eDiets.com Inc. Contracts
Sample Business Contracts
Joint Venture Agreement - Unislim Ireland Ltd. and eDiets Europe Ltd.
Joint Venture Forms
DATED 28th November 2000
(1) Unislim Ireland Limited
(2) eDiets.com Inc
and
(3) eDiets Europe Limited
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JOINT VENTURE AGREEMENT
-----------------------------------
Arthur Cox, Solicitors
Earlsfort Centre
Earlsfort Terrace
Dublin 2
Ref. RC/JM/526UN025/003
28November
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TABLE OF CONTENTS
Clauses Page
1. Definitions and Interpretation .....................................1
2. Completion .........................................................5
3. The Business .......................................................5
4. Directors ..........................................................7
5. Management of the Company ..........................................9
6. Finance ............................................................11
7. Transfer of Shares .................................................11
8. Undertakings not to Compete ........................................12
9. Deadlock ...........................................................13
10. Termination by Notice ..............................................14
11. Termination on Breach ..............................................15
12. Undertakings regarding the Operations of the Company................17
13. Distribution Policy ................................................18
14. Pre-Agreement Company Liabilities ..................................18
15. Confidentiality ....................................................18
16. Mutual Co-operation ................................................19
17. Restrictions on Announcements ......................................20
18. No Partnership......................................................20
19. Conflict with Articles of Association ..............................20
20. Remedies............................................................21
21. Costs ..............................................................21
22. Assignment..........................................................21
23. Entire Agreement....................................................21
24. Variation...........................................................21
25. Notices.............................................................21
26. Waiver..............................................................22
27. Severability........................................................22
28. Counterparts........................................................22
29. Completion..........................................................22
30. Governing Law and Submission to Jurisdiction .......................22
SCHEDULE 1
Details of the Company .............................................23
SCHEDULE 2
Completion .........................................................24
SCHEDULE 3
The Articles of Association ........................................26
SCHEDULE 4
Agreement of Adherence .............................................27
SCHEDULE 5
Pre-Emption Provisions .............................................28
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SCHEDULE 6
Service Agreement between Company and Ciaran McCourt.................34
SCHEDULE 7
Technology Licence Agreement ........................................35
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THIS Agreement is made on the 28th of November 2000
BETWEEN:
(1) Unislim Ireland Limited a company incorporated in Ireland with
registered number 42995 whose registered office is at 49 Lower Dorset
St, Dublin 1 Ireland ("Unislim" which expression shall includes its
successors and permitted assigns)
(2) eDiets.com Inc a company incorporated in Delaware, United States whose
registered office is at 3467 Hillsboro Blvd Deerfield Beach Florida
33442 ("eDiets" which expression shall includes its successors and
permitted assigns).
(3) eDiets Europe Limited a company incorporated in Ireland with registered
number 329476 whose registered office is at 49 Lower Dorset Street,
Dublin 1 ("the Company").
RECITALS:
(A) The Company is a private limited company incorporated on 28 June 2000
and at the date hereof has an authorized share capital of IR(pound
sterling)100,000 divided into 50,000 "A" Ordinary Shares of IR(pound
sterling)1 each and 50,000 "B" Ordinary Shares of IR(pound sterling)1
each. 100 Ordinary Shares have been issued and are held by Ciaran
McCourt who holds 50 "A" Ordinary Shares and Margaret Callan who owns
50 "B" Ordinary Shares. Further details of the Company as at the time
immediately prior to the execution of this Agreement are set out in
Schedule 1.
(B) eDiets and Unislim now wish to invest in and operate the Company as a
joint venture for the purposes and on the terms set out below. Upon
Completion Unislim shall own 40% of the issued share capital of the
Company in the form of 80 A Ordinary Shares and eDiets shall own 60% of
the Shares issued by the Company in the form of 120 B Ordinary Shares.
(C) Each of the Parties enters into this Agreement in consideration of each
of the other Parties entering into this Agreement and accepting the
terms, undertakings and covenants contained herein.
IT IS HEREBY AGREED AS FOLLOWS
1. Definitions and Interpretation
1.1 In this Agreement and the Recitals, where the context
so admits, the following words and expressions shall have the
following meanings:
"A Director" means a Director appointed by
an A Ordinary Shareholder
pursuant to Clause 4.1;
"Agreed Accounting Policies" mean such accounting policies
as may from time to time be
agreed in writing by the
Shareholders;
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"Ancillary Agreement(s)" means (i) the Technology
Licence Agreement of even date
entered into by eDiets British
Virgin Islands and the Company
set out in Schedule 7, (ii)
the Service Agreement, (iii)
the Memorandum and Articles of
Association of the Company,
and (iv) the Agreement of
Adherence
"Articles of Association" Means the Articles of
Association to be adopted by
the Company in the form of the
draft attached as Schedule 3
and any reference to an
"Article" shall be a reference
to that article from time to
time of the Articles of
Association;
"A Ordinary Share" Means a class A Ordinary share
of (pound sterling)1 par value
in the share capital of the
Company having the rights and
benefits and being subject to
the restrictions set out in
the Articles of Association;
"A Ordinary Shareholder" Means the registered holder of
one or more A Ordinary Shares;
"Associated Company" Means, in relation to any
Shareholder, any subsidiary or
holding company of that
Shareholder or any other
subsidiary of any holding
company as provided for in
Section 155 of the Companies
Act, 1963;
"B Director" Means a Director appointed by
a B Ordinary Shareholder
pursuant to Clause 4.1;
"Board" Means the Company's board of
directors or the Directors
present (personally or by
their alternates) at any
meeting of the Directors duly
convened and held;
"B Ordinary Share" Means a class B Ordinary Share
of (pound sterling)1 par value
in the share capital of the
Company having the rights and
benefits and being subject to
the restrictions set out in
the Articles of Association;
"B Ordinary Shareholder" Means the registered holder of
one or
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more B Ordinary Shares;
"Business" Means the business of the
Company as described in Clause
3 and such other business as
the Shareholders may agree
from time to time (in
accordance with Clause 4)
should be carried on by the
Company;
"Business Plan" Means at the date of this
Agreement the Company's
business plan in the approved
terms and at any subsequent
date the most recent business
plan of the Company approved
by the Shareholders in
accordance with Clause 12.3;
"Companies Act" Means the Companies Acts 1963
- 1999;
"Completion" Means completion of the
matters referred to in
Schedule 2;
"Completion Date" Means the date hereof (or such
later date as the Parties may
agree in writing);
"Control" Shall be determined by
reference to the right to
appoint the majority of the
Board for the time being;
"Deadlock" Means any situation which has
persisted for not less than 60
days in which,
(i) by virtue of a
substantial
disagreement amongst
the Shareholders,
whether at Board or
Shareholder level or
both; or
(ii) by virtue of an
inability to form a
quorum at any meeting
or adjourned Board or
Shareholders' meeting
a matter which is material to
the Company or the Business
cannot be resolved;
"Agreement of Adherence" Means a deed in the form
attached as Schedule 4
pursuant to which a successor,
Representative transferee or
allottee of Shares agrees to
be bound by
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all the terms of this
Agreement as if it had been a
signatory;
"Director" Means any director of the
Company from time to time;
"Parties" Means the parties to this
Agreement and "Party" means
any one of them including any
other person who becomes a
member of the Company and who
agrees to be bound by the
provisions of this Agreement
by executing a Agreement of
Adherence;
"Representative" Means, in relation to a
Shareholder, any person or
persons who have become
entitled to his Shares in
consequence of his death,
bankruptcy or mental insanity;
"Share" Means any share (of whatever
class or denomination) in the
share capital from time to
time of the Company;
"Service Agreement" Means the Service Agreement
between the Company and Ciaran
McCourt contained in Schedule
6;
"Shareholder" Means any registered holder of
one or more Shares from time
to time;
"Total Transfer Condition" Has the meaning given to it in
paragraph (D) of Schedule 5;
and
"Transfer Notice" Has the meaning given to it in
paragraph (D) of Schedule 5.
1.2 Words and phrases the definitions of which are contained or
referred to the Companies Act shall be construed as having the
meaning thereby attributed to them.
1.3 References to statutes or statutory provisions shall be
construed as references to those statutes or provisions as
respectively amended or re-enacted or as their application is
modified from time to time by other provisions (whether before
or after the date hereof) and shall include any statutes or
provisions of which they are re-enactments (whether with or
without modification) and any orders, regulations, instruments
or other subordinate legislation under the relevant statute or
statutory provision. References to sections of consolidating
legislation shall wherever necessary or appropriate in the
context be construed
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as including references to the sections of the previous
legislation from which the consolidating legislation has been
prepared.
1.4 References to any document (including this Agreement) are
references to that document as amended, consolidated,
supplemented, notated or replaced from time to time;
1.5 References in this Agreement to Recitals, Clauses, paragraphs
and Schedules are to clauses and paragraphs in and recitals and
schedules to this Agreement. The Recitals and Schedules to this
Agreement shall be deemed to form part of this Agreement.
1.6 Headings are inserted for convenience only and shall not affect
the construction of this Agreement.
1.7 References to the Shareholders include their respective
successors and permitted assigns.
1.8 References to persons shall include any individual, any form of
body corporate, unincorporated association, firm, partnership,
joint venture, consortium, association, organization or trust
(in each case whether or not having a separate legal
personality).
1.9 The masculine gender shall include the feminine and neuter and
the singular number shall include the plural and vice versa.
1.10 A document expressed to be "in the approved terms" means a
document the terms of which have been approved by or on behalf
of the Shareholders and a copy of which has been signed for the
purposes of identification by or on behalf of the Shareholders.
2. Completion
On the Completion Date the Parties will implement the provisions of
Schedule 2.
If, in any respect, any of the provisions of Schedule 2 are not
complied with on the Completion Date by any of the Parties, the
remaining Party (other than the Company) may at its option defer
Completion (and so that the provisions of this Clause shall apply to
Completion as so deferred).
3. The Business
3.1 (a) The Parties shall procure that the Business of the Company and
any subsidiaries of the Company shall be the provision of
slimming, dietary, health, beauty, and related goods and
services and any other services which the Parties may agree
from time to time via a variety of electronic media described
in Clause 3.2 ("the Services") in the Territory.
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(b) The Territory of the Business comprises the United Kingdom,
Ireland, the Isle of Man, the Channel Islands, Netherlands,
Germany, Switzerland, Austria, Australia and New Zealand and
the parties acknowledge that they will procure the
establishment of either a subsidiary of the Company or a
parallel company owned by the Parties in the same proportion as
the parties own the Company on the date hereof to exploit the
Services in the Territory.
(c) If and whenever a Party wishes or intends to establish a
similar business to the Business or which competes directly or
indirectly with the Business in or to other places listed at
the end of this paragraph, such Party shall notify the other
Party of such wish or intent. Following such notification, the
parties may, but shall not be obliged to, discuss the
possibility of the Parties and or the Company or a subsidiary
or a parallel company owned by the Parties in the same
proportion as the parties own the Company on the date hereof
providing the Services in such other places:
- Iceland, Norway, Sweden, Finland, Denmark, the Faroes,
Greenland
- France, Belgium, Luxembourg,
- Spain
- Portugal
- Italy, Romania,
- Hungary
- Poland, Czech Republic, Slovakia, the Republics of the
present and former Yugoslavia
- Greece, Cyprus
(d) Notwithstanding anything in this Agreement, the Parties shall
procure that the Business of the Company is not targeted to:
- the Americas (by which is included North, Central and
South America, Bermuda, the islands of the Caribbean,
the Pacific States, dependencies and possessions of the
United States)
3.2 The Services may be made available, published, streamed distributed,
licenced, copied or otherwise delivered in any manner by the Company
via any medium including without limitation the Internet, intranets,
extranets, mobile phones, GSM mobile phones, WAP mobile phones, 3G
mobile phones, databases, interactive television, digital media
services, electronic media services, any platforms, or any networks
(including, without limitations telecommunications, wireless, radio,
television, cable, satellite, terrestrial networks) currently in
existence of which may be developed in the future (the "Electronic
Medium").
3.3 eDiets shall provide the Technology (as defined in the Technology
Licence Agreement) to the Company in accordance with the Technology
Transfer Licence Agreement which forms part of the Ancillary
Agreements.
3.4 Unislim shall provide nutrition expertise, localized content, and
marketing expertise for the European Markets and Customer Care and
Support to the Company.
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3.5 The Business shall be conducted in accordance with the Business Plan
from time to time unless otherwise agreed by the Parties.
4. Directors
4.1 The maximum number of Directors shall be 5. The A Ordinary Shareholder
shall be entitled to appoint 2 A Directors and the B Ordinary
Shareholder shall be entitled to appoint 3 B Director's and at any time
to require the removal or substitution of any Director so appointed by
it or them. The first Directors shall be:
Ciaran McCourt (A Director)
Agnes Mc Court (A Director)
James Myers (B Director)
David Humble (B Director)
Christine M. Brown (B Director)
Ciaran McCourt shall be the Chairman of the Board of Directors.
4.2 The A Ordinary Shareholder may appoint or remove a Director appointed
by him by depositing written notice at the Company's registered office
and by sending a copy of the same to the other Shareholder.
4.3 In the event that any Shareholder disposes of all its Shares, such
Shareholder shall procure the resignation of the Directors at the time
holding office by reason of their nomination by such Shareholder.
4.4 Any Shareholder removing a Director in accordance with this Clause 4
and the relevant provisions of the Articles of Association shall be
responsible for and shall hold harmless the other Shareholder and the
Company from and against any claim for unfair or wrongful dismissal
arising out of such removal and any reasonable costs and expenses
incurred in defending such proceedings including, but without prejudice
to the generality of the foregoing, legal costs actually incurred.
4.5 The Board shall meet in Ireland not less than once in every 3 months in
accordance with and subject to the Articles of Association. Any
Director may attend a board meeting via telephone. At each meeting of
the Board and in respect of each resolution proposed to the Board or at
a meeting of the Board each Director shall have 1 vote. Subject to
Clause 5, all resolutions of the Board shall be passed by simple
majority vote.
4.6 Unless waived by all the Directors, not less than 7 clear days' notice
of all meetings of the Board shall be given to each Director and shall
be accompanied by an agenda of the business to be transacted at such
meeting together with all papers to be circulated or presented to the
same. Within no more than 10 days after each such meeting, a copy of
the minutes of that meeting shall be delivered to each Director.
4.7 The Directors shall elect one of their number to be chairman of the
Company.
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4.8 No meeting of the Board or of any committee thereof may proceed to
business nor transact any business unless a quorum is present at the
start of and throughout such meeting. A quorum of the Board shall be 1
A Director and 1 B Director present in person or by telephone or
represented by an alternate. In the event of any equality, the B
Director shall have the casting vote. In the event that a quorum of the
Directors is not so present at the start of and throughout a duly
convened Board or committee meeting, that meeting shall be adjourned by
the chairman to a day not earlier than 7 days from the date of such
meeting to the same time and place on the same day in the next week and
a quorum at such adjourned meeting shall consist of such Directors as
are present in person or represented by their alternates, provided that
7 days' notice of the meeting has been given to all the Directors (or
where appropriate) their alternates.
4.9 Each Director may, in accordance with and subject to the Articles of
Association, appoint an alternate to represent him at meetings of the
Board which he is unable to attend. Such alternate shall be 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 such
alternate to be approved by the Directors. Each alternate director
shall have one vote for every Director whom he represents.
4.10 Subject only to Clause 5.1, a resolution of the Board shall be validly
passed if the text of the resolution has been signed or approved by
each Director in accordance with the Articles of Association. Such
resolution shall be sent to each Director and shall require a response
within a period specified in the notice of such resolution, being not
less than 10 days after its date of dispatch and no resolution shall
take effect until the expiry of such period unless a majority of the
Board has waived this requirement. Any Director who does not reply to
such resolution within the period specified shall be deemed to have
voted for such resolution and for the purpose of this clause each
director irrevocably appoints any member of the Board as his attorney
in his name and on his behalf to execute any such resolution.
4.11 The first managing director of the Company shall be Ciaran McCourt. The
Service Agreement in the agreed form set out in Schedule 6 between the
Company and Ciaran McCourt shall be executed as part of the Completion.
The managing director shall have the responsibilities delegated to him
by the Board and shall report back to the Board at each Board Meeting
and as may be otherwise requested.
4.12 Subject only to Clause 5.1, the business of the Company shall be
managed by the Board which may delegate any of its powers, including
the day-to-day running of the Business, to the managing director or to
a committee or committees consisting of such Directors as it thinks
fit. The managing director or any committee so formed shall, in the
exercise of the powers so delegated, conform to any regulations that
may be imposed on it by the Board. If the Board so authorizes or
requests, auditors, consultants, advisers and employees shall be
permitted to attend and speak at meetings of the Board, but not to
vote.
4.13 The remuneration (if any) of the Directors (including the Managing
Director) shall be determined by, and subject to the unanimous approval
of, the Shareholders.
4.14 Should the Managing Director be prevented from fully carrying out his
duties under this Agreement or the Service Agreement at any time due to
illness or other
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incapacity for a period exceeding one (1) calendar month, the Board
shall be entitled to appoint a temporary replacement-managing director.
The temporary replacement-managing director shall remain in office
until the Managing Director is in a position to fully resume his
duties.
5. Management of the Company
5.1 Following Completion and save as otherwise provided in this Agreement,
the Shareholders shall exercise all voting rights and other powers of
control available to them in relation to the Company to procure that
the Company and/or the Board shall not, without the prior written
approval of the A Ordinary Shareholder and the B Ordinary Shareholder:
5.1.1 except as provided in this Agreement, make or agree to make any
change to the authorized or issued share capital from time to
time of the Company or grant any option over or interest in, or
issue any instrument carrying rights of conversion into, any
other security or share of the Company or redeem or purchase
any of its own shares or effect any other re-organization of
its share capital;
5.1.2 permit the registration of any person as a shareholder
(whether by way of subscription or transfer) other than as
permitted by this Agreement;
5.1.3 make any change to the Company's Memorandum or Articles of
Association;
5.1.4 create or, where appropriate, issue any fixed or floating
charge, debenture, lien (other than a lien arising by operation
of law or in the ordinary course of business) or other
mortgage, encumbrance or security over the whole or any part of
the undertaking, business, property or assets (tangible or
intangible) of the Company except for the purpose of securing
the indebtedness of the Company to its bankers for sums not
exceeding (pound sterling)50,000 borrowed in the ordinary and
proper course of the Business;
5.1.5 permit the Company to incur any indebtedness in excess of
(pound sterling)50,000 in the aggregate outstanding or increase
the total amount of its borrowings to a figure greater than
that provided in the Business Plan;
5.1.6 make any loan or advance or give any credit (other than normal
trade credit or other than on normal banking terms for
unsecured overdraft facilities) in excess of (pound
sterling)3,000 to any person including any "connected person"
as defined in Section 26 of the Companies Act, 1990);
5.1.7 give any guarantee, indemnity or security to secure the
liabilities or obligations of any person or corporation;
5.1.8 sell, transfer, lease, assign, dispose of or part with control
of any interest in all or any material part of the undertaking,
business, property or assets (tangible or intangible) of the
Company (whether by a single transaction or a series of
transactions) or contract to do so or acquire or contract to
acquire any
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business, property or assets (tangible or intangible) or any
interest therein which would, following such acquisition or, as
the case may be, prior to such acquisition, constitute a
material part of the business, property or assets of the
Company (and for these purposes any part accounting for, or
which would following such acquisition by the Company account
for, 20% or more of the consolidated profits, turnover or net
asset value of the Company shall be deemed material). For these
purposes the aggregate amount payable under any agreement for
hire, hire purchase or purchase on credit sale or conditional
sale terms shall be deemed to be capital expenditure incurred
in the year in which such agreement is entered into;
5.1.9 set up or close down any branch or office or create, acquire or
dispose of any subsidiary or of any shares or any security or
any interest in any subsidiary;
5.1.10 enter into any partnership or profit sharing agreement or joint
venture with any person;
5.1.11 approve the annual draft business plan, budget and capital
expenditure programmeme or make any substantial alteration to
the Business Plan including any change to the nature and/or
geographical area of the Business;
5.1.12 acquire, purchase or subscribe for any shares, loan stock,
debentures, mortgages or securities (or any interest therein)
or any other interest in any person;
5.1.13 grant any power of attorney, delegate directors' powers (other
than as provided in this Agreement) or fail to comply with any
guidelines or directives issued by the Board which are
consistent with the remainder of this Agreement;
5.1.14 make any composition or arrangement with its creditors, move
for insolvency, receivership or examinership or do or permit or
suffer to be done any act or thing whereby the Company may be
wound up (whether voluntarily or compulsorily), save as
otherwise expressly provided for in this Agreement;
5.1.15 declare or make any dividend or other distribution in cash or
in specie and whether out of revenue profits, capital profits
or capital reserves;
5.1.16 commence the prosecution or defense of, or settle, any legal or
arbitration proceedings other than routine debt collection;
5.1.17 take or agree to take any leasehold interest in, or licence
over, any land;
5.1.18 establish, cancel, or vary the terms of any pension, retirement
schemes, profit sharing, share option, profit related, bonus or
incentive scheme;
5.1.19 enter into, effect or vary any claim, disclaimer, surrender,
election or consent for tax purposes;
5.1.20 change its name or trade under any corporate or trade name
other than eDiets Europe Limited;
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5.1.21 change its financial year, auditors, solicitors or registered
office;
5.1.22 factor or assign any of its book debts;
5.1.23 open or close any bank account or change the terms of the
mandate of any bank account of the Company;
5.1.24 adopt the annual accounts or, otherwise than as required by
law, amend the Agreed Accounting Policies;
5.2 As a separate and independent undertaking, the Company agrees with each
Shareholder that it shall (so far as it is legally able to do so)
observe and comply with the prohibitions and restrictions in this
Clause 5.
6. Finance
6.1 The Shareholders shall use all reasonable endeavors to raise additional
capital from third parties to meet the capital requirements of the
Company without obligation to provide additional money.
7. Transfer of Shares
7.1 No transfer of any Share to a third party shall be registered unless:
7.1.1 the proposed transferee (if not already bound by the provisions
of this Agreement) has entered into a Agreement of Adherence;
and
7.1.2 such transfer is made in compliance with this Clause 7 and the
provisions contained in Schedule 5; and
7.1.3 except where the transfer is in accordance with Clause 7.2,
the transferor assigns and the transferee accepts an assignment
of the benefit of all or, in the case of a transfer of part of
the Shares of a Shareholder such proportionate part, of the
loans made to the Company by the transferor or any of its
Associated Companies and for the time being outstanding and
assumes all the obligations of the transferor in respect of
all, or such proportionate part, of any guarantee given by the
transferor on behalf of the Company
and no Shareholder shall otherwise sell, transfer or dispose of any
Share or Shares or any interest therein or create any third party
interest in respect thereof.
7.2 Notwithstanding Clause 7.1, the Parties agree that a transfer of Shares
to a transferee who is and remains a wholly-owned subsidiary of the
ultimate holding company of the transferor Shareholder shall be
permitted provided that:
7.2.1 the obligations of the transferor Shareholder under this
Agreement will remain unaffected by the proposed transfer;
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7.2.2 the transferee executes a Agreement of Adherence
contemporaneously with such transfer; and
7.2.3 the Shares will be re-transferred to the original transferor
Shareholder or such other transferee that is and remains a
wholly-owned subsidiary of the ultimate holding company of the
original transferor Shareholder immediately upon the transferee
ceasing to be a wholly-owned subsidiary of such ultimate
holding company and failure to so re-transfer such Shares
within 14 days of the transferee ceasing to be such a
wholly-owned subsidiary shall result in a Deemed Transfer
Notice (as defined) in paragraph (C) of Schedule 5) in respect
of all the Shares held by the transferee shareholder being
deemed to be immediately given.
Each Shareholder shall provide to the other such information as the
other may reasonably require to ascertain that the transferee has not
ceased to be such a wholly owned subsidiary.
7.3 The Shareholders will procure that the Directors shall register any
transfer of Shares which complies with the provisions of this Clause
and Schedule 5.
8. Undertakings not to Compete
8.1 Subject to Clause 16 of this Agreement, each of the Shareholders
undertakes to and with the Company and the other Shareholder
respectively that for as long as it or its nominee owns any Shares and
for a period of 2 years thereafter ("the Period") it will not and it
will procure that none of its key employees or Associated Companies
shall:
8.1.1 in the Territory, carry on or be engaged, concerned or
interested directly or indirectly whether as shareholder,
director, employee, partner, agent or otherwise in carrying on
any business similar to or competing with the Business;
8.1.2 either on its own account or in conjunction with or on behalf
of any other person, solicit or entice away or attempt to
solicit or entice away from the Company the custom of any
person who is or has at any time within two years prior to the
expiry of the Period been a customer, client, identified
prospective customer or client, agent or correspondent of the
Company or in the habit of dealing with the Company;
8.1.3 either on its own account or in conjunction with or on behalf
of any other person, employ, solicit or entice away or attempt
to employ, solicit or entice away from the Company any person
who is or shall have been at the date of or within one year
prior to the expiry of the Period an officer, manager,
consultant or employee of the Company whether or not such
person would commit a breach of contract by reason of leaving
such employment;
8.1.4 do or say anything which is detrimental to the reputation of
the Company or which may lead any person to cease to deal with
the Company on substantially equivalent terms to those
previously offered or at all;
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8.1.5 do or omit to do any matter, act or thing which is in breach of
any Ancillary Agreement or of any outstanding obligations
pursuant to any Ancillary Agreement.
8.2 Each and every obligation under this Clause shall be treated as a
separate obligation and shall be severally enforceable as such, and in
the event of any obligation or obligations being or becoming
unenforceable in whole or in part, such part or parts as are
unenforceable shall be deleted from this Clause, and any such deletion
shall not affect the enforceability of all such parts of this Clause as
remain not so deleted.
8.3 While the restrictions contained in this Clause are considered by the
Parties to be reasonable in all the circumstances, it is recognized
that restrictions of the nature in question may fail for technical
reasons and accordingly it is hereby agreed and declared that if any of
such restrictions shall be adjudged to be void, invalid or illegal as
going beyond what is reasonable in all the circumstances for the
protection of the interest of the Parties but would be valid if part of
the wording thereof were deleted or the periods thereof reduced or the
range of activities or area dealt with thereby reduced in scope the
said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
9. Deadlock
9.1 In the event of a Deadlock, each Shareholder shall, within 7 days of
such Deadlock having arisen, cause its appointees on the Board to
prepare and circulate to the other Shareholders a memorandum setting
out its position on the matter in dispute and its reasons for adopting
such position. Each such memorandum shall be considered by the
respective Shareholder who shall meet together within 7 days of receipt
of the memoranda and use their reasonable endeavors to resolve the
Deadlock.
9.2 If they do so agree, they shall jointly issue a statement setting out
the terms of such agreement and each Shareholder shall exercise the
voting rights and other powers of control available to it in relation
to the Company to procure that the terms of such agreement are
implemented and the Company shall do all things within its power to
implement such terms.
9.3 If they do not so agree within 14 days of referral of the matter to
them, then for a period of 14 days thereafter (the "Option Period") any
Shareholder (the "Initiating Shareholder") shall be entitled to serve a
Transfer Notice in respect of all (but not part only) of the Shares
held or beneficially owned by it and the provisions of Schedule 5 shall
apply thereto save that:
9.3.1 the Transfer Notice shall be expressed to be made pursuant to
this Clause;
9.3.2 notwithstanding the provisions of paragraph (F) of Schedule 5,
the Transfer Notice shall be irrevocable; and
9.3.3 the Transfer Notice shall either specify a price per Share or
shall specify that the price is to be determined in accordance
with paragraph (F) of Schedule 5.
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9.4 In the event that more than one Transfer Notice is served on the same
day, the Transfer Notice which contains the highest price shall be the
operative Transfer Notice, but in the event that one of the Transfer
Notices does not specify a price, the first to be received by the
Company shall be the operative Transfer Notice.
9.5 If after the procedure in Schedule 5 has been complied with, the other
Shareholder has not purchased all the Shares the subject of the
Transfer Notice but the Deadlock still persists, then the Transfer
Notice shall be of no further force and effect and the Initiating
Shareholder shall be entitled for a period of 21 days thereafter (the
"Purchase Period") to give notice (the "Purchase Notice") to the other
Shareholder that it shall buy all the Shares (other than those
originally subject to the Transfer Notice in Clause 9.3) at the price
per Share specified in the Transfer Notice or determined in accordance
with paragraph (F) of Schedule 5. Such sale and purchase shall be
completed within 14 days of the Purchase Notice having been given and
the provisions of paragraphs (M) to (R) (inclusive) of Schedule 5 shall
apply mutatis mutandis to such sale and purchase.
9.6 If either no Transfer Notice is served within the Option Period or the
provisions of Clause 9.5 apply but no Purchase Notice is served within
the Purchase Period and at the end of the relevant period, the Deadlock
persists, the Shareholders shall, if the Initiating Shareholder so
requests, pass a special or extraordinary resolution to place the
Company in members' voluntary liquidation.
9.7 If at the Extraordinary General Meeting referred to in Clause 9.6, no
resolution is carried in relation to the matter from which the Deadlock
arose by reason of an equality of votes for and against any proposal
for dealing with such matter, the Shareholders shall vote in favor of
the special or extraordinary (as the case may be) resolution for
winding up the Company.
9.8 If this Agreement is terminated pursuant to the provisions of this
Clause 9, the Ancillary Agreement(s) shall be deemed to be terminated
in accordance with the relevant provisions thereof.
10. No Termination by Notice
10.1 Subject to the provisions of this Clause 10 and Clause 11, this
Agreement shall continue in force indefinitely.
10.2 Unislim and eDiets shall agree in writing on or before each anniversary
of the launch of the Company website the projected number of
subscribers to the Company's website and the projected revenue per
subscriber for the following 12 months ("the Milestones").
10.3 The Milestones for the 12 months commencing on the date of the launch
of the Company website hereof shall be US$600,000 of gross revenue
generated (gross of VAT), whether generated through membership
subscriptions, other means, or a combination of both.
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10.4
10.4.1 eDiets and Unislim shall use all reasonable commercial
endeavors to achieve the Milestones. Notwithstanding the
foregoing sentence, if the Company fails to achieve at least
75% of the us US$600,000 gross revenue referred to in Clause
10.3, eDiets or Unislim may serve a seven months termination
notice of this Agreement to the other and the Company. If the
Company achieves 75% or more of such gross revenue for the
previous year during the initial six months of the said
seven-month period, such termination notice shall be
automatically withdrawn and revoked by the shareholder that
issued the said notice. If the Company fails to achieve 75% or
more of said gross revenue for the previous year during the
said initial six-month period, the party who has served the
termination notice may terminate the Agreement immediately upon
expiration of the seven-month notice of termination.
10.4.2 Notwithstanding the provisions of clause 10.4.1 above, if,
during the initial year of this Agreement, it is the reasonable
opinion of both eDiets and Unislim that the joint venture is
not successful, both eDiets and Unislim shall have the right to
mutually terminate this Agreement with immediate effect.
10.4.3 In the event of such termination under clauses 10.4.1 or 10.4.2
above, the terminating party shall be obliged to purchase the
shares of the other Shareholders at a price agreed by the
Shareholders or, in the event of a failure to agree, at 70% of
the fair value of the relevant shares as determined by an
Expert where "fair value" and "Expert" have the meanings
defined in paragraph (F) of Schedule 5.
10.5 eDiets and Unislim shall use all reasonable commercial endeavors to
agree the Milestones. Both parties hereby agree that Milestones for
subsequent years of this Agreement shall at least, be on a par with the
Milestones set for the year immediately preceding the year for which
Milestones are being agreed. Both parties hereby agree that any
increases to the Milestones shall inter alia, take into account and
reflect gross increases applicable to the online diet industry.
10.6 Notwithstanding the previous provisions of this clause 10, the parties
shall review the Business Plan on a regular basis.
11. Termination on Breach
11.1 This Agreement shall forthwith terminate with respect to a Shareholder
(in this Clause referred to as the "Defaulter"), upon written notice
("Termination Notice") to it by the other Shareholder after it has
received actual (not constructive) notice of the occurrence of any of
the following events:
11.1.1 if the Defaulter ceases or threatens to cease to carry on its
business or any substantial part thereof or changes or
threatens to change the nature or scope of its business or if
the Defaulter disposes of, or threatens to dispose of, or any
governmental or other authority expropriates, or threatens to
expropriate, all or any substantial part of its business or
assets PROVIDED THAT this Clause
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shall not apply to a bona fide re-organization or
reconstruction of the Defaulter whilst solvent on terms
approved by the other Shareholder (such approval not to be
unreasonably withheld or delayed);
11.1.2 if the Defaulter is in breach of its obligations hereunder (or
under any Ancillary Agreement) and such breach, if capable of
remedy, has not been remedied to the satisfaction of the other
Shareholder at the expiry of 30 days following written notice
to that effect having been served on the Defaulter or by the
other Shareholder indicating the steps required to be taken to
remedy the failure during such 30 day period;
11.1.3 if the Defaulter persistently withholds its consent in relation
to any matter set out in Clause 5.1 frivolously or vexatiously
in such a way as substantially to jeopardize the business or
operations of the Company;
11.1.4 if at any time hereafter there is a change in Control of the
Defaulter except within the group of companies of which the
Defaulter is a member at the date hereof.
11.2 Upon termination of this Agreement pursuant to Clause 11.1, the
provisions of this Agreement (other than Clauses 8, 15 and 17) shall
cease to have effect save as may be necessary to give effect to the
remaining provisions of this Clause or in relation to any antecedent
claims which may have arisen between the Parties.
11.3 If this Agreement is terminated pursuant to Clause 11.l, the
Shareholder not in default shall (without prejudice to its other rights
and remedies) have the right:
11.3.1 to require the Defaulter to purchase all, but not less than
all, of its Shares at any time during the period of 6 months
from the date of the Termination Notice. Upon the expiry of
such 6 month period, such put option (the "Put Option") shall
lapse if not previously exercised; or
11.3.2 to purchase all but not less than all of the Defaulter's Shares
at any time during the period of 6 months from the date of the
Termination Notice. Upon the expiry of such 6-month period,
such call option (the "Call Option") shall lapse if not
previously exercised.
11.4 The Put and Call Options in favor of the Shareholder not in default (in
this Clause hereinafter referred to as the "Beneficiary") shall be
exercised by the Beneficiary serving on the Defaulter written notice
(an "Option Notice") of its wish to exercise the relevant option. The
Option Notice shall specify the number of Shares in respect of which
the option is exercised and shall not be revocable by the Beneficiary
otherwise than with the consent in writing of the Defaulter. Upon
service of an Option Notice, the Defaulter shall become bound to buy or
(as the case may be) to sell the Shares specified therein at the price
and in accordance with the terms set out in Clauses 11.5 and 11.6.
11.5 The price at which such purchase or sale shall take place shall be 80%
of the fair value of the relevant Shares, determined in the same manner
as provided in paragraph (F) of Schedule 5 as if a Transfer Notice had
been served in respect of the relevant Shares
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<PAGE>
provided that in the case of purchase of the Defaulter's Shares, the
valuation shall take into account the effect (if any) on the Business
of the event of default which has entitled the Beneficiary to serve the
Option Notice and provided further that, in the case of a termination
pursuant to Clause 11.1.4, there shall be deducted from the fair value
the proportionate share of the further finance (together with accrued
interest thereon) not paid by the Defaulter, which proportionate share
shall be paid to the Company by the Beneficiary as soon as reasonably
practicable after completion pursuant to Clause 11.6.
11.6 Completion of the purchase or sale pursuant to an Option Notice shall
take place no later than 14 days after the date on which the fair value
applicable thereto shall have been determined.
12. Undertakings regarding the Operations of the Company
12.1 The Company undertakes to each of the Shareholders that, and each of
the Shareholders shall procure that, it shall
12.1.1 maintain with a well established and reputable insurer
adequate insurance against all risks usually insured against
by companies carrying on the same or similar business to the
Business and (without prejudice to the generality of the
foregoing) for the full replacement or reinstatement value of
all its assets of an insurable nature;
12.1.2 keep books of account and therein make true and complete
entries of all its dealings and transactions of and in relation
to the Business; such books of account and all other records
and documents relating to the business affairs of the Company
shall be open to inspection by each of the Shareholders during
normal business hours and on reasonable prior notice and they
shall be permitted to take and remove copies thereof;
12.1.3 provide each Shareholder within 4 weeks of the end of each
calendar month with management accounts for such month in a
form acceptable to the Shareholders together with a report on
product development, sales, marketing, finance and such other
areas as either Shareholder may require, prepared by the
Company's management;
12.1.4 prepare such accounts in respect of each accounting reference
period as are required by statute such accounts being prepared
on an historical cost basis and using the Agreed Accounting
Policies and procure that such accounts are audited as soon as
practicable and in any event not later than 4 months after the
end of the relevant accounting reference period; and
12.1.5 keep each of the Shareholders fully informed as to all its
financial and business affairs and in particular shall provide
each of the Shareholders with full details of any actual or
prospective material change in such affairs as soon as such
details are available.
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12.2 The Shareholders shall procure that not later than 30 days before the
beginning of each financial year, the Board prepares and delivers to
them a draft business plan, incorporating the proposed annual budget
and cash flow forecast for the next financial year.
12.3 The Shareholders shall within such 30-day period approve the draft
business plan, subject to any amendments which they deem appropriate,
whereupon it shall become the Business Plan for that financial year.
12.4 At any time during a financial year, the Board may propose to the
Shareholders changes to the Business Plan, to which they shall respond
within 30 days of receipt of each such proposal.
13. Distribution Policy
13.1 The Board shall determine the dividend policy of the Company in
accordance with Clause 5.1.15.
14. Pre-Agreement Company Liabilities
14.1 Unislim represents to eDiets and the Company that the Company has not
traded up to the date hereof.
14.2 If and to the extent that any liability has attached or in the future
attaches to the Company by reference to any act, omission, matter or
thing occurring prior to the execution of this Agreement, Unislim will
indemnify eDiets and the Company against all loss and damage and all
actions and proceedings, costs, damages, expenses, claims and demands
arising.
15. Confidentiality
15.1 Each Shareholder and the Company undertakes to each other Party that it
will not and will procure that its respective officers, employees,
agents, subsidiaries and other persons which it controls and the
respective officers, employees and agents of each such person together
with their respective advisers, will not during the period of this
Agreement, and after its termination (for whatever reason):
15.1.1 use or divulge to any person, or publish or disclose or permit
to be published or disclosed to any person, any secret or
confidential information relating to the Company or the other
Shareholder which it has received or obtained, or may receive
or obtain, (whether or not, in the case of documents, they are
marked as confidential) except in the proper course of the
provision of services on behalf of the Company on a need to
know basis only; and/or
15.1.2 other than as required by the Company, retain, duplicate or
remove from the premises of the Company information relating to
the Company or any Shareholder in whatever form (whether
written, or recorded in some other form, or oral) which is
supplied by the other party to it or which comes to its notice
during the period of this Agreement
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<PAGE>
PROVIDED THAT the obligations of this Clause shall not apply to any
information:
(i) which the recipient can reasonably demonstrate is in the public
domain without a breach of this Agreement or any other
agreement or confidence as evidenced by a written statement of
authorized signatory;
(ii) which is required to be disclosed by law, pursuant to a court
order or by any recognized stock exchange or governmental or
other regulatory body when the Party concerned shall, if
practicable, supply an advance copy of the required disclosure
to the other Parties and incorporate any additions or
amendments reasonably requested by them and/or to allow such
other Party to take such other action to prevent such
disclosure;
(iii) which is disclosed by any Party to a potential purchaser of all
or any of its Shares which is not a competitor of the Company
and which has entered into obligations of confidentiality
similar to those contained in this Clause.
15.2 For the purposes of this Clause 15, "information" includes, without
limitation, the following:
15.2.1 information concerning the affairs or property of another Party
or any business property or transaction in which they may be or
may have been concerned or interested;
15.2.2 the names and addresses of any client of the Company and of
another Party;
15.2.3 information on the terms and contents of this Agreement;
15.2.4 information relating to the business methods of the Company
and of another Party.
15.2.5 the intellectual property, business plans, studies, analyses,
reports, diagrams, business operations, strategies and any
other matters relating to the business and property of the
other Party.
16. Mutual Co-operation
16.1 The Parties acknowledge that nothing in this Agreement shall limit,
affect or restrict:
(a) a Party engaging in the Business targeted to places outside
the Territory;
(b) without affecting paragraph (a), eDiets operating its
eDiets.com website provided eDiets will inform existing
customers within the Territory about the Business and provided
eDiets does not target or accept future customers within the
Territory;
(c) without affecting paragraph (a), Unislim:
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<PAGE>
(i) operating its existing information-based website and
business, as at present; or
(ii) continuing to operate its offline membership and
weighing programmeme in Ireland.
16.2 Each of the Parties agrees to use its best reasonable endeavors to
promote the business and profitability of the Company, and in
particular eDiets and Unislim will place hyperlinks on their respective
websites to the website(s) of the Company with reasonable prominence
provided that nothing in this clause will compel a Party (other than
the Company) to do any act or thing which in the sole opinion of such
Party would be contrary to the interests of that Party.
16.3 Each of the Parties shall do and execute or procure to be done and
executed all such acts, deeds, documents and things as may be within
its power including in relation to the Shareholders, (without prejudice
to the generality of the foregoing) the passing of resolutions (whether
by the Board or in general meeting or any class meeting of the Company)
to give full effect to this Agreement and to procure that all
provisions of this Agreement are observed and performed.
16.4 Each of the Shareholders agrees with the other that this Agreement is
entered into between them and will be performed by each of them in a
spirit of mutual cooperation, trust and confidence and that it will use
all means reasonably available to it (including its voting power
whether direct or indirect, in relation to the Company) to give effect
to the objectives of this Agreement and to ensure compliance by the
Company with its obligations.
17. Restrictions on Announcements
Each of the Parties undertakes that it will not (save as required by
law or any applicable regulatory body) make any announcement in
connection with this Agreement unless the other Parties shall have
given their respective prior written consents to such announcement
(which consents may not be unreasonably withheld and may be given
either generally or in a specific case or cases and may be subject to
conditions)
18. No Partnership
Nothing contained or implied in this Agreement shall constitute or be
deemed to constitute a partnership between the Parties and none of the
Parties shall have any authority to bind or commit any other Party.
19. Conflict with Articles of Association
The Shareholders hereby agree that if and to the extent that the
Articles of Association conflict with the provisions of this Agreement,
this Agreement shall prevail for so long as it is in force to regulate
the way in which they exercise their respective voting
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<PAGE>
rights as shareholders of the Company and each Shareholder shall take
all such further steps as may be necessary or requisite to ensure that
the provisions of this Agreement shall prevail.
20. Remedies
Each Party acknowledges and agrees that if any of them shall breach the
representations, indemnities, covenants, agreements, undertakings, and
obligations (for the purposes of this Clause referred to as the "Agreed
Terms") on each of their parts contained in this Agreement, damages may
not be an adequate remedy in which case the Agreed Terms shall be
enforceable by injunction, order for specific performance or such other
equitable relief as a court of competent jurisdiction may see fit.
21. Costs
Each Party shall pay its own costs and disbursements of and incidental
to the preparation and execution of this Agreement.
22. Assignment
Save as otherwise provided herein, the benefits and obligations
conferred by this Agreement upon each of the Parties are personal to
that Party and shall not be, and shall not be capable of being,
assigned, delegated, transferred or otherwise disposed of save with the
written consent of each of the other Parties save an assignment to a
permitted transferee of that Party's Shares which has complied with
Clause 7 and Schedule 5.
23. Entire Agreement
This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the Parties and supersedes any
previous agreements, arrangements or understandings between them
relating to the subject matter hereof. Each of the Parties acknowledges
that it is not relying on any statements, or representations given or
made by any of them relating to the subject matter hereof, save as
expressly set out in this Agreement.
24. Variation
No variation or amendment to this Agreement shall be effective unless
in writing signed by authorized representatives of each of the Parties.
25. Notices
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<PAGE>
Any notice required to be given by any Party to any other Party shall
be deemed validly served by hand delivery or by prepaid registered
letter sent through the post to its address given herein or such other
address as may from time to time be notified for this purpose and any
notice served by hand shall be deemed to have been served on delivery
and any notice served by prepaid registered letter shall be deemed to
have been served 48 hours after the time at which it was posted. In
proving service it shall be sufficient to prove that the notice was
properly addressed and delivered or posted, as the case may be.
26. Waiver
No failure of any Party to exercise, and no delay in exercising, any
right or remedy in respect of any provision of this Agreement shall
operate as a waiver of such right or remedy.
27. Severability
If any provision or part of a provision of this Agreement or its
application to any Party, shall be, or be found by any authority of
competent jurisdiction to be, invalid or unenforceable, such invalidity
or unenforceability shall not affect the other provisions or parts of
such provisions of this Agreement, all of which shall remain in full
force and effect. The Parties shall then negotiate in good faith in
order to agree terms of a mutually satisfactory provision to be
substituted for the provision found to be void, invalid or
unenforceable.
28. Counterparts
This Agreement may be entered into on separate engrossments, each of
which when so executed and delivered shall be an original but each
engrossment shall together constitute one and the same instrument and
shall take effect from the time of execution of the last engrossment.
29. Completion
All of the provisions of this Agreement shall remain in full force and
effect notwithstanding Completion (except insofar as they set out
obligations which have been fully performed at Completion).
30. Governing Law
This Agreement shall be governed by and construed in accordance with
Irish Law and the Parties submit to the exclusive jurisdiction of the
Irish Courts for the purpose of enforcing any claim arising hereunder.
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SCHEDULE 1
Details of the Company
Name: EDIETS EUROPE LIMITED
Registered Number: 329476
Registered office: 49 Lower Dorset Street, Dublin 1
Date of incorporation: 28 June 2000
Authorized Share Capital: (pound sterling)100,000 divided into 50,000 A ordinary
shares of (pound sterling)1 each and 50,000 B ordinary
shares of (pound sterling)1 each
Issued Share Capital: (pound sterling)100
Shareholder Number of Shares
----------- ----------------
Ciaran McCourt 50 A Ordinary
Shares
Margaret Callan 50 B Ordinary
Shares
Auditors: Farrell Grant Sparks
Directors: Ciaran McCourt
Margaret Callan
Secretary: Ciaran McCourt
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SCHEDULE 2
Completion
1. On the Completion Date the Parties will procure that a meeting of the
Board shall be held to approve and pass resolutions substantially in
the form specified in draft minutes in the approved terms;
2. The Parties will procure that an Extraordinary General Meeting of the
Company shall be convened and that the resolutions specified in the
draft notice of meeting of the Company in the approved terms shall be
proposed and passed at such meeting, such proposed resolutions
including the adoption of the new Memorandum of Association and the
Articles of Association referred to in the said resolution and attached
as Schedule 3;
3. Subject to the resolutions referred to in 2 above being proposed and
duly passed:
(i) Unislim shall deliver to the Company an unconditional
application in writing for the allotment to it for cash at par
30 A Ordinary Shares, such application being accompanied by a
banker's draft for (pound sterling)30 and the Company shall
accept such subscription;
(ii) eDiets shall deliver to the Company an unconditional
application in writing for the allotment to it for cash at par
70 B Ordinary Shares, such application being accompanied by a
banker's draft for (pound sterling)70 and the Company shall
accept such subscription;
(iii) Unislim shall accept the transfer to it of 50 subscriber shares
nil paid redesignated as an A Ordinary Share and shall pay
(pound sterling)50 to the Company in full payment for the said
Share and the Company shall credit such Share as fully paid;
(iv) eDiets shall accept the transfer to it of 50 subscriber shares
nil paid redesignated as a B Ordinary Share and shall pay
(pound sterling)50 to the Company in full payment for the said
Share and the Company shall credit such Share as fully paid;
and
(v) Unislim shall make the following cash advances to the Company:
Unislim: $250,000 less vouched expenses (as agreed on the date
hereof by the parties) incurred by Unislim Ireland Limited and
Unislim Clubs Limited to the date of completion
such loans shall be interest-free and shall be repayable at
such time as the Board shall determine provided always that
such repayments of such loans shall be made to the Shareholders
pro rata to the amounts of such loans from time to time
outstanding.
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<PAGE>
4. Subject to completion of the matters referred to in 3 above, the
Parties shall procure that:
(i) the bankers of the Company shall be Allied Irish Bank and the
Parties shall procure that a corporate current account be
opened with such bank at its branch at 140 Lower Drumcondra
Road, Dublin 9;
(ii) the Solicitors of the Company shall be Arthur Cox;
(iii) the accounting reference date of the Company shall be 31
December;
(vi) Mr. Ciaran McCourt and Agnes McCourt as initial nominee of
Unislim and Mr. James Myer and Mr. David Humble and Christine
M. Brown as initial nominees of eDiets shall be appointed A and
B Directors respectively; and
(vii) the Parties who are also parties to the Ancillary Agreement(s)
shall enter into the same and the Shareholders shall procure
that the Company does so.
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SCHEDULE 3
The Articles of Association
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<PAGE>
SCHEDULE 4
Agreement of Adherence
DATE:
By this Agreement I/we
having our registered office at
of
intending to become a shareholder of [ ] Limited ("the Company")
hereby agree(s) with the Company and each of its shareholders to comply with and
to be bound by all of the provisions of a Shareholders' Agreement dated [ ]
2000 between the Company, [ ] and [ ] (a copy of
which has been delivered to me/us and which I/we have initialed and attached
hereto for identification) in all respects as if I/we was/were a party to such
Agreement and were named therein as a Shareholder and a Party and on the basis
that references therein to each of Shareholder and Party include a separate
reference to me/us together with all the benefits and obligations of the
transferring shareholder pursuant to, arising out of or in any related to or
connected with the Agreement.
EXECUTED AS A DEED
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SCHEDULE 5
Pre-Emption Provisions
(A) The Directors in their absolute discretion and without assigning any
reason therefore may decline to register any transfer of Shares on
which the Company has a lien or which are not fully paid. The Directors
shall not register a transfer to a person who is known to them to be an
infant, bankrupt or person of unsound mind provided that the Directors
shall not be bound to enquire into the age or soundness of mind of any
transferee or whether or not he is a bankrupt.
(B) Subject to any agreement between all of the Shareholders, no sale,
transfer or disposal of any Shares or any interest in any Shares shall
be made by a Shareholder except in compliance with the following
provisions of this Schedule and no Shareholder shall otherwise sell,
transfer or dispose of any Share or any interest therein, or create any
Third Party Interest in respect thereof.
(C) If:-
(a) a Shareholder at any time attempts to deal with or dispose of a
Share or any interest therein or right attaching thereto
otherwise than as permitted by this Agreement; or
(b) a petition is presented or a proceeding is commenced (and such
petition or proceeding is not discharged or dismissed within 30
days of presentation thereof) or an order is made or an
effective resolution is passed for the winding-up, insolvency,
administration, re-organization, re-construction, dissolution
or bankruptcy of a Shareholder or for the appointment of a
liquidator, receiver, administrative receiver, administrator,
trustee or similar officer of a Shareholder or of all or any
part of its business or assets PROVIDED THAT these provisions
shall not apply to a bona fide re organization or
re-construction of a Shareholder whilst solvent on terms
approved by the other Shareholder (such approval not to be
unreasonably withheld or delayed); if a Shareholder stops or
suspends payments to its creditors generally or is unable or
admits its inability to pay its debts as they fall due or seeks
to enter into any composition or other arrangement with its
creditors or is declared or becomes bankrupt or insolvent; if a
creditor takes possession of all or any part of the business or
assets of a Shareholder or any execution or other legal
process is enforced against the business or any substantial
asset of a Shareholder and is not discharged within 14 days; or
if anything, analogous or having a substantially similar effect
to any of the events specified in this paragraph happens under
the law of any applicable jurisdiction;
(c) a Shareholder dies or has an order made against him by any
court having jurisdiction (whether in Ireland or elsewhere) in
matters concerning mental disorder;
that Shareholder (or his Representative in the case of paragraphs (b)
and (c)) shall be deemed to be a Transferor (as defined in paragraph
(D)) and to have given
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<PAGE>
immediately prior to such attempt or event (as the case may be), a
transfer notice (herein a "Deemed Transfer Notice") in respect of such
Share, which shall be governed by paragraph (E).
(D) Before selling, transferring or otherwise disposing of any Share or any
interest in any Share, the Shareholder proposing to sell, transfer or
dispose of the same (hereinafter called the "Transferor") shall give a
notice in writing (hereinafter called a "Transfer Notice") to the
Company that it desires to sell, transfer or dispose of the same. The
Transfer Notice shall specify:
(a) the class and number of Shares and/or any interest therein
which the Transferor wishes to transfer or dispose of (which
may be all or part only of the Shares then held by the
Transferor but shall in no circumstances be 5 per cent or less
of the issued voting share capital of the Company) (hereinafter
called the "Relevant Shares");
(b) the price at which the Transferor is willing to sell the
Relevant Shares; and
(c) whether the Transferor wishes to impose a condition that unless
all of the Relevant Shares are sold pursuant to the following
provisions of this Schedule, none shall be sold (hereinafter
called the "Total Transfer Condition");
and shall have annexed to it the share certificate in respect of the
Relevant Shares.
The Transfer Notice shall constitute the Company the agent of the
Transferor for the sale of the Relevant Shares at the Prescribed Price
(as hereinafter defined) during the Prescribed Period (as hereinafter
defined) to the other Shareholders and save as provided in paragraph
(F) of this Schedule shall not be revocable except with the consent of
the other Shareholders.
(E) Within 7 days after the receipt of any Transfer Notice the Directors
shall serve a copy of that Transfer Notice on all the Shareholders
other than the Transferor. In the case of a Deemed Transfer Notice the
Directors shall similarly serve notice on all the Shareholders
(including the Transferor), notifying them that the same has been
deemed to have been given, within 28 days after (i) the date of the
event-giving rise to the Deemed Transfer Notice or (ii) (if later) the
date on which the Directors (as a whole) actually become aware of such
event and shall specify in such notice the number and class of Shares
which the Transferor is deemed to wish to transfer (the "Relevant
Shares"). That notice shall then constitute a Transfer Notice and the
provisions of this Schedule shall apply mutatis mutandis thereto save
that:-
(a) it shall be deemed not to contain a Total Transfer Condition;
(b) it shall not be revocable; and
(c) the Transferor shall not be entitled to specify a price at
which it is willing to sell the Relevant Shares.
(F) If the price stated in the Transfer Notice shall be accepted by all the
other Shareholders, such price shall be the Prescribed Price. If such
price shall not be so
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<PAGE>
accepted, or because the Notice relates to a Deemed Transfer Notice no
such price was stated, the Shareholders shall seek to agree in good
faith a price for the Relevant Shares. If within 28 days after the date
on which the Transfer Notice was given the Transferor and the other
Shareholders shall have agreed a price for the sale of the Relevant
Shares, then such price shall be the Prescribed Price. In default of
such agreement within such period, the Directors shall forthwith
request the Expert to determine and certify in writing the sum
considered by it to be the fair value of the Relevant Shares as at the
date of the Transfer Notice and the sum so determined and so certified
shall be the Prescribed Price. The Expert shall act as an expert and
not as an arbitrator and its written determination shall be final and
binding on the Shareholders. The Expert shall make its working papers
relating thereto available to each Shareholder upon request. The costs
and expenses of the Expert shall be borne by the Parties as the Expert
shall determine PROVIDED THAT if the Transferor is required to pay all
or part of such costs but is in liquidation, receivership or is the
subject of an administration order, an amount equal to the Transferor's
share of such costs may be deducted from any purchase monies otherwise
to be paid to the Transferor.
The Parties shall use their respective reasonable endeavors to ensure
that the Expert makes its determination within 21 days of referral of
the matter to it. The Transferor shall be entitled by written notice to
the Directors to withdraw the Transfer Notice within 2 weeks of the
date on which it is notified of the Experts' determination of the
Prescribed Price.
The "Expert" shall be the auditors for the time being of the Company
or, if they shall refuse to act or shall not respond to the Director's
request within 7 days of receipt of such request, shall be such
Independent Chartered Accountant of not less than five years' standing
as shall be nominated by agreement between all the Shareholders or
failing such nomination within 14 days after the request of any
Shareholder to the others therefore, nominated at the request of any
Shareholder by the President from time to time of the Institute of
Chartered Accountants in Ireland.
For the purpose of this Schedule the fair value of the Relevant Shares
shall be the Open Market Value of the Relevant Shares at the date of
the Transfer Notice where:
the "Open Market Value" of the Relevant Shares shall be ascertained on
the following assumptions and bases:
(i) valuing the Relevant Shares as on an arm's length sale between
a willing vendor and a willing purchaser
(ii) if the Company is then carrying on business as a going concern,
on the assumption that it will continue to do so;
(iii) that the Relevant Shares are capable of being transferred
without restriction;
(iv) taking no account of any rights and obligations attached to the
Relevant Shares whether by virtue of any contract or otherwise;
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<PAGE>
(v) taking no account of any element of control attaching to the
Relevant Shares or conferred by the transfer of the Relevant
Shares or the relevant part thereof;
(vi) that the Ancillary Agreements will not continue in force after
the transfer;
(G) If the Prescribed Price is accepted or agreed as aforesaid, the
Prescribed Period shall commence on the date of the Transfer Notice or
the date of such agreement, if later, and shall expire 2 months
thereafter. If the Prescribed Price is not so accepted or agreed then
the Prescribed Period shall commence on the date on which the auditors
shall have notified the Directors of their determination of the
Prescribed Price and shall expire 2 months thereafter.
(H) Promptly following acceptance or agreement of the Prescribed Price or 2
weeks after the Transferor has been notified of the determination of
the Prescribed Price by the Expert and has not withdrawn its Transfer
Notice pursuant to paragraph (F) of this Schedule, the Relevant Shares
shall be offered by the Company by notice in writing to the other
Shareholders in proportion to the number of Shares held by them at the
date of the Transfer Notice ("Pro-Rata Entitlement") for purchase at
the Prescribed Price. Such offer shall be open for acceptance at any
time within the Prescribed Period. Every such offer shall specify (a)
the total number of Relevant Shares; (b) the number of Relevant Shares
in that Shareholder's Pro-Rata Entitlement; (c) whether or not the
Transfer Notice contained a Total Transfer Condition and shall be
accompanied by a form of application for use by the Shareholder in
applying for his Pro-Rata Entitlement and for any Relevant Shares in
excess of such Pro-Rata Entitlement which he wishes to purchase.
(I) Subject to paragraph (K) of this Schedule, if there shall only be one
Shareholder who applies for all or any of the Relevant Shares within
the Prescribed Period, the Directors shall give notice in writing
thereof to the Transferor and the Transferor shall be bound upon
payment to transfer such of the Relevant Shares to such Shareholder as
it has applied for (including any Relevant Shares in excess of its
Pro-Rata Entitlement for which it has applied). The purchase shall be
completed at a place and time to be appointed by the Directors being
not less than 3 days nor more than 10 days after the date of such
notice, and the Directors shall be bound to register the transfer.
(J) Subject to paragraph (K) of this Schedule, if there shall be more than
one Shareholder who applies within the Prescribed Period for all or any
of the Relevant Shares, the Directors shall allocate the Relevant
Shares (or so many of them as shall have been applied for as aforesaid)
to or amongst the applicants in accordance with their Pro Rata
Entitlement provided that if not all Shareholders have accepted the
full amount of Relevant Shares in their Pro-Rata Entitlement, any
Relevant Shares not so accepted shall be used to satisfy requests from
other Shareholders as nearly as may be in proportion to their requests
for Shares in excess of their Pro-Rata Entitlements and any remaining
excess shall be apportioned by applying this paragraph (J) without
taking account of any Shareholder whose application has already been
satisfied in full. However, no Shareholder shall be obliged to take
more than the maximum number of the Relevant Shares specified by him as
aforesaid. The Directors shall
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<PAGE>
forthwith give notice of such allocations to the Transferor and the
Shareholders to whom the Relevant Shares have been allocated and shall
specify in the said notice the place and time, being not less than 3
days nor more than 10 days after the date of such notice at which the
sale of the Relevant Shares so allocated shall be completed. The
Transferor shall be bound upon payment to transfer the Relevant Shares
so allocated to the relevant Shareholders and the Directors shall be
bound to register the transfers.
(K) If the Transfer Notice contains a Total Transfer Condition, an offer of
sale of the Relevant Shares made by the Directors pursuant to this
Schedule shall only be capable of acceptance when all of the Relevant
Shares shall have been accepted by the Shareholders. If by the
foregoing procedures the Directors shall not have received acceptances
in respect of all of the Relevant Shares within the Prescribed Period,
they shall forthwith give notice in writing of that fact to the
Transferor. The Transfer Notice shall then be deemed to have been
withdrawn and no transfers shall take place.
(L) If the Transfer Notice does not contain a Total Transfer Condition and
if by the foregoing procedures the Directors shall have received
acceptances from Shareholders in respect of part only of the Relevant
Shares within the Prescribed Period then they shall forthwith give
notice in writing of that fact to the Transferor. The Transferor shall
then be entitled at any time within 6 months after the date of the
Directors' said notice:
(a) to sell and transfer all or part of those Relevant Shares which
have not been accepted as aforesaid to any person approved by
the other Shareholders (such approval not to be unreasonably
withheld or delayed) at any price, being not less than the
Prescribed Price (or a proportion of the Prescribed Price which
represents the proportion of the Relevant Shares to be
transferred) and the Directors shall be bound to register the
same; or
(b) if the Transferor is a Representative, to elect to be
registered himself as the holder of all or part of those
Relevant Shares which have not been accepted as aforesaid,
without triggering the pre-emption rights in this Schedule.
(M) If any Shares to be transferred pursuant to this Agreement shall not be
capable of being offered or allocated without involving fractions, the
same shall be offered to or allocated amongst the Shareholders, or some
of them, in such proportions as may be determined by lots drawn in
respect thereof, and the lots shall be drawn in such manner as the
Directors shall think fit.
(N) A Transferor, having become bound to transfer any Shares pursuant to
this Agreement shall deliver to the transferee duly executed transfers
in respect of such Shares in favor of the transferee together with the
relative share certificates) against payment by the transferee of the
price due in respect thereof. If the Transferor makes default in
transferring the same, any Director is hereby irrevocably and
unconditionally appointed as the attorney of the Transferor to complete
and to execute the necessary instrument of transfer of such Shares
together with a standard form indemnity in respect of non-production of
share certificates in respect of such Shares and may deliver them on
his behalf and the Company shall receive the purchase money on trust
for the Transferor and shall thereupon (subject to such instrument
being duly stamped) cause the transferee to be registered as the holder
of such Shares. The Company shall
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<PAGE>
not be bound to earn or pay interest on any money so held and shall not
pay such money to the Transferor until he shall have delivered his
share certificates (or an appropriate indemnity in respect of any lost
certificates) to the Company. The receipt of the Company for such
purchase money shall be a good discharge to the transferee who shall
not be bound to see to the application thereof, and after the name of
the transferee has been entered in the register of members in purported
exercise of the aforesaid power, the validity of the proceedings shall
not be questioned by any person.
(O) For the purpose of ensuring that a particular transfer of a Share is
permitted under this Agreement, the Directors appointed by the holders
of the class of Shares not the subject of the relevant transfer may
require the transferor or the person named as transferee in any
transfer lodged for registration to furnish the Company with such
information and evidence as they may, acting reasonably, think
necessary or relevant. Failing such information or evidence being
furnished to the satisfaction of such Directors within a period of 28
days after such request, the Directors shall be entitled to refuse to
register the transfer in question.
(P) An obligation to transfer a Share under the provisions of this
Agreement shall be deemed to be an obligation to transfer as beneficial
owner the entire legal and beneficial interest in such Share free from
any lien, charge or other encumbrance and together with all rights
attaching thereto.
(Q) Upon the transfer of any Shares pursuant to the provisions of this
Agreement, the Transferor shall be entitled to all dividends and
interest accrued in relation to those Shares up to the date of transfer
and any amount paid to either the Transferor or transferee in excess of
such pro-rated entitlement shall be held by it on trust for the other.
(R) In the event that any Share is transferred under the provisions of this
Agreement to an existing Shareholder, such Shares shall at the time of
transfer, be re-classified to conform with the class of Shares already
held by such Shareholder. Where any Share is transferred under the
provisions of this Agreement to a person who, immediately prior to such
transfer, is not a Shareholder, such Shares shall at the time of
transfer, be re-designated with a class other than those existing at
that time, unless all Shareholders otherwise agree.
(S) The provisions of this Schedule may be waived in whole or in part in
any particular case with the prior written consent of all the
Shareholders.
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<PAGE>
SCHEDULE 6
Service Agreement between the Company and Ciaran McCourt
- 34 -
<PAGE>
SCHEDULE 7
Technology Licence Agreement
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<PAGE>
EXECUTED for and on behalf of
Unislim Ireland Limited
BY
Ciaran McCourt
---------------------------------------------------------
Director
Agnes McCourt
---------------------------------------------------------
Director/Secretary
EXECUTED for and on behalf of
eDiets.com Inc
BY
David R. Humble
---------------------------------------------------------
Director
Christine M. Brown
---------------------------------------------------------
Director/Secretary
EXECUTED for and on behalf of
eDiets Europe Limited
BY
Margaret Callan
---------------------------------------------------------
Director
Ciaran McCourt
---------------------------------------------------------
Director/Secretary
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<PAGE>
EXECUTED for and on behalf of
Unislim Ireland Limited
BY
Agnes McCourt
---------------------------------------------------------
Director
Ciaran McCourt
---------------------------------------------------------
Director/Secretary
EXECUTED for and on behalf of
eDiets.com Inc
BY
David R. Humble
---------------------------------------------------------
Director
Christine M. Brown
---------------------------------------------------------
Director/Secretary
EXECUTED for and on behalf of
eDiets Europe Limited
BY
Margaret Callan
---------------------------------------------------------
Director
Ciaran McCourt
---------------------------------------------------------
Director/Secretary
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