AGREEMENT FOR SALE
AND PURCHASE OF BUSINESS
Parties
POWERCALL LIMITED
THE SHAREHOLDERS OF POWERCALL
LIMITED
THE DIRECTORS OF POWERCALL LIMITED
XXXXXXX INVESTMENTS (N.Z.) LIMITED
XXXXXXX INVESTMENTS LIMITED
Relating to Purchase of Powercall Business
LOWNDES JORDAN
BARRISTERS & SOLICITORS
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PARTIES
1. POWERCALL LIMITED at Auckland (Powercall).
2. The persons specified in Item 1 of Schedule 1 (Shareholders).
3. The persons specified in Item 2 of Schedule 1 (Directors).
4. XXXXXXX INVESTMENTS (N.Z.) LIMITED at Auckland (BKINZ).
5. XXXXXXX INVESTMENTS LIMITED, a company incorporated under the laws of
Alberta, Canada (BKI).
INTRODUCTION
A. The Shareholders are the holders of all of the shares in Powercall.
B. The Directors are directors and employees of Powercall.
C. The Shareholders have agreed to sell to Powercall Technologies Limited
(PTL), a wholly owned subsidiary of BKINZ, and BKINZ has agreed to procure
the purchase by PTL from the Shareholders, all of the existing business
previously owned by Powercall as a going concern for the Consideration and
upon the terms and conditions contained in this Agreement.
D. The Directors will enter into employment contracts with PTL on the terms
set out in the contracts annexed to this Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounts all accounts of Powercall and of any
related parties supplied to BKINZ prior
to execution of this Agreement.
Business Day a day (other than a Saturday or Sunday)
on which registered banks are open for
business.
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2
Business Records all books of account, accounts, records,
files, data, databases, certificates or
other evidence of title to assets and
information howsoever recorded or stored
relating to or required for the
Business.
Business all of the existing businesses prior to
the date of this Agreement owned and
operated by Powercall including the
Software, the Fixed Assets and the
Current Assets.
Cashflow has the meaning provided in the Escrow
Agreement.
Charge includes option, right to acquire, lien;
pledge, mortgage, assignment, charge,
security interest, bailment, or
encumbrance or adverse interest of any
nature whether legal or equitable and no
matter how arising.
Completion completion by the parties of the sale
and purchase as provided in clause 5.
Completion Date the actual date of Completion being 16
May 1997 or 7 days after the conditions
referred to in clause 9 have been
satisfied or waived by the party
entitled to waive the same (whichever is
the later) or such other date as may be
agreed upon by the parties.
Consideration the sum of $85,213.80, the Goodwill
Value and the value of the Liabilities,
provided that in no circumstances shall
the Goodwill Value exceed the Maximum
Goodwill Value.
Costs includes any and all costs (on a
solicitor and own client basis),
expenses, damages, penalties, interest,
compensation, and awards.
Current Assets all current assets specified in Annexure
E.
Disclosure Letter the letter of disclosure referred to as
such, signed by the Shareholders and
dated and delivered to BKINZ prior to
the signing of this Agreement.
Escrow Agreement the Escrow Agreement in the form annexed
as Annexure B to be entered into by BKI,
the Shareholders and Montreal Trust
Company of Canada as trustee.
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Exchange Rate the average between the Westpac buy and
sell rates for the exchange of $NZ to
$CAD, at the close of business on the
date specified in this Agreement or
where a date is not specified, on the
last bank Business Day prior to the date
of the relevant transaction.
Fixed Assets all computer hardware and office fixed
assets prior to this date Agreement
owned by Powercall.
Goodwill Value the value subject to adjustment as
provided in clause 3.3 and 3.4
calculated by applying a multiple of 4
to the audited NPAT of PTL for the 4
Years from 1 April 1997 to 31 March 2001
in accordance with the example
spreadsheet annexed as Annexure C and
for the purposes of clauses 3.2 and 3.3
shall be the value so calculated for the
relevant Year or Years.
GST Act the Goods and Services Tax Xxx 0000.
GST Goods and Services Tax levied under the
GST Act.
Intellectual Property includes confidential information, trade
secrets, drawings, designs, techniques,
programmes, processes, logos,
copyrights, trade or service marks,
patents, registered designs, and other
information and rights capable of being
protected under New Zealand or other
laws relating to intellectual property
no matter how recorded or stored and any
applications for same.
Liabilities all current and term liabilities of
Powercall as specified Annexure D.
Maximum Goodwill $20 million.
Value
NPAT net profit after taxation calculated in
accordance with Generally Accepted
Accounting Principles subject to the
Software development costs being treated
in accordance with the letter from KPMG
attached as Annexure F.
Penalty Rate the Westpac Indicator Lending Rate plus
4%.
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Premises the land and buildings Xxxxx 0, 00 Xxxxx
Xxxxxx, Xxxxxxxx and Xxxxx 0, 00
Xxxxxxxxx Xxxxxx, Xxxxxx.
Proceedings includes proceedings, claims, demands,
actions, conferences, mediations,
conciliations, compromises,
arbitrations, hearings or appeals
arising out of, preliminary to or in
connection with any dispute or alleged
dispute.
PTL Powercall Technologies Limited, a
company to be incorporated under the
Companies Xxx 0000 as a wholly owned
subsidiary of BKINZ.
Software all rights to the Powercall software
developed by Powercall and Powercall
Services Limited.
Strike Price in respect of the BKI shares to be
issued pursuant to this Agreement is the
average sale price for BKI shares on the
Alberta Stock Exchange over a period of
5 trading days prior to the date
specified in this Agreement for
determining a price for BKI shares, or
where a date is not specified, over 5
trading days prior to the applicable
date of settlement.
Warranties the representations, warranties, and
undertakings of Powercall, the Directors
and the Shareholders set out in Schedule
2.
Year a financial year commencing on 1 April
and terminating on 31 March in the next
succeeding year.
1.2 General Interpretation: In the interpretation of this Agreement,
unless the context otherwise requires:
1.2.1 References to the parties include their respective
executors, administrators, successors and permitted assigns;
1.2.2 References to persons include individuals, partnerships,
firms, associations, corporations and unincorporated bodies
of persons, government or semi-government or local body or
municipal bodies, and agencies or political subdivisions of
them in any case whether having separate legal personality
or not;
1.2.3 Words in the singular shall include the plural and vice
versa;
1.2.4 Words importing one gender shall include the other genders;
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1.2.5 Any obligation not to do anything includes an obligation not
to suffer, permit or cause that thing to be done;
1.2.6 Headings have been inserted for convenience only and shall
not affect the construction of this Agreement;
1.2.7 Reference to a statute includes all statutes amending,
consolidating or replacing the statute referred to and
includes all subsidiary or delegated legislation or
exercises of authority under such statute or legislation;
1.2.8 References to clauses, schedules and annexures shall be
construed as references to the same in this Agreement;
1.2.9 References to money unless otherwise specified are
references to New Zealand currency.
1.3 Joint and Several: Unless otherwise provided, the covenants herein
expressed or implied shall bind all persons executing this Agreement
and any two or greater number of them jointly and each of them
severally.
1.4 Time of the Essence: Time shall be of the essence of this Agreement
both as to dates and periods.
1.5 Precedence of Documents: If there is any conflict between the
provisions of this Agreement and the Escrow Agreement, the provisions
of this Agreement shall prevail.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Shareholders agree to sell and the BKINZ agrees
to procure PTL to purchase the Business for the Consideration.
2.2 Accrual Rules: The Consideration is the lowest price the parties would
have agreed upon at the date of this Agreement for the sale and
purchase of the Business and is consequently the core acquisition
price pursuant to Section OB1(c) of the Income Tax Xxx 0000.
2.3 Going Concern: The parties agree that the supply made pursuant to this
Agreement is the supply of a going concern under section 11(1)(c) of
the GST Act on which GST is chargeable at zero per cent.
2.4 Ratification: As soon as practicable after incorporation of PTL, BKINZ
shall procure PTL to ratify this Agreement.
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
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3.1.1 Deposit: By payment of a deposit on the Completion Date of
$85,213.80 which shall comprise cash of $28,120.55 and BKI
shares to a value of $57,093.25 based on the Strike Price on
4 April 1997 converted to $NZ at the Exchange Rate as at 3
April 1997. The BKI shares will be issued to the Trustee
under the Escrow Agreement and held in escrow until the
first anniversary of the Completion Date at which time they
shall be released to the Shareholders.
3.1.2 Share Exchange: The Goodwill Value (subject to adjustment as
provided in clauses 3.3 and 3.4) shall be paid in the manner
provided in clauses 3.2 to 3.4 by way of the issue and
allotment to the Shareholders free from all Charges of fully
paid ordinary shares in the capital of BKI ranking in all
respects pari passu with the existing ordinary shares in the
capital of BKI.
3.1.3 Assumption of Liabilities: PTL shall on the Completion Date
assume responsibility for all Liabilities and subject to the
rights of PTL to a set off in respect of any Warranty claim
under clause 7, PTL will keep Powercall, the Shareholders
and the Directors fully indemnified against all Liabilities
but only in respect of those Liabilities and to the extent
of the value of those Liabilities specified in Annexure D.
3.2 Issue of Shares into Escrow: BKI shall issue shares pursuant to clause
3.1 (Earnout Shares). The Earnout Shares shall be:
3.2.1 Issued in 4 separate tranches within 66 Business Days of 31
March 1998, 1999, 2000 and 2001 (Issue Dates).
3.2.2 Issued in numbers which have a value (based on the Strike
Price converted to $NZ at the Exchange Rate) equal to the
Goodwill Value calculated for the Year which ended on the
Issue Date less the value recalculated at the same Strike
Price of any BKI shares issued on prior Issue Dates.
3.2.3 Issued initially to the Trustee to be held in escrow for a
minimum period of 12 months pursuant to the Escrow Agreement
and subject to the earn out and escrow conditions specified
in clause 3.3 and in the Escrow Agreement.
3.3 Escrow and Earn Out Provisions: The Earnout Shares shall be held by
the Trustee subject to the following conditions:
3.3.1 The Earnout Shares shall only be released to the
Shareholders if PTL produces sufficient cumulative Cashflow
between 1 April 1998 and the Years ending on 31 March 1999,
31 March 2000, 31 March 2001 and 31 March 2002 (Earnout
Period).
3.3.2 Earnout Shares shall be released to the Shareholders in 4
tranches within 66 Business Days following 31 March 1999, 31
March 2000, 31 March 2001 and 31 March 2002 (Release Dates).
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3.3.3 The Earnout Shares to be released on each of the Release
Dates shall not exceed in value (based on the Strike Price
converted to $NZ at the Exchange Rate) the cumulative
Cashflow of PTL between 1 April 1997 and the end of the Year
which terminated 12 months before the relevant Release Date
multiplied by 4, less the value recalculated at the same
Strike Price of any BKI shares released on a prior Release
Date.
3.4 Final Adjustment of Acquisition Price: Within the period of 66
Business Days following on 31 March 2002 there shall be a final
calculation of the Goodwill Value and adjustment of the Consideration
as follows:
3.4.1 The Goodwill Value shall be the lesser of:
(a) 4x the cumulative Cashflow for the four Years ending
on 31 March 2001; and
(b) The Maximum Goodwill Value; and
(c) 12x the NPAT for the Year ended 31 March 2001.
3.4.2 If the Goodwill Value calculated pursuant to clause 3.4.1
exceeds the recalculated value as at 31 March 2002 of the
BKI shares which have been released from escrow pursuant to
clause 3.3 then BKI shall issue to the Shareholder BKI
shares (based on the Strike Price converted to $NZ at the
Exchange Rate) of a value equal to such excess. If the
Goodwill Value calculated pursuant to clause 3.4.1 is less
than the recalculated value as at 31 March 2002 of the BKI
shares which have been released from escrow pursuant to
clause 3.3 then any remaining Earnout Shares held in escrow
shall be cancelled.
3.5 Dividends on Earnout Shares: Any dividends declared in respect of
Earnout Shares held in escrow pursuant to clauses 3.2 or 3.3 shall be
held in trust by the Trustee. Such dividends declared in respect of
shares which are released to the Shareholders shall be paid to the
Shareholders when the shares are released. Any dividends held in trust
by the Trustee in respect of BKI shares which are cancelled will be
forfeited to BKI on the date of cancellation.
3.6 Allocation of Consideration: The Consideration shall be apportioned
between the Shareholders in the percentages specified in Item 1 of
Schedule 1.
4. Pre-Completion Obligations
4.1 Pre-Completion: Between the date of this Agreement and Completion:
4.1.1 Preserve Business: Powercall, the Directors and the
Shareholders shall conduct the Business in an efficient and
businesslike manner and shall not do anything to prejudice
the goodwill of the Business.
4.1.2 Sale of Assets: Powercall and the Shareholders shall not
without the prior consent in writing of BKINZ dispose of any
of the Fixed Assets.
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4.1.3 Expenditure: Powercall and the Shareholders shall not
without the consent of BKINZ incur any capital or general
expenditure in relation to the Business exceeding in
aggregate $3,000.
4.1.4 Access to Premises and Business: Powercall and the
Shareholders shall ensure that BKINZ and its representatives
have full access to the Premises and the Business Records
and will be given promptly all information they may
reasonably require concerning the Business or affairs of
Powercall.
4.1.5 Insurance: Powercall and the Shareholders shall keep all of
the Fixed Assets fully insured against all usual risks
insured against by parties engaged in the activities
comprising the Business. Powercall shall immediately notify
its insurers of the interest of PTL in the Fixed Assets
pursuant to this Agreement. Powercall shall provide details
of all insurance policies including copies thereof to BKINZ
as soon as possible after the signing of this Agreement.
4.1.6 Liabilities: Powercall and the Directors shall ensure that
PTL and BKINZ do not, without their prior written consent,
unless specifically provided for in this Agreement, become
responsible for any of the Liabilities or obligations of
Powercall or the Shareholders.
4.2 By Completion: On or before Completion Powercall and the Shareholders
shall:
4.2.1 Benefit of Business: Take all steps reasonably required to
enable PTL to obtain the full benefit of the Business and in
particular any licenses, contracts or rights possessed by
Powercall or the Shareholders in relation to the Business.
4.2.2 Service Agreement: Procure the execution of employment
contracts by each of the Directors for terms of 5 years (in
the case of Xxxx Xxxxxx as General Manager of PTL) in the
form annexed as Annexure A.
4.3 Employees:
4.3.1 Forthwith after the execution of this Agreement but subject
to the Privacy Xxx 0000 Powercall shall provide to BKINZ the
particulars of employment for those employees who are
engaged in the Business who have indicated a willingness to
be employed by PTL and who PTL has agreed with Powercall are
necessary for the ongoing staffing of the Business.
4.3.2 Such employees shall be offered employment contracts with
PTL on the standard form employment contract utilised by
BKINZ to take effect from the Completion Date but providing
for substantially the same benefits as those employees
currently enjoy.
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4.3.3 Notwithstanding clauses 4.3.1 and 4.3.2 it is acknowledged
and agreed that PTL, BKINZ and BKI shall have no liability
or responsibility in respect of the wages, emoluments,
holiday pay, superannuation, redundancy or any other Costs
in respect of Powercall's employees except to the extent
that they are included in the Liabilities. Powercall, the
Directors and the Shareholders agree to indemnify PTL upon
demand against any such liability arising in respect of any
period prior to the Completion Date.
5. Completion
5.1 Possession: Possession of the Business shall be given and taken on 1
April 1997 as at which date all outgoings and incomings of the
Business shall be apportioned.
5.2 Risk: Risk in the Fixed Assets shall remain with Powercall until the
Completion Date.
5.3 Insurance: Powercall and the Shareholders shall keep all of the Fixed
Assets fully insured until the Settlement Date against all usual risks
insured against by parties engaged in the activities comprising the
Business. Powercall shall immediately notify its insurers of the
interest of PTL in the Fixed Assets pursuant to this Agreement.
Powercall shall provide details of all insurance policies including
copies thereof to BKINZ as soon as possible after the date of this
Agreement.
5.4 Completion: Completion shall take place on the Completion Date at 2.15
p.m. or at such other time as the parties shall agree and Shareholders
will hand to PTL:
5.4.1 Title Documents: All documents of title relating to the
Software and the Fixed Assets and all documents and Accounts
evidencing the Current Assets and Powercall's right to
collect the Current Assets.
5.4.2 Transfers: All transfers and assignments of all leases,
licenses, permits, grants, concessions and approvals and all
consents necessary to enable PTL to obtain the full benefit
of the Business;
5.4.3 Assignment: An absolute assignment of all Current Assets and
evidence satisfactory to BKINZ that all debtors of the
Shareholders comprised within the Current Assets have been
notified in writing of such assignment.
5.4.4 Releases of Charges over Assets: Unconditional releases of
any Charges over any of the assets comprised in the
Business;
5.4.5 Powercall's Records: All Business Records relating to the
Business;
5.4.6 Pre-conditions: Evidence satisfactory to BKINZ that the
Shareholders have fulfilled their obligations under clause
4;
and against compliance with the above provisions PTL shall pay or
satisfy the Consideration as specified in clause 3.1.1.
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5.5 Damage or Destruction of Assets: If any of the Fixed Assets are lost,
damaged or destroyed prior to the Completion Date PTL may at its
option either:
5.5.1 Purchase Assets: Purchase such damaged or destroyed asset or
assets together with all rights under the Shareholders'
relevant insurance policy; or
5.5.2 Reject Assets: Reject any of such assets in which case the
Consideration shall be reduced by an amount being the
replacement value of such asset or assets as determined by
agreement between the Shareholders and BKINZ. Failing
agreement within 5 Business Days following Completion, the
replacement value shall be determined by KPMG who shall act
as experts and not an arbitrators and accordingly the
Arbitration Xxx 0000 shall not apply.
6. Default at Completion
6.1 Default by the Shareholders : Without prejudice to clause 8, if any of
the provisions of clauses 4 or 5 are not fully complied with on
Completion, PTL may (in addition to and without prejudice to all other
rights or remedies available to PTL under this Agreement or otherwise)
at PTL's option:
6.1.1 Rescind: Rescind this Agreement; or
6.1.2 Completion: Effect Completion so far as practicable having
regard to the defaults which have occurred (without
releasing the Shareholders from liability to comply as soon
as possible with the Shareholders' obligations under clauses
4 and 5); or
6.1.3 Delay Completion: Fix a new date for Completion not being
more than 20 Business Days after the Completion Date) and in
that case the Shareholders shall pay to PTL interest at the
Interest Rate on the Consideration payable on the Completion
Date from the date on which Completion was due until
Completion takes place. If Completion does not take place
other than by reason of a default by PTL then such payment
shall not be refundable to the Shareholders.
6.2 Default by Purchaser: If from any cause whatsoever save the default of
the Shareholders any portion of the Consideration is not paid upon the
due date for payment PTL shall pay to the Shareholders interest at the
Interest Rate on the portion of the Consideration so unpaid from the
due date for payment until payment, without prejudice to any of the
Shareholders' rights or remedies.
7. Warranties and Indemnities
7.1 Powercall's, Directors' and Shareholders' Warranties: Powercall, the
Directors and the Shareholders and each of them jointly and severally
represent, warrant and undertake to PTL and BKINZ in terms of the
Warranties and it is agreed that:
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7.1.1 Investigations not to affect Warranties: Except as disclosed
in Schedule 3 and/or the Disclosure Letter, the Warranties
shall not be modified, qualified or discharged or in any way
affected by any investigation made by BKINZ into the affairs
of Powercall;
7.1.2 Separate and Independent: Each of the Warranties shall be
separate and independent and save as expressly otherwise
provided shall not be limited by reference to any other of
the Warranties or any other provision of this Agreement.
7.2 Reliance on Warranties: Powercall, the Directors and the Shareholders
acknowledge that PTL and BKINZ have entered into this Agreement in
reliance (among other things) on the Warranties.
7.3 Powercall's, Directors' and Shareholders' Covenants: Powercall, the
Directors and the Shareholders and each of them jointly and severally
warrant, represent and undertake to BKINZ and also as a separate
covenant to PTL:
7.3.1 Indemnity: That Powercall, the Directors and the
Shareholders and each of them jointly and severally will
keep the PTL and BKINZ fully indemnified against all and any
depletion in or reduction in the value of the Business or
any of the assets of Business acquired by PTL and all
Proceedings and Costs reasonably suffered or incurred by PTL
or BKINZ as a result of or in relation to any breach or
non-fulfilment of any of the Warranties and all Costs
incurred in making, defending or compromising any
Proceedings in relation to facts or matters which are or
would if proved or might, constitute such a breach or
non-fulfilment; and
7.3.2 No Breach of Warranties Prior to Completion: That they will
procure that (except only as may be necessary to give effect
to this Agreement) they shall not allow or procure any act
or omission before Completion which would constitute a
breach of any of the Warranties if they were given at any
time prior to or on Completion or which would make any of
the Warranties inaccurate or misleading if they were so
given; and
7.3.3 Disclosure of Change in Circumstances: That they will
forthwith disclose in writing to BKINZ any matter or thing
which may arise or become known to them or any of them after
the date of this Agreement and prior to Completion which is
inconsistent with any of the Warranties or which might
render any of them inaccurate or misleading when given at
Completion or which might be material to be known by a
purchaser for value of the Business or which might have a
material adverse effect on the value of the Business or any
of the assets of the Business.
7.4 Directors' Employment: Powercall, the Directors and the Shareholders
each acknowledge that BKINZ, BKI and PTL have entered into this
Agreement upon the expectation that each of the Directors will
continue to be employed on a full time basis in the Business for the
term of the employment contracts referred to in clause 4.2.2. Should
any of such contracts be terminated for any reason prior to the end of
their 5 year terms other than through the default of PTL or as a
consequence
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of the death or permanent disability of a Director, and as a
consequence PTL, BKINZ or BKI suffer any losses or incur any Costs
then Powercall, the Directors and the Shareholders shall be jointly
and severally liable to reimburse such losses or Costs and PTL, BKI
and BKINZ shall be entitled to adjust the Consideration according
and/or set off any such amount against any payment due to the
Shareholders under this Agreement.
7.5 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the Warranties are made and given subject to the provisions
of Schedule 3.
8. Rights of Rescission
8.1 Rescission for Breach: Without prejudice to clause 6, if on or prior
to Completion it should be found that:
8.1.1 Unfulfilled Obligations: Any obligation of Powercall, the
Directors or the Shareholders contained in this Agreement is
or will on Completion be unfulfilled; or
8.1.2 Breach of Warranties: Any Warranty is or may at Completion
be inaccurate or misleading;
then the PTL may, without prejudice to any other rights available to
it under clause 8.2 of this Agreement, by notice in writing to the
Shareholders, rescind this Agreement.
8.2 Effect of Rescission: Rescission of this Agreement under clause 8.1
shall not extinguish any right of PTL or BKINZ to damages or
compensation.
8.3 Rescission for Matters other than Default: If on or prior to
Completion:
8.3.1 Destruction of Assets: Any asset of the Business shall be
destroyed or damaged to an extent which in the opinion of
the BKINZ materially and adversely affects the Business; or
8.3.2 Material Adverse Change: Any other event shall occur which
affects or is likely to affect adversely to a material
degree the Business or the financial position, assets or
profitability of the Business;
PTL and BKINZ shall be entitled by notice in writing to the
Shareholders to rescind this Agreement, but the occurrence of such an
event shall not give rise to any right to damages or compensation
except where Powercall, the Directors or the Shareholders have failed
to give notice of such event as required by clause 7.3.3.
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9. Conditions
9.1 This Agreement is conditional upon:
9.1.1 Government or Regulatory Consents: Consent being given by
any New Zealand or Canadian government or regulatory body
whose consent is required to enable Completion of this
Agreement; and
9.1.2 Stock Exchange Consent: The approval of the Alberta Stock
Exchange.
9.1.3 Board Consent: The approval of the board of directors of
BKINZ and of BKI.
9.2 Fulfilment of Conditions: Each of the parties shall do all acts and
things reasonably necessary to procure the fulfilment of the
conditions set out in clause 9.1.
9.3 Benefit of Conditions: The Shareholders acknowledge that the
conditions contained in clauses 9.1.1 to 9.1.3 have been inserted
solely for the protection of PTL and BKINZ and accordingly PTL or
BKINZ may waive any of such conditions and in such event this
Agreement shall remain binding on the parties.
9.4 Failure of Conditions: Should:
9.4.1 Not Satisfied: Any of the conditions set out in clause 9.1
not be fulfilled or waived (as the case may be) by 16 May
1997 or such later date as may be agreed by the parties; or
9.4.2 Unreasonable Conditions: Any consent or approval required in
terms of the conditions set out in clause 9.1 be granted on
terms not reasonably acceptable to any affected party;
then this Agreement shall be voidable by notice in writing and this
Agreement shall then be at an end and the parties shall not have any
further rights or obligations except that the Shareholders will repay
any deposit paid.
10. Non Competition
10.1 Non-Competition: In consideration of PTL, BKINZ and BKI entering into
this Agreement and as a condition precedent, Powercall, the Directors
and the Shareholders and each of them acknowledge that the
Consideration is dependent upon and has been calculated on the basis
that they will not carry on a business the same as or in substantial
competition with the Business in opposition to PTL in the field of
development, marketing, production and servicing of software for the
operation of telephone systems in conjunction with computer systems
after Completion for the period specified below and accordingly
Powercall, the Directors and the Shareholders and each of them jointly
and severally covenant and agree with PTL, BKINZ and BKI that:
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10.1.1 Business: They will not during a period which is the greater
of 1 year from the Completion Date or 1 year from the date
of termination of the Service Agreement of the last of the
Directors to be employed by PTL at any place in New Zealand
(except as a servant of PTL or BKINZ) or except with the
prior written consent of BKINZ be directly or indirectly
engaged or connected or interested in, either on their own
account or as a partner with or as an employee of any other
person or as a shareholder, director, officer, consultant,
adviser or employee of any person (other than as holder of
not more than 5% of the shares in the capital of any
company whose shares are listed on any official stock
exchange) or directly or indirectly assist financially any
such business; and
10.1.2 Orders: They will not on their own account or for any
person, enterprise, firm, trust, joint venture or syndicate
solicit orders for such business otherwise than for the
benefit of PTL or BKINZ from any person, firm or company who
at the Completion Date was or had previously been a customer
of the Business; and
10.1.3 Employees: They will not on account of Powercall, the
Directors or the Shareholders or for any person, enterprise,
firm, trust, joint venture or syndicate entice or attempt to
entice away from the PTL or the BKINZ any employee of PTL or
BKINZ.
10.2 Provisions with respect to Covenants: Each of the covenants contained
in clause 10.1 shall:
10.2.1 Separate and Severable: Be separate and severable and to the
extent that any such provision is unenforceable by reason of
its period, scope or area being held by a court of competent
jurisdiction to be unreasonable, then such provision shall
be limited to the maximum period, scope or area which such
court considers reasonable and shall be enforceable on those
terms;
10.2.2 Benefit of Purchaser and Assigns: Be given for the benefit
of and be enforceable by PTL and BKINZ and their successors
and assigns.
11. Option to Purchase
11.1 the Shareholders' Option: Should BKINZ determine at any time following
Completion that any of the assets acquired from the Shareholders
pursuant to this Agreement are no longer required, then BKINZ will
procure PTL to offer to the Shareholders a first right to purchase
such assets at their fair market value (to be determined in the event
of a dispute between the parties by KPMG). Such right to purchase
shall be exercised by the Shareholders giving written notice to PTL
within 10 Business Days of receipt of notice of such right being
available.
11.2 PTL's Rights: Should the Shareholders fail to exercise their rights
under clause 11.1 within the 10 Business Day period then PTL shall be
free to sell such assets without restriction.
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12. Arbitration
12.1 Submission: If any dispute or difference shall arise between any of
the parties in any way arising out of or in connection with this
Agreement such dispute or difference shall be referred to the
arbitration of a single arbitrator if the parties can agree upon one
or otherwise of two arbitrators one to be appointed by the
Shareholders and one by the Purchaser or an umpire to be appointed by
the two arbitrators prior to entering into consideration of the matter
and any such reference shall be a submission to arbitration within the
meaning of the Arbitration Xxx 0000 and its amendments.
13. General
13.1 Non-Merger: The Warranties, indemnities, representations and
undertakings set out in this Agreement shall notwithstanding any rule
of law to the contrary not merge in the instruments of transfer
executed pursuant to this Agreement but shall remain in full force and
effect and enforceable to the fullest extent.
13.2 No Announcement: The parties agree that (except as may be required by
law or by the requirements of the Alberta Stock Exchange) they will
not make any announcement or disclosures as to the subject matter of
this Agreement except in a form and manner and at such time as all
parties may agree.
13.3 Notices: Any notice to be given pursuant to this Agreement shall be
given in accordance with and subject to the following provisions of
this clause 13.3:
13.3.1 In Writing: All notices shall be in writing signed by a duly
authorised officer of the party giving the notice or by the
party's solicitor;
13.3.2 Delivery: Without prejudice to any other sufficient mode of
delivery, a notice may be sent by hand, prepaid post, telex
or facsimile to the address or number (in the case of telex
or facsimile) of the intended recipient last advised to the
sender in accordance with this clause. The initial addresses
and numbers of the parties are:
Powercall and Shareholders: c/o Schnauer & Co
Barristers and Solicitors
P 0 Box 31 272
AUCKLAND 1
Facsimile: (00) 000 0000
PTL and BKINZ: 0 Xxxx Xxxxxx
Xxxx Xxxx
XXXXXXXX
Facsimile: (00) 000 0000
13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice delivered
by hand shall be received on delivery;
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13.3.4 Notice by Post: Subject to clause 13.3.6, a notice sent by
prepaid post shall be deemed to be received 3 days after
being posted;
13.3.5 Notice by Telex or Facsimile: Subject to clause 13.3.6, a
notice sent by telex or facsimile shall be deemed to be
received at the time of transmission where a transmission
report or answerback code produced by the sender's machine
indicates successful transmission;
13.3.6 Receipt Outside Business Hours: Any notice received or
deemed to be received pursuant to clauses 13.3.3, 13.3.4 or
13.3.5 after 5.00 pm (recipient's time) on a Business Day in
the recipient's city or on a day which is not a Business Day
in the recipient's city shall be deemed to be received at
9.00 am (recipient's time) on the next Business Day in the
recipient's city;
13.3.7 Proof of Delivery: In proving delivery of a notice, it shall
be sufficient:
(a) By Hand: in the case of a notice by hand, to provide
evidence that the notice was delivered to the address
of the recipient and no acknowledgement from the
recipient shall be necessary;
(b) By Post: In the case of a notice by post, to provide
evidence that the notice was correctly addressed and
posted in a prepaid envelope;
(c) By Telex or Facsimile: In the case of a notice by telex
or facsimile, to provide the transmission report
produced by the sender's machine showing a successful
transmission to the correct number of the recipient and
to have telephoned the recipient to confirm receipt of
a legible copy of such notice.
13.4 Applicable Law and Jurisdiction: This Agreement shall be governed by
and construed and interpreted in accordance with the laws of New
Zealand and the parties irrevocably submit to the exclusive
jurisdiction of the New Zealand courts.
13.5 Further Assurance: The parties will do all things including without
limitation the execution of documents as shall be necessary to give
full effect to this Agreement.
13.6 Entire Agreement: This Agreement including all schedules, annexures
and exhibits to it, and any documents incorporated by express
reference forms the entire agreement between the parties relating to
its subject matter and supersedes all prior agreements and
understandings between the parties with respect to that subject
matter. If there is any conflict between the terms of this document
and any other document forming part of this Agreement, the terms set
out in this document shall prevail.
13.7 Variation: This Agreement may only be varied by an express written
agreement executed by all the parties or by persons duly authorised in
writing on their respective behalf.
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13.8 Costs: Each party shall bear their own Costs of and incidental to the
preparation, Completion and implementation of this Agreement.
13.9 Waiver: No failure to exercise and no delay in exercising on the part
of the Purchaser any right under this Agreement shall operate as a
waiver of that right nor shall any single or partial exercise of any
right preclude any other or further exercise of such right or the
exercise of any other right. Any such waiver unless otherwise
expressly agreed in writing, shall only apply in respect of the
particular circumstances for which it is given.
13.10 Counterparts: This Agreement may be signed in any number of
counterparts, all of which when taken together constitute one and the
same instrument. Any party may enter into this Agreement by executing
any such counterpart. The parties will co-operate to circulate all
counterparts to each other for the purposes of having all counterparts
executed by all parties as soon as practicable following Completion.
13.11 Guarantee: BKINZ and BKI jointly and severally guarantee the
performance by PTL of its obligations under clauses 2. 3. 5, 6, 9 and
11 of this Agreement.
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EXECUTED by the parties.
SIGNED by POWERCALL )
LIMITED ) Signature /s/ Evan Read
------------------------------
Name Evan Read
------------------------------
Director
Signature /s/ Xxxx Xxxxxx
------------------------------
Name Xxxx Xxxxxx
------------------------------
Director
SIGNED by )
) Signature /s/ Xxxx Xxxxxx
) ------------------------------
as trustees of the N & N XXXXXX ) Name Xxxx Xxxxxx
FAMILY TRUST ) ------------------------------
Signature /s/ Xxxx Xxxxxx
------------------------------
Name Xxxx Xxxxxx
------------------------------
SIGNED by )
) Signature /s/ Evan Read
) ------------------------------
as trustees of the READ ) Name Evan Xxxxx Xxxx
XXXXXXXX FAMILY TRUST ) ------------------------------
Signature /s/ Xxxxx Xxxxxxxx
------------------------------
Name Xxxxx Xxxxxxxx
------------------------------
SIGNED by )
) Signature /s/ Xxxxxxx Duncraft
) ------------------------------
as trustees of the DUNCRAFT ) Name Xxxxxxx Duncraft
FAMILY TRUST ) ------------------------------
Signature /s/ Xxxx Xxxxxx
------------------------------
Name Xxxx Xxxxxx
------------------------------
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SIGNED by ) /s/ G L Xxxx
XXXXXXX XXXXX XXXX ) ------------------------------
in the presence of: ) X X Xxxx
/s/ Xxxxxxx Duncraft Witness's Signature
-------------------------------------
Xxxxxxx Duncraft Name
-------------------------------------
Manager Occupation
-------------------------------------
000 Xxxx Xx Address
-------------------------------------
SIGNED by ) /s/ X X Xxxxxx
XXXXXXXX XXXXXXXX ) ------------------------------
XXXXXX in the presence of: ) X X Xxxxxx
/s/ Xxxx Read Witness's Signature
-------------------------------------
Evan Xxxxx Xxxx Name
-------------------------------------
[ILLEGIBLE] Occupation
-------------------------------------
Auckland Address
-------------------------------------
SIGNED by EVAN XXXXX XXXX ) /s/ X X Read
in the presence of: ) ------------------------------
) X X Read
/s/ Xxxx Xxxxxx Witness's Signature
-------------------------------------
Xxxx Xxxxxx Name
-------------------------------------
Manager Occupation
-------------------------------------
0 Xxxxxxx Xxx Address
-------------------------------------
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SIGNED by ) /s/ M G Duncraft
XXXXXXX XXXXXX ) ------------------------------
DUNCRAFT in the presence of: ) M G Duncraft
/s/ Xxxx Xxxx Witness's Signature
-------------------------------------
Xxxx Xxxx Name
-------------------------------------
Sales + Marketing MNGR Occupation
-------------------------------------
00 Xxxxxxx Xxx, [ILLEGIBLE] Address
-------------------------------------
SIGNED by ) /s/ G L Xxxx
XXXXXXX XXXXX XXXX ) ------------------------------
in the presence of: ) X X Xxxx
/s/ Xxxx Xxxxxx Witness's Signature
-------------------------------------
Xxxx Xxxxxx Name
-------------------------------------
Manager Occupation
-------------------------------------
0 Xxxxxxx Xxx Address
-------------------------------------
SIGNED for XXXXXXX (N.Z.) )
INVESTMENTS LIMITED ) Signature /s/ Xxx Xxxxxxxx
by: ) -------------------------------
Name Xxx Xxxxxxxx
-------------------------------
Officer
Signature
-------------------------------
Name
-------------------------------
Director
E-137
SIGNED for XXXXXXX )
INVESTMENTS LIMITED ) Signature /s/ Xxx Xxxxxxxx
by: ) -------------------------------
Name Xxx Xxxxxxxx
-------------------------------
Officer
Signature /s/ Xxxxxxx Ridgwam
-------------------------------
Name Xxxxxxx Ridgwam
-------------------------------
Director
(c) Lowndew Jordan
Xxxxxxxx 0000
E-138
SCHEDULE 1
Item 1. Shareholders
1.1 _____________________________________________________________
as trustees of the N & N Xxxxxx Family Trust created by Trust Deed
dated Address: 0 Xxxxxxxx Xxxxxx, Xxxxxxxx Percentage of
Consideration: 30%
1.2 _____________________________________________________________
as trustees of the Read Xxxxxxxx Family Trust created by Trust Deed
dated Address: 0X Xxxxxxxxxxxxxx Xxxxxx, Xxxxxxxx Percentage of
Consideration: 30%
1.3 _____________________________________________________________
as trustees of the Duncraft Family Trust created by Trust Deed dated
Address: 000 Xxxx Xxxx, Xxxxxxxx Percentage of Consideration: 30%
1.4 _____________________________________________________________
Xxxxxxx Xxxx
Address: 00 Xxxxxxx Xxxxxx, Xx Xxxx
Percentage of Consideration: 10%
Item 2. Directors
Name Xxxxxxx
Xxxxxxxx Xxxxxx 0 Xxxxxxxx Xxxxxx, Xxxxxxxx
Xxxx Read 0X Xxxxxxxxxxxxxx Xxxxxx, Xxxxxxxx
Xxxxxxx Duncraft 000 Xxxx Xxxx, Takapuna
Xxxxxxx Xxxx 00 Xxxxxxx Xxxxxx, Xx Eden
E-139
SCHEDULE 2
Warranties (Clause 7.1)
1. General
1.1 Disclosure Letter: All information contained or referred to in the
Disclosure Letter is true complete and accurate in all respects and
Powercall, the Shareholders and the Directors are not aware of any
other fact or matter which renders or might upon its disclosure render
any such information misleading.
1.2 Agreement: The provisions of the recitals to this Agreement, clause
1.1 of this Agreement and all information contained in the Schedules
and Annexures to this Agreement are complete and correct in all
respects.
1.3 Information Supplied: All written information which has been given or
authorised to be given by any of Powercall, the Directors, the
Shareholders or any of the officials of Powercall or by any
professional advisers of Powercall or the Shareholders to PTL, BKINZ
or to any of their directors, employees, agents or professional
advisers in the course of the negotiations leading to this Agreement
was when given and will at Completion be true complete and accurate in
all respects and Powercall, the Directors and the Shareholders are not
aware of any other fact or matter which renders or might upon its
disclosure render any such information misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances
relating to the Business, the assets and affairs of Powercall, the
Directors and Shareholders material for disclosure to an intending
purchaser of the Business have been disclosed to BKINZ or its advisers
in writing and any such facts arising prior to Completion will
forthwith be disclosed in writing to BKINZ or its advisers.
2. Powercall
2.1 Encumbrances: There is not any and will not at Completion be any
Charge on, over or affecting the Businesses and there is no agreement
or commitment to give or create any such Charge and no demand has been
made by any person claiming to be entitled to any such Charge.
2.2 Records: All the Business Records have been fully and correctly
completed and will pending Completion continue to be so completed and
there are and will pending Completion be no material inaccuracies or
discrepancies of any kind contained or reflected in any of them. They
give and reflect and at Completion will give and reflect a true and
fair view of the financial, contractual and trading position of the
Business and of the Fixed Assets and the Liabilities.
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2.3 Accounts:
2.3.1 True and Fair View: The Accounts are complete and accurate
and give and reflect and will at Completion give and reflect
a true and fair view of Powercall, its activities and
financial status in all respects.
2.3.2 Comply with Statute: The Accounts comply with all applicable
requirements of the Companies Xxx 0000, the Companies Xxx
0000 and the Financial Reporting Xxx 0000, as the case may
be.
2.3.3 GAAP: The Accounts have been prepared in accordance with
generally accepted accounting practice as that term is
defined in the Financial Reporting Xxx 0000 and to the
extent consistent with such generally accepted accounting
practice on a basis consistent with that adopted for
preceding accounting periods.
2.3.4 No Unusual or Extraordinary Items: The Accounts are not
affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the
results set out in the Accounts (or any of them) unusually
better or worse than they (or any of them) might otherwise
be or have been.
2.3.5 Full Disclosure: The Accounts fully disclose all the assets
and Liabilities (whether ascertained, contingent, deferred
or otherwise and whether or not quantified or disputed) of
Powercall and make full provision and/or reserve for all
such Liabilities.
2.4 No Actions: As at the Completion Date there will be no actions, suits,
Proceedings, requisitions, requirements or arbitrations pending or
outstanding or (to the knowledge of Powercall, the Directors and the
Shareholders) threatened against Powercall in relation to or affecting
the Business, any of the Fixed Assets or the Software, or the
Liabilities.
2.5 Compliance with Law: As at the Completion Date the Shareholders
lawfully carrying on the Business in all its aspects and Powercall,
the Directors and the Shareholders are not at such date aware of any
impediment to PTL lawfully carrying on the Business immediately
following Completion.
3. Statutory Obligations
3.1 Employment and Safety: The Premises and operation of the Business
complies and will at Completion comply with the Health and Safety in
Employment Xxx 0000 and all applicable legislation governing
employment and safety of employees.
3.2 Holding of Licences: The Shareholders hold and will on Completion be
in possession of all current licences (including import licences and
concessions, if any) consents, authorities and permits from or issued
by any Governmental Department, municipal or local body or other
authority whether in respect of the Premises, plant, machinery,
buildings or other assets of the Business or otherwise necessary or
required to enable them to carry on the Business fully and effectively
E-141
and that the Shareholders and Powercall has not had notice that any
such licences, consents, authorities or permits are being or are
likely to be withdrawn or in any manner qualified whether by reason of
the sale of the Business or otherwise howsoever.
3.3 Utilities: All Charges for local authority rates, electric power, gas
and water supplied to the Business will be paid up to the Completion
Date.
3.4 Building Works: Where Powercall has done or caused or permitted to be
done in the Premises any works for which a permit or building consent
was required by law, such permit or consent was obtained for those
works and they were completed in compliance with that permit or
consent and, where appropriate, a code compliance certificate was
issued for those works.
3.5 Building Act: All obligations imposed on Powercall under the Building
Act 1991 shall be fully complied with at the Completion Date.
3.6 No Requisitions: There will not on Completion be any unsatisfied
requisitions by or dispute with any local body health authority,
government or ad hoc authority or other body or official or authority
having competent jurisdiction affecting or relating to any of the
Premises, plant, machinery, buildings or other assets of the Business.
3.7 All Documents Stamped: All documents which in any way affect the
right, title or interest of Powercall and the Shareholders in or to
any of the property or assets to be transferred to PTL and which
attract stamp duty have been duly stamped.
4. Properties and Assets
4.1 Title: As at Completion all assets comprised within the Business will
be unencumbered property of the Shareholders and on the Completion
Date exclusive title to them will pass to PTL free of all Charges.
4.2 Assets: The plant, equipment, and assets comprised in the Fixed Assets
will at the Completion Date be in good working order and condition.
4.3 No Defects: No structural, drainage or other material defects affect
any of the buildings and structures on or comprising the Premises.
4.4 Leasehold Premises: The Premises are held upon lease terms which have
been fully disclosed to PTL.
4.5 Compliance with Leases: Powercall and the Shareholders have paid all
rent that may be payable and has performed and observed all covenants
(whether in relation to freehold or leasehold land) conditions,
agreements, statutory requirements, planning or building or resource
consent, bylaws, orders and regulations affecting the Premises or any
business carried on the Premises and no notice of any breach of any
such matter has been received nor are the Shareholders aware of any
such breach having occurred.
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4.6 Debts: The Shareholders and Powercall will pay and discharge all debts
and Liabilities incurred or arising prior to the close of business on
the Completion Date except for the Liabilities and shall indemnify PTL
and BKINZ in respect of any Costs and Proceedings relating thereto.
4.7 Compliance with Statutes: Powercall has complied with all provisions
of the Building Xxx 0000, Resource Management Xxx 0000 and all other
legislation (including regulations, bylaws, ordinances, codes of
practice, circulars and guidance notes made thereunder) relating to
building, planning or environmental matters and dealing with (but
without limitation) waste, contaminated land, discharges to land or
ground and surface water or sewers, emissions to air, noise,
dangerous, hazardous or toxic substances and materials, nuisance or
health and safety and there are no actions, claims or Proceedings
(whether actual or potential) existing in relation to such matters nor
is likely to arise any liability in relation to such matters.
4.8 No Other Matter: There is no other matter of which Powercall or the
Shareholders are or ought to be aware on reasonable enquiry and which
adversely affects the value of any of the Premises or casts any doubt
on the right or title of Powercall and the Shareholders to those
Premises or its use of those Premises for the Business which should be
revealed to a purchaser of the Business or other person entering into
this Agreement.
4.9 Compliance with Notices: There have been no notices, claims or demands
served on Powercall in respect of any of its assets (including the
Premises) which have not been fully complied with.
4.10 Current Assets: All assets included within the Current Assets are:
4.10.1 Assets owned by the Shareholders and are transferable by way
of absolute assignment to PTL on Completion.
4.10.2 In respect of debts, are amounts actually invoiced by
Powercall to such debtors not earlier than 3 months prior to
Completion and no part of such amounts still outstanding
have been released upon terms that any debtor pays less than
the fair value of the debt or have been written off or have
been compromised on any terms.
4.10.3 Collectible in full within 66 Business Days of Completion
failing which such Current Assets shall be repurchased at
their full value by the Shareholders forthwith upon receipt
of written demand from PTL following expiry of such period.
5. Intellectual Property
5.1 All Intellectual Property Included: The Consideration for the Business
is assessed on the basis that all licences and all Intellectual
Property or other similar rights relating to the Business of or used
by Powercall, if any, are at present owned solely and beneficially by
the Shareholders and that all of such rights shall be
E-143
transferred to PTL on Completion to the intent that PTL shall be the
sole unencumbered and undisputed owner of all such things as at
Completion.
5.2 No Intellectual Property Agreements: Powercall, the Directors and the
Shareholders have not entered into any agreement or arrangement for
the provision of technical information or assistance or granting
rights in respect of any patents, trade marks or registered designs or
copyright and to the best of Powercall's, the Directors' and the
Shareholders' knowledge and belief the operations of Powercall do not
infringe any patent or other Intellectual Property right of any kind
vested in any other party.
5.3 Disclosure of Intellectual Property: Full details of all Intellectual
Property owned or used by Powercall have been given to BKINZ and no
person has been authorised to make any use whatsoever of any
Intellectual Property owned by Powercall or the Shareholders and
Powercall, the Directors and the Shareholders have not disclosed
(except in the ordinary course of the operation of the Business prior
to Completion) any of the know-how, trade secrets, technical
processes, confidential information, Intellectual Property or lists of
customers or suppliers which relate to the Business to any other
person.
5.4 Use of Names: Powercall and the Shareholders are entitled to use its
trade names in those parts of the world in which they currently
conduct the Business or in which its products are sold to its
customers and no person has been authorised to make any use whatsoever
of such names and the use of such names by Powercall does not infringe
the rights of any other person and none of the names is being used
claimed, opposed or attacked by any other person.
5.5 Name: Powercall and the Shareholders have not consented to and will
not before Completion consent to the adoption of a similar names to
those of Powercall by any other company or person.
5.6 Intellectual Property Not Disputed: The Intellectual Property rights
of Powercall and the Shareholders have not been and will not at
Completion be challenged or disputed by any third party and Powercall,
the Directors and the Shareholders are not aware of any facts or
circumstances which might entitle a third party to challenge Powercall
and the Shareholders ownership or use of the Intellectual Property
used in the Business.
6. Commercial Matters
6.1 Insurance: Full details of all insurance policies maintained by
Powercall have been supplied to BKINZ and all such insurances are now
in force and all premiums due have been paid and pending Completion
the Shareholders shall not permit any of its insurances to lapse or do
or omit to do anything the doing or omission of which would make any
such policy of insurance void or voidable or would or might result in
an increase in the rate of premiums and no claims are outstanding and
nothing has occurred to give rise to any such claim.
E-144
6.2 Effect of Acquisition of Businesses: Powercall, the Directors and the
Shareholders have no reason to believe that as a result of the
proposed acquisition of the Business by PTL:
6.2.1 No Cessation of Supplies: Any supplier of Powercall will
cease supplying PTL or may substantially reduce its supplies
to the Business or alter the terms on which it supplies to
the Business; or
6.2.2 No Cessation of Custom: Any customer of the Business will
terminate any contract relating to the Business or cease or
materially reduce its custom with the Business; or
6.2.3 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or
entered into by Powercall required to be transferred to PTL
to enable it to carry on the Business in the manner in which
it has been carried on at any time during the 2 years prior
to the date of this Agreement will be withdrawn, cancelled
or be capable of termination as a consequence of such
transfer.
7. Employment:
7.1 Employees: Powercall shall be solely liable for all entitlements of
employees of the Business and PTL shall have no obligation to such
employees except as provided in clauses 4.2.2 and 4.3 of the annexed
Agreement.
7.2 Full Disclosure of Terms: Full disclosure in writing of the current
rate of remuneration, fees and expenses payable to each employee of or
consultant to Powercall and the terms of such employment or
consultancy have been made to BKINZ in writing and no employee or
consultant has given notice or is under notice of dismissal or
termination of employment of any consultancy agreement.
7.3 No Amounts Due: There are no outstanding arrears of salary, wages,
fees, holiday pay or other remuneration nor any accrued holiday, long
service, annual leave or other employment related entitlements in
respect of any employees of the Business other than those included in
the accruals which comprise part of the Liabilities.
7.4 No Schemes: There are not now and will not on Completion be in
existence any retirement, death or disability benefit schemes for
employees of the Business or any obligations to or in respect of any
present or past employees with regard to retirement, redundancy,
death, sickness or disability pursuant to which PTL may become liable
to make any payments.
E-145
SCHEDULE 3
(Clause 7.4)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, none of Powercall, the Directors or the Shareholders shall be
liable in respect of any Proceedings or Costs for breach of any of the
Warranties or other breach of this Agreement:
1.1 Notice: Unless, promptly after BKINZ becomes aware or ought to have
become aware of any breach, they shall have received from BKINZ
written notice containing full details of the relevant Proceedings
within a period of 2 years after Completion and (unless the relevant
Proceedings shall have been withdrawn or satisfied) action in a court
of competent jurisdiction in respect of such breach shall have been
commenced within 1 year after receipt of such notice;
1.2 Aggregate of Warranties to Exceed Specified Amount: Unless the
aggregate amount of the liability of Powercall, the Directors and the
Shareholders for all such Costs and Proceedings exceeds $3,000;
1.3 Limit for Single Proceedings: Unless, in respect of any single breach
of any of the Warranties, the amount of the liability of Powercall,
the Directors and the Shareholders for such Costs and Proceedings in
respect of such breach exceeds $1,000;
1.4 Exclusion where Covered by Insurance: If and to the extent that (after
taking account of related Costs and any normal excess in such policy)
recovery is made by PTL under any policy of insurance effected by or
for the benefit of the PTL in respect of any of the subject matters of
such Proceedings;
1.5 Exclusion where Recovery under Another Agreement: If and to the extent
that those Proceedings or Costs occasioned thereby has been recovered
under any other agreement entered into between the parties and vice
versa;
1.6 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
1.6.1 Any alteration in rates of taxation after the date of this
Agreement with retrospective effect or the withdrawal after
the date of this Agreement of any published extra-statutory
concession or the alteration after that date of any
published statement of practice of the relevant revenue
authority; or
1.6.2 The passing of, or any change in, any legislation after the
date of this Agreement.
1.7 Liability Disclosed: If and to the extent the facts, matters or
circumstances giving rise to the breach are referred to in the
Disclosure Letter or any document disclosed with the Disclosure Letter
or in any document disclosed to BKINZ or
E-146
any officer of or professional adviser to BKINZ in relation to this
Agreement or the matters contemplated herein or in the Accounts and
BKINZ confirms its acceptance of such facts, matters and
circumstances;
1.8 Pursuant to Agreement: If and to the extent that such matter giving
rise to the Proceedings properly falls to be done in implementing the
terms of this Agreement;
2. Limitations Separate and Independent: For the avoidance of doubt each of
the above paragraphs of this Schedule shall be construed as being separate
and independent and none of them shall be construed as limiting the effect
of any other.
3. Recovery from Third Party: If Powercall or the Shareholders pay an amount
pursuant to a Proceedings in respect of breach of any of the Warranties and
PTL has a right of reimbursement against any person other than Powercall or
the Shareholders in respect of or relating to those Proceedings, PTL shall
(subject to PTL, being indemnified to its reasonable satisfaction against
all reasonable Costs) take all reasonable steps or Proceedings to enforce
such right. If PTL subsequently recovers such reimbursement from such third
party, PTL shall forthwith repay to the Shareholders such part of the
amount paid by Powercall or the Shareholders by way of damages for breach
of that Warranty as equals the amount of the which is so recovered by PTL
in respect of the facts, matters or circumstances giving rise to the breach
of that Warranty (after taking account of the Costs of recovery).
E-147
ANNEXURES
A: Service Agreement (clause 4.2.2)
E-148
Private & Confidential
Xxxx Xxxxxx
Powercall Ltd
X.X. Xxx 000 000
Xxxxxxx Xx
XXXXXXXX
14 September 1998
Dear Nick
Earn-out calculation schedule
Enclosed please find the earn out calculation for the year ended 31 March 1998
with respect to Powercall Limited.
I understand that you have reviewed this schedule, and discussed the
calculations with Xxxxxxx Investments (NZ) Limited.
With your signed acceptance, on behalf of the shareholders of Powercall Limited,
we will instruct our solicitor to issue the share script to escrow. Please sign
and return a copy of this letter so we may initiate these instructions.
Yours faithfully
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
Chief Executive Officer
--------------------------------------------------------------------------------
For and on behalf of the shareholders of Powercall Limited
/s/ Xxxx Xxxxxx /s/ Xxxx Xxxxxx Date 21/9/98
--------------------------------------------------------------------------------
Xxxx Xxxxxx & Xxxx Xxxxxx as Trustees
of the N&N Xxxxxx Family Trust.
/s/ Evan Read /s/ Xxxxx Xxxxxxxx Date 12/10/98
--------------------------------------------------------------------------------
Evan Xxxxx Xxxx and Xxxxx Xxxxxxxx Trustees
of the Read Family Trust
E-149
/s/ Xxxxxxx Duncraft /s/ Xxxxx Duncraft Date 16/9/98
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Xxxxxxx Duncraft and Xxxxx Duncraft as Trustees
of the Read Duncraft Family Trust.
/s/ Xxxxxxx Xxxx Date 16/9/98
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Xxxxxxx Xxxx
cc: Xxx Xxxxxxxx, Xxxxxxx Investments
Xxxxxx Xxxxxxxxxxx, Xxxxxxxxxxx Xxxxxxxxx
E-150
XXXXXXX
INVESTMENTS
POWERCALL LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 31 MARCH 1998
1 Purchase price
Made up of following components:
Initial cash consideration
Goodwill value
2 Goodwill Value
The lesser of:
Four (4) times cumulative Net Profit after Tax for the 4 years ended 31
March 1998 - 2001. Twelve (12) times the Net profit after Tax for the year
ended 31 March 2001 Twenty Million dollars (NZ$20m)
3 Consideration paid to date
Initial cash on settlement of 4,948
Initial shares on settlement 27,440 57,093
--------------
62,041
4 Goodwill calculation For the year ended March 31, 1998
NZ$
Net income 239,882
Tax charge (80,503)
--------------
159,379
x4 637,516
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5 Escrow shares to be issued
Shares to be issued and held in escrow equalling the goodwill value
As at31 March 1998
Exchange rate (NZ:CAD) 0.7816
Share Price (strike) c$ 1.75
Shares to be issued 284,733
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E-151
XXXXXXX
INVESTMENTS
POWERCALL LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 31 MARCH 1998
6 Escrow shares to be released
First release to be 5 June 1998 (66 days from March 1998)
Based on cummulative cash flow earned for the year ended 31 March 1998 (as
defined in Escrow Agreement)
March 1998 March 1999 March 2000 March 2001 TOTAL
Net profit after tax 159,379 159,379
Add back:
Depreciation 49,701 49,701
Depletion -
Deferred tax 11,273 11,273
Goodwill amortisation -
Research and development -
amortisation
------- -------
220,353 220,353
Shares to be released from escrow 98,416
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7 Revalution of shares previously
issued
No NZ$ NZ$/Share
Shares issued to date 27,440 $57,093 $2.08
Share price at March 31, 1998 $2.24
Revalution of Escrow shares
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Total shares to release 98,416
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E-152
XXXXXXX
INVESTMENTS
POWERCALL LIMITED
ACQUISITION VALUATION AND SHARE ISSUE CALCULATION
AS AT 31 MARCH 1998
8 Summary
NZ$
Total purchase price currently:
Cash 62,041
Goodwill value 637,516
------------
699,557
Paid to date
Cash 62,041
Goodwill value
To release shares of value ($NZ) 220,353
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Total consideration paid and
released 282,394
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To be potentially released in future $ 417,163
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9 Conclusion
Goodwill value 637,516
Shares to issue to escrow ------- 284,733
Shares to release from escrow ------- 98,416
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E-153
