Exhibit 10.24
THIS SHAREHOLDERS' AGREEMENT made this 13th day of February,
2007.
AMONG:
SHANNON INTERNATIONAL INC.
OF THE FIRST PART
- and -
EB HOLDING INC.
OF THE SECOND PART
- and -
LOGICAL SEQUENCE INCORPORATED
OF THE THIRD PART
The parties agree as follows:
1
Definitions and Interpretation
1.1 Where used in this
Agreement, unless there is something in the context or
the
subject matter inconsistent therewith, the following terms shall
have
the
following meanings respectively:
(a)
"Affiliate" of a body
corporate (the first body corporate) means a
body corporate which is directly or indirectly controlled by the
first
body corporate, or directly or indirectly controls the first
body
corporate or is directly or indirectly controlled by a body
corporate
which also directly or indirectly controls the first body
corporate;
(b)
"Agreement" means this
agreement and any instrument supplemental
hereto, the expressions "Article", "section", "subsection" and
"clause" followed by a number and/or a letter number mean and refer
to
a specified Article, section, subsection or clause of this
Agreement;
(c)
"Board" means the
board of directors of the Company;
(d)
"Business Day" means
any day other than a Saturday or a Sunday or a
statutory or civic holiday;
(e)
"Company" means
Logical Sequence Incorporated, a body corporate
incorporated under the laws of Ontario;
(f)
"Common Shares" means
the common shares in the capital of the Company;
<PAGE>
(g)
"Control" means, in
the case of a corporation, ownership, directly or
indirectly through ownership by other persons of at least 50% plus
one
of all of the voting rights attached to all voting shares
(exclusive
of shares that are voting only in certain events, unless such
events
have occurred and are continuing) and in the case of any other
person,
ownership, directly or indirectly, through ownership by any
persons,
of at least 50% of the beneficial equity interests therein;
(h)
"Fair Market Value"
means fair market value of the Shares as
determined in accordance with Article 10;
(i)
"EB" means EB Holding
Inc., a body corporate incorporated under the
laws of Nova Scotia;
(j)
"Person" includes an
individual, a firm, a corporation, a syndicate, a
partnership, a trust, an association, a joint venture, an
unincorporated organization and every other legal or business
entity
whatsoever;
(k) "Related Party" means either an
Affiliate of a Shareholder or a person
with whom a Shareholder is related or affiliated within the meaning
of
the Income Tax Act (Canada);
(l)
"SII" means Shannon
International Inc., a body corporate incorporated
under the laws of Nevada;
(m)
"Shares" means all or
any of the issued shares in the capital stock of
the Company;
(n)
"Shareholders" means
collectively EB and SII as long as each of these
continue to own Shares and in each case includes any future owner
of
such Shares; and
(o)
"Transfer" of a Share
includes any sale, exchange, transfer,
assignment, gift, pledge, encumbrance, hypothecation, alienation
or
other transaction, whether voluntary, involuntary or by operation
of
law, by which the legal or beneficial ownership of, or any
security
interest or other interest in the Share, passes from one Person
to
another, or to the same Person in a different capacity, whether or
not
for value, and any changing control of the legal or beneficial
owner
of the Share or any Person that controls, directly or indirectly,
in
any manner whatsoever, such legal or beneficial owner of the
Share,
other than an involuntary change of control resulting from the
transmission of the securities from a deceased or incompetent
Shareholder to its estate or legal personal representative for so
long
as the securities continue to be held by the estate or such
legal
personal representative, and "to transfer", "transferred" and
similar
expressions shall have corresponding meanings.
1.2 Words importing
the singular number only shall include the plural and vice
versa, and words importing the use of any gender shall include
both
genders.
1.3 The Article and
section headings in this Agreement are included herein for
convenience of reference only, and shall not constitute a part of
this
Agreement for any other purpose.
1.4 This Agreement and
all documents ancillary hereto shall be governed by and
interpreted in accordance with the laws of the Province of Nova
Scotia and
the
federal laws of Canada applicable therein.
1.5 If any act is
required hereunder to be done, any notices required in order
to
be given, or any period of time is to expire hereunder on any day
that
is
not a Business Day, any such act shall be required to be done or
notice
shall be required to be given or time shall expire on the next
succeeding
Business Day.
<PAGE>
1.6 The provisions of
this Agreement shall apply mutatis mutandis to any shares
or
securities of any nature into which the Shares or any of them may
be
converted, exchanged, reclassified, redivided, redesignated,
subdivided or
consolidated, to any shares or securities of any nature that are
received
by a
Shareholder as a stock dividend or distribution payable in
shares,
securities, warrants, rights or options of any nature of the
Company, to
any
shares, securities, warrants, rights or options of any nature of
the
Company or any successor, continuing company or corporation of the
Company
that
may be received by a Shareholder on a reorganization,
amalgamation,
arrangement, consolidation or merger, statutory or otherwise, and
to any
shares, securities, warrants, rights or options hereafter issued
or
allotted by the Company to a Shareholder, all of which shares,
securities,
warrants, rights or options shall be deemed to be Shares for the
purposes
of
this Agreement.
2
Purpose
2.1 The Shareholders
of the Company are desirous of entering into this
Agreement for the purpose of regulating their share holdings and
affairs of
the
Company in the circumstances herein provided for.
2.2 As of the date of
this Agreement, the shares of the Company are held as
follows:
(a)
EB - 544,983 Common
Shares;
(b)
SII - 5,100,000 Common
Share; and
(c)
Others - 4,355,017
Common Shares.
3
Management
3.1 Subject as
hereinafter provided, the Shareholders agree to exercise any
and
all
voting rights attaching to the Shares and to otherwise exercise
their
influence that, unless the Shareholders otherwise agree in writing,
at all
times while this Agreement is in effect:
(a)
The Board shall
consist of five (5) directors. SII and EB shall each
be entitled to nominate one (1) director;
(b)
The Company agrees to
appoint William Clements as the President of the
Company on terms to their mutual satisfaction. The remaining
officers
of the Company shall be as selected from time to time;
(c)
A quorum for meetings
of the Board, except as herein provided, will be
all of the directors, present in person or by means of
conference
telephone or other communications equipment whereby all persons
participating in the meeting can hear each other, provided that
the
Directors nominated by each of the Shareholders are present at
all
times (except that where any director is unavailable to attend
any
directors meeting as provided in this Agreement, the Shareholder
who
nominated the director in question may designate another person
to
perform the obligations of the unavailable director), unless the
party
whose representatives were not in attendance subsequently consents
in
writing to the business conducted at the meeting. If at any
meeting
(the "Initial Directors' Meeting") any one of the Directors
nominated
by each Shareholder is not present or ceases to be present the
Directors present may adjourn the meeting to the same time and
place
five Business Days later (the "Adjourned Directors' Meeting").
Notice
of the Adjourned Directors' Meeting shall be delivered in
accordance
with the provisions of section 13.2 as soon as possible to the
Shareholder whose nominees were not present or ceased to be present
at
the Initial Directors' Meeting. A quorum of directors at the
Adjourned
Directors' Meeting will consist of those directors who are present
in
person or by telephone, and such quorum, notwithstanding the
other
provisions of this Agreement, shall be authorized to conduct all
of
the business of the Company;
(d)
Subject to section
3.2, all matters or questions requiring action or
decision at a meeting of the Board shall be determined by a
majority
of votes cast at the meeting and each Shareholder agrees that
there
shall be no casting vote with respect to any of the proceedings of
the
Shareholders or the Directors of the Company; and
<PAGE>
(e)
A quorum for meetings
of the Shareholders of the Company shall not
exist unless there is at least one representative from each
Shareholder present in person or by proxy, unless the party
whose
representative was not in attendance subsequently consents in
writing
to the business conducted at the meeting. If at any meeting
(the
"Initial Shareholders' Meeting") a representative of each
Shareholder
is not present or ceases to be present, the Shareholder
remaining
present may adjourn the meeting to the same time and place five
Business days later (the "Adjourned Meeting"). Notice of the
Adjourned
Shareholders' Meeting shall be delivered in accordance with the
provisions of section 13.2 as soon as possible to the Shareholder
who
was not present or ceased to be present at the Initial
Shareholders'
Meeting. A quorum of Shareholders at the Adjourned
Shareholders'
Meeting will consist of those Shareholders present in person or
by
proxy, and such quorum, notwithstanding the other provisions of
this
Agreement, shall be authorized to conduct all of the business of
the
Company.
3.2 Notwithstanding
anything contained in the Articles and By-Laws of the
Company, unless otherwise expressly agreed in writing by each of
the
Shareholders, regardless of any action taken or purported to be
taken at
any
meeting of the Board or Shareholders, no obligation of the Company
will
be
created or action taken by the Company with respect to or
concerning any
of
the following matters without the prior consent of Shareholders
holding
an
aggregate 66 2/3% of the votes attaching to the outstanding
issued
Shares which carry a right to vote in all circumstances:
(a)
changes in the
Articles or By-Laws of the Company;
(b)
the creation or issue
of shares of the Company or of any security
exchangeable or convertible into shares of the Company except
as
expressly provided for in this Agreement;
(c)
the conversion,
exchange, reclassification, redesignation,
subdivision, consolidation or other change to any shares of the
Company;
(d)
the redemption or
purchase for cancellation of any shares in the
capital of the Company, except as expressly herein permitted;
(e)
the amalgamation,
continuance, merger, consolidation or reorganization
of the Company, or the approval or effecting of any plan of
arrangement in each case, whether statutory or otherwise;
(f)
the choice and terms
of appointment of bankers, auditors, lawyers and
other major consultants of the Company;
(g)
except in the ordinary
course of business, all matters relating to the
borrowing of money, financing and refinancing and giving security
upon
the assets of the Company;
(h)
changes in the size of
the Board;
(i)
the loaning of any
amount to any shareholder, officer or director of
the Company or the repayment of any shareholder's loans to the
Company;
(j)
any significant change
in the nature of the business of the Company or
any significant decision affecting its operation;
(k)
the sale or
disposition by the Company of a substantial portion of its
assets or undertaking or the liquidation, dissolution or winding-up
of
the Company;
<PAGE>
(l)
any change in the
authorized signing officers of the Company in
respect of legal documents or other bank or financial
institutions;
and
(m)
except as otherwise
expressly permitted hereunder, the payment of any
salary, bonuses, and other payments to the Shareholders of the
Company
or their Affiliates except in the ordinary course of business.
3.3 Each Shareholder
agrees that any transactions between the Company, any
Shareholder and any Related Party to a Shareholder shall take place
at fair
market rates.
3.4 Each Shareholder
agrees that it, acting by itself or in concert with or
through any Related Party, shall not derive any benefit or seek any
benefit
from
any contract or arrangement arising from or related to the business
of
the
Company from time to time without first disclosing such opportunity
to
the
other Shareholders in writing. Upon the execution of this
Agreement,
each
Shareholder shall disclose to the other Shareholders all such
contracts or arrangements as may have been entered into by such
Shareholder
prior to the execution of this Agreement.
3.5 Each Shareholder
covenants and agrees that it will not at any time during
the
term of this Agreement and for a period of two years following
the
termination of this Agreement in any manner whatsoever (including,
without
limitation, either individually or in partnership or jointly or
in
conjunction with any person or persons, firm, association,
syndicate,
company or corporation, as principal, agent, shareholder,
employee,
consultant, trustee or in any other manner whatsoever), whether
directly or
indirectly, carry on or be engaged in or establish or acquire
control of
any
person, firm, corporation or other entity which operates, or
advise,
lend
money to, guarantee the debts or obligations of, or permit its, his
or
her
name or any part thereof to be used or employed by or associated
with,
any person or persons,
firm, association, syndicate, company or corporation
carrying on or engaged in, the business of the Company. Nothing
herein
shall prevent any Shareholder from owning, as a passive investor,
less than
five
percent (5%) of any class of securities of a corporation which may
be
a
competitor of the Company whose securities are trading- 1 -
on a recognized
stock exchange.
4
Restrictions on Transfer
4.1.1 Except as expressly provided in this Agreement, no
Shareholder shall
Transfer any of his right, title or interest in or to any Shares
now or
hereafter owned on record or beneficially by it without the express
written
consent of all Shareholders first being obtained.
4.1.2 Any Shareholder (including an Affiliate of any Shareholder
that becomes a
shareholder), may at any time, or from time to time, transfer all
or a
portion of his Shares, to an Affiliate of such Shareholder or in
the case
of
an individual shareholder to a company controlled by such
Shareholder;
provided, however, that as a condition precedent to any transfer
in
accordance with the provisions of this section 6.2, the transferee
(a
"Permitted Transferee") shall execute and deliver an acknowledgment
to the
parties to this Agreement whereby the Permitted Transferee agrees
to be
bound by the provisions hereof as if the Permitted Transferee were
an
original party hereto. Thereupon, the Permitted Transferee shall
have the
same
rights, and shall be subject to the same obligations and
restrictions,
as
the transferor (the "Transferor") under this Agreement.
Notwithstanding any transfer permitted pursuant to this section
6.2, the
Transferor shall continue to be liable to the other party or
parties to
this
Agreement for any default in performance by the Permitted
Transferee
of
his obligations hereunder and the Transferor shall indemnify the
other
parties hereto against any loss, cost, damage or expense suffered
or
incurred as a result
of any failure by the Permitted Transferee to comply
with
the provisions of this Agreement.
<PAGE>
4.1.3 In the event of any transfer pursuant to section 4.1.2 hereof
or for the
purposes of the provisions of Articles 4, 5 or 6 inclusive, of
this
Agreement:
4.1.4 Any notice required to be given to SII or a Permitted
Transferee
(including successive Permitted Transferees pursuant to section
4.1.2) need
only
be given to SII and Shares held by SII or any such Permitted
Transferees shall be deemed for all such purposes to be held by SII
any
rights or obligations of SII or such Permitted Transferees shall be
deemed
to
be those of SII and all actions taken by SII in connection
therewith
shall be effective and binding upon SII or all such Permitted
Transferees
as
if made by them, respectively; and
4.1.5 Any notice required to be given to EB or a Permitted
Transferee (including
successive Permitted Transferees pursuant to section 4.1.2) need
only be
given to EB, any Shares held by EB or any such Permitted
Transferees shall
be
deemed for all such purposes to be held by EB, any rights or
obligations
of
EB or such Permitted Transferees shall be deemed to be those of EB
and
all
actions taken by EB in connection therewith shall be effective
and
binding upon EB or all such Permitted Transferees as if made by
them,
respectively;
Nothing herein contained shall restrict the ability of any
Shareholder and
his
Permitted Transferees from entering into such agreements as they
may
determine to be necessary or desirable to govern, as between
themselves,
the
matters arising from the operation of this Article 4 of this
Agreement.
4.2 All certificates
representing Shares shall bear the following legend:
"The
Shares represented by this Certificate are subject to the
provisions
of a
shareholder agreement made as of the ____ day of
