EXHIBIT 10.7
[LETTERHEAD]
Mr Xxxxxx Xxxxx
Chief Executive
FAI Insurance
Level 12, 000 Xxxxxxxxx Xxxxxx
XXXXXX XXX 0000
Dear Xxxxxx
This letter is to confirm that my agreement entered into where FAI Insurance
have agreed to purchase 10% of my shareholding and to pay the purchase price via
instalments over a three year period, with each installment being $600,000.
I hereby give you my irrevocable undertaking that you will have the sole
discretion to pro rata the second, third and fourth instalments downwards, ie.
to decrease the amount if you are not satisfied with the royalty payment
generated and that would be payable to FAI during each of these three years.
I will sign if necessary a power of attorney over to you and this letter is my
undertaking to provide you with the absolute guarantee that I will accept your
judgement as each of these payments fall due. The above statement is to override
the agreement signed between us and is to also be identical for any bonus
payments which will become due if we reach certain volume points as mentioned in
the agreement.
Yours faithfully
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
CHIEF EXECUTIVE
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OPTION AGREEMENT
XXXXXXX XXXXX XXXXXX
(Xxxxxx)
FAI INSURANCES LIMITED
ACN 004 304 545
(FAI)
Gadens Xxxxxxxx
Lawyers
Skygarden Building
00 Xxxxxxxxxxx Xxxxxx
XXXXXX XXX 0000
Telephone: 000-0000
Facsimile: 931-4888
941422
SPR
INDEX
CLAUSE NO. CONTENTS
1. Definitions and Interpretation
2. Grant of Option
3. Time of the Essence
4. Exercise of Option
5. Option Price and Bonus
6. Completion
7. Option Fee
8. Assignability
9. Notices
10. Stamp Duty and Costs
11. Governing Law and Jurisdiction
12. Waiver
13. Cumulative Rights
14. Further Assurance
15. Execution by Counterparts
16. Entire Understanding
17. Disclosure Agreement
THIS AGREEMENT is made on 5 September 1994
PARTIES:
1. XXXXXXX XXXXX XXXXXX of 00 Xxx Xxxxxxxxx, Xxxxxxxx Xxxxx, XXX 0000
("Xxxxxx").
2. FAI INSURANCES LIMITED ACN 004 304 545 of Level 12, 000 Xxxxxxxxx Xxxxxx,
Xxxxxx, XXX 0000 ("FAI").
RECITALS:
X. Xxxxxx is the beneficial owner of 251 ordinary shares and 13 "C" class
ordinary shares in FAI Security Holdings which has a total issued capital
of 502 ordinary shares of $1.00 par value each and 26 "C" class ordinary
shares of $1.00 par value each.
X. Xxxxxx has agreed to grant FAI an option to purchase from him approximately
10% of the total issued capital of FAI Security Holdings on the terms and
conditions in this Agreement.
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement unless the context otherwise requires:
"Additional Price" means the extra consideration payable by FAI to Xxxxxx
depending on the Sales by FAI Security Holdings and any of its subsidiaries
determined in accordance with clause 5 and payable in accordance with
clause 6;
"Completion" means completion of the exercise of the Option in accordance
with clause 6;
"Completion Date" means the date(s) on which Completion will take place as
determined in accordance with clause 6.1;
"FAI Security Holdings" means FAI Security Holdings Pty Limited ACN 003 125
264;
"Notice" means the notice of exercise of the Option given by FAI to Xxxxxx
pursuant to clause 4.1;
"Option" means the option granted under clause 2;
"Option Fee" means the amount specified in Item 2;
"Option Price" means the amount specified in Item 4;
"Option Shares" means the ordinary shares and "C" class ordinary shares in
the capital of FAI Security Holdings specified in Item 1 of which Xxxxxx is
the legal owner;
2.
"Option Time" means the time specified in Item 3;
"Sales" means the total number of security units installed by FAI Security
Holdings and any of its subsidiaries throughout Australian and New Zealand
territories for the most recent twelve month period ending on the
Completion Dates.
1.2 In this Agreement unless the context otherwise requires:
reference to a person includes any other entity recognized by law and vice
versa;
words importing the singular number include the plural number and vice
versa;
words importing one gender include every gender;
any reference to any of the parties by their defined terms includes that
party's executors, administrators or permitted assigns or, being a company,
its successors or permitted assigns;
every agreement or undertaking expressed or implied by which more than one
person agrees or undertakes any obligation or derives any benefit binds or
enures for the benefit of those persons jointly and each of them severally;
clause headings are for reference purposes only;
reference to an Item is a reference to an Item in the Schedule to this
Agreement;
reference to an Exhibit, Annexure or Schedule is a reference to the
corresponding Exhibit, Annexure or Schedule to this Agreement;
reference to a statute includes all regulations under and amendments to
that statute and any statute passed in substitution for that statute or
incorporating any of its provisions to the extent that they are
incorporated.
2. GRANT OF OPTION
2.1 In consideration of the payment of the Option Fee by FAI to Xxxxxx (receipt
of which is acknowledged) Xxxxxx grants to FAI an option to purchase all of
the Option Shares for the Option Price together with the Additional Price
(if any).
2.2 The Option Shares will be sold free of any encumbrance, equity or right of
third party and with all rights attached to them at the date of exercise of
the Option.
3. TIME OF THE ESSENCE
3.1 Time is of the essence of this Agreement.
3.2 The Option will terminate if it is not exercised prior to the Option Time.
3.
4. EXERCISE OF OPTION
4.1 FAI may exercise the Option by notice in writing given to Xxxxxx at any
time prior to the Option Time only in respect of all of the Option Shares
(the "Notice").
4.2 On delivery of the Notice by FAI to Xxxxxx there will come into existence a
legally binding agreement to which Xxxxxx will sell and FAI will purchase
by instalments the Option Shares for the Option Price together with the
Additional Price (if any) on the Completion Dates in accordance with
clause 6.
5. OPTION PRICE AND ADDITIONAL PRICE
(i) In addition to the instalment of the Option Price payable on any
Completion Date, FAI may pay Xxxxxx an Additional Price in respect of
that year depending on the number of Sales for the relevant year
determined as follows:
Completion Date Sales Additional Price
Second Completion Date 14,000 - 18,000 $100,000.00
18,001 - 20,000 $200,000.00
20,001 - 23,000 $350,000.00
23,001 and above $500,000.00
Third Completion Date 14,000 - 18,000 $100,000.00
18,001 - 20,000 $200,000.00
20,001 - 23,000 $350,000.00
23,001 and above $500,000.00
Fourth Completion Date 14,000 - 18,000 $100,000.00
18,001 - 20,000 $200,000.00
20,001 - 23,000 $350,000.00
23,001 and above $500,000.00
6. COMPLETION
6.1 Completion will take place in accordance with the following table.
Completion Instalment of Instalment of Instalment
Date Option Shares Option Price No
First Completion 21 ordinary $1,000,000 1
Date: 5/9/94 shares and (being $1,250,000
2 "C" class less Option Fee)
ordinary shares
Second Completion 10 ordinary $600,000.00+ 2
Date: 5/9/95 shares Additional Price
4.
Third Completion 10 ordinary $600,000.00+ 3
Date: 5/9/96 shares Additional Price
Fourth Completion 10 ordinary $600,000.00+ 4
Date: 5/9/97 shares Additional Price
6.2 On each Completion Date:
(a) Xxxxxx will deliver to FAI:
(i) duly executed transfers in respect of the instalment of the
Option Shares determined in accordance with clause 6.1 in favour
of FAI (or such other person(s) as FAI may direct in writing);
and
(ii) the certificates in respect of those Option Shares to be
transferred; and
(b) FAI will pay the instalment of the Option Price determined in
accordance with clause 6.1 together with the Additional Price (if any)
to Xxxxxx (or as Xxxxxx otherwise directs in writing) in cash or by
bank cheque.
6.3 FAI may in its absolute discretion pay any anticipated Additional Price
prior to the relevant Completion Date on such terms as it may determine.
6.4 Completion will take place at the offices of FAI or such other place as may
be agreed between FAI and Xxxxxx.
7. OPTION FEE
7.1 The Option Fee is payable immediately on execution of this Agreement and is
non-refundable if the Option is not exercised in accordance with this
Agreement.
7.2 If the Option is exercised in accordance with this Agreement, the Option
Fee will be deducted from the first instalment of the Option Price as set
out in clause 6.1.
8. ASSIGNABILITY
This Agreement is personal to FAI and FAI may not assign its rights under
this Agreement to any person.
9. NOTICES
9.1 Any notice, approval, request, demand or other communication ("notice") to
be given for the purposes of this Agreement must be in writing and will be
served personally or sent by ordinary or registered mail (airmail if
overseas) to the address of the party specified in Item 5, or such other
address as that party may notify the other party, in writing, from time to
time or by facsimile transmission to the facsimile number of that party
specified in Item 5 (if any) or such other facsimile number as that party
may notify the other party, in writing, from time to time.
5.
9.2 A notice given:
(a) personally will be served upon delivery;
(b) by post (other than overseas airmail) will be served three (3)
business days after posting;
(c) by overseas airmail will be served seven (7) business days after
posting;
(d) by facsimile transmission will be served upon receipt of a
transmission report by the machine from which the facsimile was sent
indicating that the facsimile had been sent in entirety to the
facsimile number specified in Item 5 or such other number as may have
been notified by the receiving party to the other party and if the
facsimile has not been completely transmitted by 5:00 p.m. (determined
by reference to the time of day at the recipient's address) it will be
deemed to have been served on the next business day.
9.3 Any notice which, by virtue of the above provisions, has been served on a
Saturday, Sunday or public holiday will be served on the first business day
(determined by reference to the recipient's address) after that day.
9.4 A notice may be given by an authorised officer, employee or agent of the
party giving the notice.
10. STAMP DUTY AND COSTS
10.1 FAI will pay all stamp duty on or arising in connection with this Agreement
and any other related documentation.
10.2 FAI will bear all legal and other costs and expenses arising directly or
indirectly with respect to the preparation, execution, completion and
performance of this Agreement or any other related documentation.
11. GOVERNING LAW AND JURISDICTION
This Agreement will be governed by and be construed in accordance with the
laws of New South Wales for the time being in force, and the parties agree
to submit to the non-exclusive jurisdiction of the courts of that
jurisdiction.
12. WAIVER
The failure or omission of a party at any time to:
(a) enforce or require the strict observance of or compliance with any
provision or this Agreement; or
(b) exercise any election or discretion under this Agreement,
will not operate as a waiver of them or of the rights of a party, whether
express or implied, arising under this Agreement.
6.
13. CUMULATIVE RIGHTS
The rights or remedies conferred on any party by this Agreement are in
addition to all rights and remedies of that party or law or in equity.
14. FURTHER ASSURANCE
Each party will sign, execute and complete all such further documents as
may be necessary to effect, perfect or complete the provisions of this
Agreement and the transactions to which it relates.
15. EXECUTION BY COUNTERPARTS
15.1 This Agreement may consist of one or more counterpart copies.
15.2 All counterparts of this Agreement, when taken together, constitute the one
document.
16. ENTIRE UNDERSTANDING
16.1 This Agreement contains the entire understanding and agreement between the
parties as to the subject matter of this Agreement.
16.2 All previous negotiations, understandings, representations, warranties
(other than warranties set out in this Agreement), memoranda or commitments
in relation to, or in any way affecting, the subject matter of this
Agreement are merged in and superseded by this Agreement and will be of no
force or effect whatsoever and no party will be liable to any other party
in respect of such matters.
16.3 No oral explanation or information provided by any party to another will
affect the meaning or interpretation of this Agreement or constitute any
collateral agreement, warranty or understanding between any of the parties.
17. DISCLOSURE OF AGREEMENT
Neither party will disclose, divulge or otherwise publicise the terms or
provisions of this Agreement without the prior written approval of each
other party except for the purpose of, and to the extent that, such
disclosure is required by law.
SCHEDULE
ITEM 1
Option Shares 51 ordinary shares and 2 "C" class ordinary
shares in the capital of FAI Security Holdings Pty Limited,
ACN 003 125 264 numbered as follows:
ordinary shares - to
"C" class ordinary shares - to
ITEM 2
Option Fee $250,000.00
7.
ITEM 3
Option Time 5.00 pm 30 June 1995
ITEM 4
Option Price $3,050,000
ITEM 5
Notices Xxxx Xxxxxx/ Xxxxxx: Address 00 xxx xxxxxxxxx.
Fax Balmoral Beach.
Tel Sydney 2088 NSW.
FAI: Address 000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxx 0000
Tel 00-000-0000
FAI Security
Holdings: Address Level 0, 00 Xxxxxxx Xxxxxxx
Xxx Xxxxx Xxxxxx 000
Tel 00-000-0000
EXECUTED as an agreement.
SIGNED on behalf of FAI INSURANCES )
LIMITED by its authorised )
representative in the presence of: )
)
/s/ R. F. Baulderstone ) /s/ X. X. Xxxxx
---------------------------------- ) --------------------------------------
Signature of witness ) Signature of authorised representative
)
)
R. F. Baulderstone ) X. X. Xxxxx
---------------------------------- ) --------------------------------------
Name of witness - please print ) Name of authorised representative
) - please print
)
77 Pacific Highway )
---------------------------------- )
Address of witness )
North Sydney )
8.
SIGNED by XXXX XXXXXX in the )
presence of: )
)
/s/ X. X. Xxxxxxxxx )
------------------------------ )
Signature of witness )
)
X. X. Xxxxxxxxx )/s/ Xxxx Xxxxxx
------------------------------ )--------------------------
Name of witness-please print )
)
66 Wyong Rd. )
Mosman N.S.W. )
------------------------------ )
Address of witness
[LETTERHEAD OF GADENS XXXXXXXX]
Our Ref RES Xxxx Xxxx 941422
Direct Line 931-4713
6 February 1995
Mr X Xxxxx
XXX Insurances Limited
Level 00
000 Xxxxxxxxx Xxxxxx
XXXXXX XXX 0000
Dear Xx Xxxxx:
OPTION AGREEMENT WITH MR XXXX XXXXXX
FAI SECURITY HOLDINGS PTY LIMITED
After a recent review of the option agreement with Mr Xxxx Xxxxxx, it has come
to our attention that the definition of "Sales" is relatively imprecise in that
FAI Security Holdings does not actually install security units but rather sells
them to distributors who themselves install the security units.
Accordingly, I would appreciate it if FAI Insurances Limited could agree to an
amendment to the option agreement to address this imprecision. I suggest the
definition of "Sales" on page 2 of the agreement be amended as follows:
"Sales" means the total number of security units sold by FAI Security
Holdings to its distributors throughout the Australian and New Zealand
territories for the most recent twelve month period ending on the
Completion Dates.
If FAI Insurances Limited is agreeable to the above amendment, please sign the
enclosed copy of this letter on behalf of FAI Insurances Limited and return to
Gadens Xxxxxxxx.
Thank you for your assistance.
Yours faithfully
Xxxx Xxxx
for GADENS XXXXXXXX
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Encl
[LETTERHEAD OF GADENS XXXXXXXX]
2.
SIGNED on behalf of FAI )
INSURANCES LIMITED by its )
authorised representative in the )/s/ Xxxxxx X. Xxxxx
presence of: )----------------------------------
) Signature of authorised
/s/ R. F. Baulderstone ) representative
------------------------------------)
Signature of witness ) Xxxxxx X. Xxxxx
)----------------------------------
/s/ R. F. Baulderstone ) Name of authorised representative
____________________________________) - please print
Name of witness - please print )
)
00 Xxxxxxx Xxxxxxx, Xxxxx Xxxxxx )
------------------------------------
Address of Witness
