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This Agreement allows for two Shareholders (Shareholder #1 and Shareholder #2) to make decisions in respect of management of the company. The Agreement should be read in conjunction, and be consistent, with the Constitution. If there are less or more than two Shareholders, appropriate changes can be made

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Kalde & Associates Commercial Lawyers

SHAREHOLDERS AGREEMENT

Between:

AND

DISCLAIMER

This document, including drafting notes is intended to an overview of information and a framework of documentation to assist you in establishing your company. This document has been drafted by Kalde & Associates with start-ups in mind but does not take into account your particular circumstances and is not intended to be comprehensive. The law and practice changes from time to time and we do not guarantee that this document is complete, accurate or up-to-date. This document, including drafting notes does not constitute legal advice and must not be relied upon by you as a substitute for seeking legal advice. Your use of this document does not create a solicitor-client relationship between you and Kalde & Associates. We recommend that you seek legal and other professional advice specific to your circumstances before acting or relying on any part of this document. We are not responsible for any action taken or not taken in reliance on this document or the drafting notes. Your use of this document is subject to our Terms of Use which can be viewed by following this link:

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TABLE OF CONTENTS

1DEFINITIONS

2INTERPRETATION

3STRUCTURE OF THE COMPANY

4OBJECTIVES OF THE COMPANY

5MANAGEMENT

6AGREEMENTS BETWEEN COMPANY AND SHAREHOLDERS

7USE OF INTELLECTUAL PROPERTY

8TRANSFERS OF SHAREHOLDER’S SHARES

9OPTION TO PURCHASE OUTGOING SHAREHOLDERS SHARES

10POWER OF ATTORNEY

11PUBLICITY AND CONFIDENTIALITY

12RECORDS AND ACCOUNTS

13PAYMENTS AND DIVIDENDS

14GOOD FAITH

15DISSOLUTION OF COMPANY

16DISPUTES

17GENERAL PROVISIONS

18EXECUTION & SCHEDULES

THIS AGREEMENTis made on theday of20

BETWEEN

[NAME] (ACN/ABN [For tax reasons, normally an ABN will be required. However if a company has no ABN, the ACN may be used in certain circumstances. See sections 153 and 1344 of the Corporations Act.]) of[ REGISTERED ADDRESS]

having its principal place of business at [ PLACE OF BUSINESS ADDRESS] (“the Company”)

AND

of(“”)

AND

of()

PARTIES:

(“[ SHAREHOLDER #1 ]”)

AND

(“[ SHAREHOLDER # 2]”abbreviation)

BACKGROUND

The Shareholders hold all the Shares in the Company.
The Shareholders and the Company have entered into this Agreement to record their aims and objects in relation to the Company and to provide for the effective operation and administration of the Company.

OPERATIVE PROVISIONS

1DEFINITIONS

1.11.1In this Agreement the following words have the following meanings, unless the context does not permit:

(a)“Accession Deed” means the Agreement set out at Schedule 2;

(b)“Act” means the Corporations Act 2001 (Cth);

(c)“Agreement” means this Shareholders Agreement and includes the Schedules;

(d)“Board” means the Board of Directors, and includes any committee of that Board;

(e)“Board Meeting” means a meeting of the Board (or any committee of the Board) duly convened and held in accordance with this Agreement and the Constitution;

(f)“Business” means the business of providing sales, implementation, support, maintenance and consultancy services related to the business objectives of the company;

(g)“Business Day” means any day other than a Saturday, Sunday, bank holiday or public holiday in New South Wales;

(h)“Confidential Information” means all information, forms, specifications, processes, statements, formulae, trade secrets, drawings and data, and copies of extracts made of or from that information and data, concerning:

(i)the operations and dealings of the Company or a Shareholder;

(ii)the organisation, finance, customers, markets, suppliers, Intellectual Property Rights of the Company, a Shareholder, a related body corporate of the Company or a related body corporate of a Shareholder; or

(iii)the operations and transactions of a Shareholder concerning the Shareholder’sshareholding in the Company

(i)“Constitution” means the Constitution of the Company as amended from time to time;

(j) “Directors” means the directors of the Company at any given time and as at the date of this Agreement means the directors identified in Item 2 of Schedule 1;

(k)“Disabled” means totally and permanently disabled in the written opinion of two duly qualified medical practitioners;

(l)“Financial Year” means the period of 12 consecutive calendar months ending on 30 June (or on another day decided by the Board);

(m)“Intellectual Property Rights” means all intellectual property rights, including any patents, patent applications, trademarks, service marks, trade or business names, registered designs, unregistered design rights, copyrights, moral rights, know how, trade secrets, domain names, internet addresses, rights in confidential information, and all or any other intellectual property rights, whether registered or unregistered, and including all applications and rights to apply for any of the same;

(n)“Item” means an Item in a Schedule;

(o) “Managing Director” means that person appointed by the Board from time to time for that position;

(p)“Office” means the registered office of the Company from time to time;

(q)“Purchase Price” means the purchase price for the Shares calculated in accordance with Item 7 of Schedule 1;

(r)“Schedule” means a Schedule to this Agreement;

(s)“Serious Misconduct” includes but is not limited to:

(i)engaging in fraudulent activity;

(ii)engaging in, or being convicted for, stealing, fraud, assault or any other similar criminal behaviour;

(iii)engaging in, or being convicted for, sexual harassment and other offensive or harassing behaviour;

(iv)accepting any payment or other benefit in bad faith as an inducement for any act or omission;

(t)“Shareholder” means the person or persons which hold Shares from time to time and as at the date of this Agreement is the person or persons set out in Item 1 of Schedule 1;

(u)“Shares” means fully paid shares in the Company;

(v) “Special Resolution” means a resolution that has been passed by at least 75% of the votes cast by Shareholders entitled to vote on the resolution; and

(w)Transfer” means to sell, assign, transfer, convey or otherwise dispose of Shares.

2INTERPRETATION

2.1In this Agreement unless the context requires otherwise:

(a)headings in this Agreement are reference only and do not form part of this Agreement;

(b)a reference to any party to this Agreement, or any other document or arrangement, includes that party's executors, administrators, substitutes, successors and permitted assigns;

(c)a reference to any legislation or legislative provision includes any statutory modification or re-enactment of, or legislative provision substituted for, and any subordinate legislation issued under, that legislation or legislative provision;

(d)a reference to a time and date in connection with the performance of an obligation is a reference to the time and date in the State of New South Wales, even if the obligation is to be performed elsewhere;

(e)a reference to the rights, duties, obligations and liabilities of more than one party will in every case be a reference to rights, duties, obligations and liabilities that are several and not joint or joint and several;

(f)the singular includes the plural and vice versa;

(g)a reference to an individual or person includes a corporation, partnership, joint venture, association, authority, trust, State or government and vice versa;

(h)a reference to any gender includes all genders;

(i)a reference to a recital, clause, schedule, annexure or exhibit is to a recital, clause, schedule, annexure, or exhibit of or to this Agreement;

(j)a recital, schedule, annexure or a description of the parties forms part of this Agreement;

(k)a reference to any agreement, deed or document is to that agreement, deed or document (and, where applicable, any of its provisions) as amended, novated, supplemented or replaced from time to time;

(l)where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning;

(m)a reference to a bankruptcy or winding up includes bankruptcy, winding up, liquidation, dissolution, becoming an insolvent under administration (as defined in the Act), being subject to administration and the occurrence of anything analogous or having a substantially similar effect to any of those conditions or matters under the law of any applicable jurisdiction, and to the procedures, circumstances and events which constitute any of those conditions or matters;

(n)where an expression is defined anywhere in this Agreement, it has the same meaning throughout this Agreement; and

(o)a reference to "dollars" or "$" is to an amount in Australian currency.

3STRUCTURE OF THE COMPANY

3.1No further shares

(a)No further Shares will be issued except with the written consent of a simple majority of Shareholders.

(b)Shares may not be issued to a prospective shareholder until that prospective shareholder has executed the Accession Deed.

4OBJECTIVES OF THE COMPANY

(a)The objective of the Shareholders in establishing the Company is to have the Company carry on the Business in accordance with the terms of this Agreement.

(b)In order to fulfil the objective listed in clause 4 ,(a) above, each Shareholder must:

(i)not be involved in any other business in any capacity which competes with the Business in the State of New South Wales or is a similar business to the Business;

(ii)not use Confidential Information in a way which damages or is reasonably likely to damage the Company or any of the other Shareholders;

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

(iv)make approvals or decisions that are required of the Shareholder in good faith and in the best interests of the Company and the carrying on of the Company as a commercial venture; and

(v)be just and faithful in the Shareholder's activities and dealings with the otherShareholders.

5MANAGEMENT

(a)The Company will be managed on a day-to-day basis by the Managing Director who will report to and be responsible to the Board for the Company’s activities and operations.

5.2QUORUM

(a)A quorum for Directors meetings is as specified in Item 1 of the Schedule.

5.3BOARD OF DIRECTORS

(a)The number of Directors (excluding alternate directors) must be equal to the number ofShareholders, unless the Shareholders unanimously determine otherwise.

5.4Each Shareholder is entitled to appoint one Director.

(a)The Company must procure that, on the date this Agreement takes effect, the Board comprises the Shareholders or their nominees.

(b)The Company and each Shareholder shall on a continuing basis ensure the due and proper appointment of each Shareholder’s nominated Director.

(c)Each Shareholder may appoint an alternate director to represent them at meetings of the Board in the absence of that Shareholder’s nominated Director. Such alternate director is entitled to attend and vote at meetings of the Board and to be counted in determining whether a quorum is present, without the need for the alternate director to be approved by the other Directors. Each alternate may vote for every Director whom they represent.

(d)Notwithstanding anything to the contrary contained in the Constitution, each Director can only be removed from the Board:

(i)automatically if the person is disqualified from holding office under the Constitution, or by law; or

(ii)by resolution of a simple majority of the Board if the person has engaged in Serious Misconduct.

(e)Every appointment and removal of a Director takes effect when the written notice of appointment or removal is received at the Office or, in the case of an appointment, when the written consent to act as a Director is received at the Office if that is later than the receipt of the notice of appointment.

(f)Subject to clauses 5.4 ,(g)and 5.4 ,(h) below, the Board shall meet not less than once each Financial Year or as otherwise determined by the Board, with the time, date and location of all Board Meetings to be determined by a simple majority of the Board.

(g)A Director may call a Board Meeting, convened in accordance with this clause, by written notice to the other Directors and that Director will be responsible for preparing the agenda for the Board Meeting.

(h)A Shareholder, or Shareholders, holding more than 15% of the Shares in the Company may call a Board Meeting, convened in accordance with this clause, by written notice to the Board and that Shareholder, or those Shareholders, will be responsible for preparing the agenda for the Board Meeting.

(i)A Board Meeting will require at least 10 Business Days' prior written notice to be given to all Directors unless otherwise agreed by all Directors. That notice must include an agenda and, unless all Directors otherwise agree, a Board Meeting may only resolve matters specifically referred to in that agenda. Subject to clauses 5.4 ,(g),and 5.4 ,(h) above, the agenda must be determined by the Board.

(j)A quorum for Directors meetings is as specified in Item 1 of the Schedule.

5.5DECISION MAKING

(a)Subject to the law and this Agreement, all decisions of the Board in general meeting will be made by simple majority vote.

(b)Any purchase by a Shareholder in the Company’s name or using the Company’s funds or credit must be agreed to in writing by the other Shareholders if the purchase is over $5,000.

6AGREEMENTS BETWEEN COMPANY AND SHAREHOLDERS

(a)Each Shareholder agrees to make the relevant contribution to the Business set out in Item 3 ofSchedule 1 on the date of this Agreement.

(b)Each party acknowledges that the Company may wish to enter into certain arrangements, agreements or understandings with any Shareholder, related party or associate. Those arrangements, agreements or understandings must:

(i)be negotiated on an arm’s length basis;

(ii)be finalised on normal commercial terms;

(iii)subject to clause 6(b)(iv) below not be entered into without the prior approval of a simple majority of the Board;

(iv)not be considered, nor voted upon, by Directors appointed by the Shareholder proposing to enter, or the Directors appointed by the Shareholder whose related party or associate is proposing to enter, into the arrangement, agreement or understanding; and

(v)not be performed unless a written Agreement has been entered into in accordance with this clause.

7USE OF INTELLECTUAL PROPERTY

(a)The Shareholders each acknowledge that the Intellectual Property Rights associated with the Company or licensed to the Company are the property of the Company and the Shareholders agree only to use such Intellectual Property Rights for the benefit of the Company.

8TRANSFERS OF SHAREHOLDER’S SHARES

(a)A Shareholder must not transfer its Shares (or any part of them) without the prior written consent of the other Shareholders or in accordance with this Agreement.

9OPTION TO PURCHASE OUTGOING SHAREHOLDERS SHARES

(a)If during the currency of this Agreement:

(i)a Shareholder dies;

(ii)a Shareholder becomes Disabled;

(iii)a Shareholder becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under a law relating to mental health; or

(iv)a Shareholder ceases to be employed or engaged as a consultant of the Business as previously agreed by the Shareholders without that other Shareholders consent the other Shareholders shall have a first and irrevocable option to purchase the Shares of the relevant Shareholder on the terms of this Agreement.

(b)If during the currency of this Agreement a Shareholder desires or proposes to transfer all or any part of its Shares, the other Shareholders shall have a first and irrevocable option to purchase the Shareholder’s Shares on the terms of this Agreement.

(c)If during the currency of this Agreement a Shareholder or that Shareholder’s nominated Director:

(i)engages in Serious Misconduct;

(ii)breaches any provision of this Agreement and fails to rectify that breach within 20Business Days after a notice of that breach from another Shareholder requesting that breach be remedied; or

(iii)causes or permits the relevant Shareholder’s Shares to be levied upon under anyexecution or other legal process;

(iv)suffers the appointment of a receiver of his undertaking or property or any part thereof or if steps are taken for the appointment of such receiver by any person, corporation or authority;

(v)mortgages, pledges or otherwise gives any security over the relevant Shareholder’sShares without the prior written consent of the other Shareholders;

(vi)has an application presented against it (that is not discharged or withdrawn within ten (10) business days of its presentation), an order made, a resolution passed or a meeting summoned or convened for the purpose of considering a resolution for its winding up or for bankruptcy;

(vii)a receiver, or receiver and manager, appointed over its assets or undertaking any part of them;

(viii)has any execution or other process of any court or authority issued against or levied upon any of its assets and that execution or process is not discharged or withdrawn within sixty Business Days of the date of issue;

(ix)ceased to pay its debts or suspended payment generally or would cease or threaten to cease to carry on its business or become insolvent or be presumed by the court to be insolvent within the meaning of the Act;

(x)has an administrator, trustee, liquidator or provisional liquidator appointed for all or any part of its assets or undertaking; or

(xi)entered into or resolved to enter into an arrangement, composition or compromise with, or assignment for the benefit of its creditors generally or any class of creditors or proceedings are commenced to sanction such an arrangement, composition or compromise other than for the purposes of a bona fide scheme of solvent reconstruction or amalgamation; or

(xii)has a meeting of its directors, shareholders or creditors convened, summoned or held for the purpose of considering or agreeing to any resolution for the winding up or administration of the Shareholder,

(d)the other Shareholder shall have a first and irrevocable option to purchase the Shares of thatDirector’s relevant Shareholder on the terms of this Agreement.

9.2EXERCISE OF OPTION

(a)A Shareholder may exercise an option created under clause 9 by giving written notice of the Shareholder’s intention to exercise the option to the Company and the other Shareholders within 20 Business Days of the event giving rise to the option occurring.

(b)Upon the conclusion of 20 Business Days of the event giving rise to the option created under clause 9 (“the Effective Date”), the parties agree that in relation to any options exercised shall be deemed a legally binding contract between: