shares on issue if the Exit Member appointed an Independent
Valuer under clause 10.2(c)(ii),

 

32

 

and the date for completion of the transfer of the
Exit Member’s Shares willl be the date set out in clause 10.2(b)(i) (if clause
10.2(d)(i) applies) or 5 Business Days after the date the Independent Valuer
notifies the Members of the Fair Market Value (if clause 10.2(d)(ii) applies).

 

(e)                                                    Without limiting clause 8.6, if the
Company wishes to buy back the Exit Member’s Shares under this clause 10.2:

 

(i)                                                         the Company must comply with the
requirements of Part 2J.1 of the Act; and

 

(ii)                                                      each party must do and perform all such
acts and enter into such instruments as are within its power (in any capacity),
and use its best endeavours to procure others to do and perform such acts and
enter into such instruments, as are necessary or desirable to give effect to
the buy back including:

 

(A)                                                    voting in favour of the buy back at any
shareholder meetings that may be required;

 

(B)                                                      entering into any buy back agreement that
may be required to effect the buy back; and

 

(C)                                                      lodging all necessary documents and giving
all necessary notifications of the buy back to any regulatory authorities.

 

(f)                                                      If no notice is issued within the period referred to in clause
10.2(b), then:

 

(i)                                                         the Company must appoint an Independent Adviser to advise on and
implement a Sale or Listing; and

 

(ii)                                                      the parties must, subject to clause 10.2(g) and their respective
fiduciary and statutory obligations, do all things reasonably required of them
to facilitate a Sale or Listing.

 

(g)                                                   Prior to completion of the Sale or Listing, a Member may notify the
other Member and the Company in writing that it requires that Member to follow
the pre-emption procedure under clause 8.3 in respect of the Shares held by
that Member, in which case references in clause 8.3 to:

 

(i)                                                         the “Pre-emption Member” will be deemed to be a reference to the
Member issuing the notice under this clause10.2(g);

 

(ii)                                                      the “Pre-emption Vendor” will be deemed to be a reference to the
Member receiving the notice under this clause 10.2(g); and

 

(iii)                                                   the “Pre-emption Price” will be to:

 

(A)                                                    in respect of a Sale, the Directors’ bona fide estimation of the
price per Share expressed as a cash price (whether the consideration under the
Sale is to be satisfied in cash, shares or otherwise) due to be paid on
completion of the Sale (or, where

 

33

 

the
Sale is for only part of the Shares, the amount which would have been paid if
all of the Shares had been acquired at the same price per Share as the Shares
comprised in the Sale), provided that if any shares that are offered as
consideration under the Sale are quoted on a recognised stock exchange, the
price per share of those shares will be deemed to be the closing price per
share of the shares on that stock exchange on the trading day immediately prior
to completion of the Sale; or

 

(B)                                                      in respect of a Listing, the price per Share at which Ordinary
Shares are proposed to be issued or sold in connection with the proposed
Listing, being:

 

(1)                                               in the case of an offer for issue or sale, the underwritten price
or, if applicable, the minimum price at which Ordinary Shares are to be issued
or sold in connection with the Listing; and

 

(2)                                               in the case of a placing, the placing price.

 

(h)                                                   In the event of a Sale or a Listing within 6 months of the date of
the notice referred to in clause 10.2(f) which values the Shares at a price per
Share higher than the price per Share paid to the ANZ Member pursuant to clause
10.2(f), Channell must pay to the ANZ Member an amount equal to the difference
per Share multiplied by the number of Shares transferred pursuant to clause
10.2(f).  If any shares that are offered
as consideration under the Sale are quoted on a recognised stock exchange, the
price per share of those shares will be deemed to be the closing price per
share of the shares on that stock exchange on the trading day immediately prior
to completion of the Sale.  If any shares
that are offered as consideration under the Sale are not quoted on a recognised
stock exchange, then Channell shall, acting reasonably and in good faith,
determine the value of those shares.

 

(i)                                                       If the Independent Valuer is appointed
pursuant to this agreement to determine Fair Market Value then the following
provisions apply: (i) the Independent Valuer has 15 Business Days from their
appointment to determine the Fair Market Value; (ii) the Members and Company
must provide reasonable assistance to the Independent Valuer (including
reasonably full access during business hours to the books and records of the
Group Companies and to the Group companies personnel and accountants); (iii)
the Members may make submissions to the Independent Valuer (a copy of which
must be provided to the other Member); (iv) the Independent Valuer acts as an
expert and not an arbitrator; and (v) the Expert’s determination is final and
binding on the parties, in the absence of manifest error or fraud.

 

10.3                                          Call
Option

 

(a)                                                    The ANZ Member grants to the Company, Channell and the Channell
Member an option to acquire all of the Shares held by the ANZ Member (“Call
Option”) on the terms of this clause 10.3.

 

34

 

(b)                                                   The Call Option may be exercised by the Company, Channell or the
Channell Member at any time on or after the second anniversary of the
Completion Date by giving a notice (“Call Option Notice”) to the ANZ Member.

 

(c)                                                    The Call Option Notice must specify:

 

(i)                                                         the date for completion of the transfer of the ANZ Member’s Shares
to the issuer of the Call Option Notice, which must not be less than 15
Business Days and not more than 2 months after the date of the Call Option
Notice;

 

(ii)                                                      the price per Share which the issuer of the Call Option Notice proposes
to pay to the ANZ Member for the transfer of its Shares pursuant to the Call
Option.

 

(d)                                                   Within 10 Business Days of the receipt of
the notice under paragraph (b), the ANZ Member must:

 

(i)                                                         notify the issuer of the Call Option
Notice that it accepts the price per Share nominated by the issuer of the Call
Option Notice for the transfer of its Shares under clause 10.3(c)(ii); or

 

(ii)                                                      appoint an Independent Valuer to determine
the Fair Market Value.

 

(e)                                                    The ANZ Member is obliged, subject to
receipt of the cash consideration offered under the Call Option, to transfer
all of its Shares to the issuer of the Call Option Notice at either:

 

(i)                                                         the price per Share offered by the issuer
of the Call Option Notice for the transfer of its Shares under clause 10.3(c)(ii),
if that price was accepted by the ANZ Member under clause 10.3(d)(i); or

 

(ii)                                                      the price per Share equal to the Fair
Market Value divided by the total number of Shares, if the ANZ Member appointed an Independent Valuer
under clause 10.3(d)(ii),

 

and the date for completion of the transfer of the
ANZ Member’s Shares to the issuer of the Call Option Notice will be the date
specified in clause 10.3(c)(i) (if clause 10.3(e)(i) applies) or 5 Business
Days after the date the Independent Valuer notifies the Members of the Fair
Market Value (if clause 10.3(e)(ii) applies).

 

(f)                                                      Without limiting clause 8.6, if the
Company wishes to buy back the ANZ Member’s Shares under this clause 10.3:

 

(i)                                                         the Company must comply with the
requirements of Part 2J.1 of the Act; and

 

(ii)                                                      each party must do and perform all such
acts and enter into such instruments as are within its power (in any capacity),
and use its best endeavours to procure others to do and perform such acts and
enter into such instruments, as are necessary or desirable to give effect to
the buy back including:

 

35

 

(A)                                                    voting in favour of the buy back at any
shareholder meetings that may be required;

 

(B)                                                      entering into any buy back agreement that
may be required to effect the buy back; and

 

(C)                                                      lodging all necessary documents and giving
all necessary notifications of the buy back to any regulatory authorities.

 

(g)                                                   In the event of a Sale or a Listing within 6 months of the date of
the Call Option Notice which values (in Channell’s reasonable opinion) the
Shares at a price per Share higher than the price per Share paid to the ANZ
Member pursuant the Call Option, Channell must pay to the ANZ Member an amount
equal to the difference per Share multiplied by the number of Shares
transferred pursuant to the Call Option. 
If any shares that are offered as consideration under the Sale are
quoted on a recognised stock exchange, the price per share of those shares will
be deemed to be the closing price per share of the shares on that stock
exchange on the trading day immediately prior to completion of the Sale.  If any shares that are offered as
consideration under the Sale are not quoted on a recognised stock exchange,
then Channell shall, acting reasonably and in good faith, determine the value
of those shares.

 

11.                                                 New
Shareholders

 

11.1                                          Deed
of Adherence

 

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

 

(a)                                                    at the time of or prior to any allotment or transfer the New Shareholder
enters into a Deed of Adherence in the form set out in Annexure 4; and

 

(b)                                                   if the New Shareholder is to be bound by this Agreement in the
capacity of an Investor, the Investors have approved in writing the New
Shareholder being treated as an Investor under this Agreement.

 

11.2                                          Assignment

 

(a)                                                    An Investor may assign the benefit of this Agreement (including the
benefit of the Warranties and the covenants given to the Investor) to a person
to whom it transfers Shares in accordance with this Agreement and the
Constitution.

 

(b)                                                   Subject to clause 11.2(a), no party may assign or in any other way
dispose of any of its rights or obligations under this Agreement without
obtaining the prior written consent of the other parties, such consent not to
be unreasonably withheld.

 

36

 

12.                                                 Fees
and costs

 

12.1                                          Capital
raising fee

 

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

 

12.2                                          Investors’
costs

 

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

 

13.                                                 Duration

 

13.1                                          Termination

 

(a)                                                    This Agreement will terminate:

 

(i)                                                         in respect of all parties, on a Sale or Listing;

 

(ii)                                                      with respect to a Member, upon that Member ceasing to be a
shareholder in the Company (except for clauses
1, 5, 14, 16 and 17);

 

(iii)                                                   when all the parties so agree in writing.

 

(b)                                                   If either Investor materially breaches this Agreement and fails to
remedy the breach within 1 month of being given written notice by the other
Investor to do so, the Investor not in breach may purchase all of the Shares
held by the other Investor (and/or all Shares held by a permitted transferee of
that Investor under clause 8.2) at a price per Share calculated in accordance
with the following formula:

 

	
  95%

  	
  x

  	
  A

  
	
   

  	
   

  	
  B

  

 

where:

 

A = the Fair
Market Value; and

 

B = the total
number of Shares.

 

37

 

in which case,
the Investor in breach and/or its permitted transferees, as the case may be,
must transfer all of their Shares to the Investor not in breach.

 

13.2                                          Continuing
rights and obligations

 

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

 

14.                                                 Confidentiality
and announcements

 

14.1                                          Provisions
to remain confidential

 

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

 

14.2                                          Permitted
disclosures

 

A party may make disclosures:

 

(a)                                                    to the extent permitted by the Acquisition Agreement;

 

(b)                                                   to those of its employees and officers as the party reasonably
thinks necessary to give effect to this Agreement but only on a confidential
basis;

 

(c)                                                    to those of its professional or financial advisers, insurance
brokers and bankers for the purpose of obtaining advice or assistance in
connection with its obligations or rights or the rights of any other party
under this Agreement provided that such person is subject to obligations of
confidentiality substantially similar to or greater than those contained in
this clause 14;

 

(d)                                                   if required by law, after the form and terms of that disclosure have
been notified to the other parties and the other parties have had a reasonable
opportunity to comment on the form and terms and all reasonable requests
contained in such comments have been complied with;

 

(e)                                                    if by an Investor, to the extent permitted by clause 6.5; and/or

 

(f)                                                      to the extent that the information disclosed is or becomes available
to the public other than by reason of a breach of this Agreement or other
legally binding obligation.

 

14.3                                          Public
Announcements

 

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

 

38

 

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

 

15.                                                 Investors’
obligations and rights

 

15.1                                          Several
and not Joint

 

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

 

15.2                                          Separate
Warranties and undertakings

 

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

 

15.3                                          Exercise
of Investors’ rights

 

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

 

15.4                                          Waiver
of Investors’ rights

 

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

 

16.                                                 Notices

 

16.1                                          Requirements

 

All notices must be:

 

(a)                                                    in legible writing and in English;

 

(b)                                                   addressed to the recipient at the address or facsimile number set
out below or to such other address or facsimile number as that party may notify
to the other parties:

 

to the Company:

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

Attention: Chairman;

Facsimile no: +61 2 9738 9763;

 

to Channell

Address: 26040 Ynez Road, Temecula CA USA

Attention: William H Channell, Jr;

 

39

 

Facsimile no: +1 909 296 3965;

 

to ANZ

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

Attention: Kevin Cooney;

Facsimile no: +61 2 9232 7469;

 

(c)                                                    signed by the party or where the sender is a company by an
authorised officer of that company; and

 

(d)                                                   sent to the recipient by hand, prepaid post (airmail if to or from a
place outside Australia) or facsimile.

 

16.2                                          Receipt

 

Without limiting any other means by which a party may
be able to prove that a notice has been received by another party, a notice
will be deemed to be duly received:

 

(a)                                                    if sent by hand when left at the address of the recipient;

 

(b)                                                   if sent by pre-paid post, 3 days (if posted
within Australia to an address in Australia) or 10 days (if posted from one
country to another) after the date of posting; or

 

(c)                                                    if sent by facsimile, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine from which the
facsimile was sent indicating that the whole facsimile was sent to the
recipient’s facsimile number;

 

but if a notice is served by hand, or is received by
the recipient’s facsimile on a day which is not a Business Day, or after 5.00
pm on a Business Day, recipient’s local time, the notice is deemed to be duly
received by the recipient at 9.00 am on the first Business Day after that day.

 

17.                                                 General
provisions

 

17.1                                          Entire
agreement

 

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

 

17.2                                          Further
assurances

 

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

 

40

 

17.3                                          Conflict
with the Constitution

 

To the extent permitted by law:

 

(a)                                                    if there is any conflict or inconsistency between the provisions of
this Agreement and the Constitution, this Agreement prevails; and

 

(b)                                                   the Members will take such steps as are necessary and within their
power to amend the Constitution (including passing all shareholder resolutions
proposed by the Board) to rectify any such inconsistency from time to time.

 

17.4                                          Invalid
or unenforceable provisions

 

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

 

(a)                                                    it is to be read down or severed in that jurisdiction to the extent
of the invalidity or unenforceability; and

 

(b)                                                   that fact does not affect the validity or enforceability of:

 

(i)                                                         that provision in another jurisdiction; or

 

(ii)                                                      the remaining provisions.

 

17.5                                          No
merger

 

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

 

17.6                                          Waiver
and exercise of rights

 

(a)                                                    A waiver of a provision of or of a right under this Agreement is
binding on the party granting the waiver only if it is given in writing and is
signed by the party or an authorised officer of the party granting the waiver.

 

(b)                                                   A waiver is effective only in the specific instance and for the
specific purpose for which it is given and may be given on such terms and
conditions as the waiving party considers appropriate.

 

(c)                                                    A single or partial exercise of a right by a party does not preclude
another exercise or attempted exercise of that right or the exercise of another
right.

 

(d)                                                   Failure by a party to exercise or delay in exercising a right does
not prevent its exercise or operate as a waiver.

 

17.7                                          Rights
Cumulative

 

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

 

41

 

17.8                                          Acknowledgment

 

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

 

(a)                                                    it has entered into the transactions entirely on the basis of its
own assessment of the risks and the effect of the transactions after taking
appropriate professional advice in relation to such matters;

 

(b)                                                   except as set out expressly in this Agreement, it owes no duty of
care or other fiduciary obligation to any other party;

 

(c)                                                    to the extent that it owes any duty or obligation as referred to in
clause 17.8(b) (whether in contract, tort or otherwise) (except as set out
expressly in this Agreement) to any other party, the party waives, to the
fullest extent permitted by law, any rights which the party may have in respect
of such duty of care or fiduciary obligation.

 

17.9                                          Amendment

 

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

 

17.10                                   Counterparts

 

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

 

17.11                                   Governing
law

 

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

 

17.12                                   Jurisdiction

 

Each party irrevocably and
unconditionally:

 

(a)                                                    submits to the non-exclusive jurisdiction of the courts of New South
Wales; and

 

(b)                                                   waives, without limitation, any claim or objection based on absence
of jurisdiction or inconvenient forum.

 

17.13                                   Consents or approvals

 

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

 

42

 

17.14                                   GST

 

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

 

17.15                                   Constitution

 

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

 

Executed as an agreement

 

 

	
  Signed by

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  Channell
  Bushman Pty Limited

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  by a
  director and secretary/director:

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Thomas Liguori

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature of
  secretary/director

  	
   

  	
   

  	
   

  	
   

  	
  Signature of
  director

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thomas Liguori

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of
  secretary/director (please print)

  	
   

  	
   

  	
   

  	
   

  	
  Name of
  director (please print)

  

 

 

	
  Signed for
  and on behalf of

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  Channell
  Commercial Corporation

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  by its duly
  authorised representative

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  in the
  presence of:

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Ron
  Glatley

  	
   

  	
   

  	
   

  	
   

  	
  /s/
  Thomas Liguori

  
	
  Signature of
  witness

  	
   

  	
   

  	
   

  	
   

  	
  Signature of
  authorised representative

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ron Glatley

  	
   

  	
   

  	
   

  	
   

  	
  Thomas Liguori

  
	
  Name of
  witness (please print)

  	
   

  	
   

  	
   

  	
   

  	
  Name of
  authorised representative

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (please
  print)

  

 

43

 

 

	
  Signed for
  and on behalf of

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  Australia
  and New Zealand

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  Banking
  Group Limited

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  by a duly
  appointed attorney

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
  in the
  presence of:

  	
   

  	
  )

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature of
  witness

  	
   

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of
  witness (please print)

  	
   

  	
   

  	
   

  	
   

  	
  Name of
  attorney (please print)

  

 

44

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