Disclosure Letter
To: Xxxxxxx Investments (NZ) Limited at Auckland
And To: Xxxxxxx Investments Limited at Alberta, Canada
Dated: the _____ day of December 1997
Sale and purchase of shares in New Zealand Online Limited
1. We refer to the Agreement for Sale and Purchase of Shares ("the
Agreement") in relation to New Zealand OnLine Limited ("the Company")
dated the same date as this letter to be executed by Xxxxxxxx Xxxx Xxxx
and M & H Trustee Services Limited as vendor, Xxxxxxx Xxxxx Xxxxx,
Xxxxxxx Investments (NZ) Limited at Auckland as purchaser, and Xxxxxxx
Investments Limited at Alberta, Canada as BKI, relating to the sale and
purchase of all the Shares ("Shares") in the Company. In particular we
refer to clause 7 of the Agreement and the Warranties set out in the
Agreement ("the Warranties"). This is the Disclosure Letter referred to
in the Agreement ("this Letter").
2. Words and expressions which are defined in the Agreement shall have the
same meaning in this Letter, unless the context otherwise requires.
3. Pursuant to the Agreement, we write this Letter:
(a) to disclose information constituting exceptions to and
qualifications of the Warranties, and
(b) to provide particulars of matters referred to relating to the
subject matter of the Agreement.
4. Note that:
(a) references to clauses, schedules and appendices stated in this
Letter are references to clauses, schedules and appendices in the
Agreement;
(b) warranty references stated in this Letter are reference to
Warranties in Schedule 1 of the Agreement;
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(c) disclosure in this Letter of a matter under one Warranty shall be
disclosure under all other clauses and Warranties in the Agreement
under which the matter might be relevant;
(d) this Letter comprises 8 pages (exclusive of attachments); and
(e) Attached to and forming part of this Letter is the Information
Memorandum prepared by Xxxxxxx Investments (NZ) Limited during
their due diligence review of the Company. In the event of there
being any discrepancy or inconsistency between information in the
Information Memorandum, and in this Letter, the information in
this Letter shall prevail.
Yours faithfully
-------------------------
Xxxxxxxx Xxxx Xxxx
Signed for and on behalf of
M & H Trustee Services Limited per:
-------------------------
X X Xxxxxx
-------------------------
X X Xxxxxxx
Part 1
General disclosures
The following are disclosures made on a general basis:
Parrilott Pty Limited ("Parrilott")
Attached to this Letter is two pages of search extract for this Australian
company (ACN 078 712 099, incorporated in New South Wales on 28 May 1997). This
company was a shelf
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company acquired for the purpose of receiving Australian dollar payments for
products sold, and remitting moneys to New Zealand. Xxxxxxxxx has a bank account
and its assets as at 30 September 1997 are referred to in the Financial
Statements in respect of Parrilott. Xxxxx will resign as a director and
secretary with effect Completion as will the current Australian resident
director Xxxxxxx Xxxxxxx Xxxxxxx. The Purchaser will have to nominate
replacement directors and secretary. Any Statutory Books will be held by Xx
Xxxxxxx. There will be few. Any Business Records will be held by Xxxxx, at
Completion. Parrilott has no insurance cover. It has furnished no taxation
returns, other than its first "nil" sales tax returns.
Refer to part 2 for further specific disclosures concerning Parrilott.
Part 2
Specific disclosures
The following are specific disclosures relating to one or more of the Warranties
detailed in Schedule 2 of the Agreement. The numbering used below conforms with
the numbered Warranties in Schedule 2.
1.3 During the course of the Purchaser's due diligence enquiries and
discussions with Xxxxxxx Xxxxx, certain sales and financial projections
for the Company were developed by the Purchaser. Certain estimates of
prospective sales of Pictrix and Pictrix junior units, after discussion
with Xxxxxxx Xxxxx. These were estimates only, and Xxxxxxx Xxxxx on
behalf of the Vendors provided the information in that discussion in good
faith using his best considered assessment of factors relevant to such
projections at the time. The estimated time frame for such projected
sales may well prove to have been under-estimated.
2.3 By agreement with the Purchaser on or before Completion, the shares in
Parrilott Pty Limited will be transferred to the Company and Parrilott
Pty Limited will thereupon become a fully owned Subsidiary of the
Company.
2.6 The Vendor or parties related to the Vendor own shares in the following
companies:
Ciga Finance Limited, International Telecommunications Specialists
Limited, Ciga Computers Limited and Advanced Communications Group
Limited.
The Company has no shareholding in any of these companies and is not
intended to do so. These companies will not form part of the transaction
contemplated by the Agreement. The Information Memorandum also refers to
PhotoDigital Solutions Limited. That company is incorporated. Its shares
are half owned by Xxxxxxx Xxxxx
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and Xxxxx Xxxxxx. That proposal will not now proceed. It will be up to
the Purchaser and the Company to determine whether or not any arrangement
in time is entered into with Xxxxx Xxxxxx to market Company products to
the photographic industry in Australia or elsewhere.
3.1 The Business Records of the Company are very informal and only a very
light system of record keeping has been maintained. In no sense are they
fulsome records. Not all Statutory Books are completed. For example the
Company does not maintain a minute book, a register of members or a
directors interests register. The register of assets of the Company has
been reviewed by the Purchaser. There are some assets of the Company not
on the register and there are some items on the register which should no
longer be there. The Purchaser has details of such items.
No provisioning is made in the Business Records for any contingent
liability of the Company.
3.3.4 Although relative to the period since 30 September 1997, the Company has
expensed certain moneys, disclosed to KPMG on behalf of the Purchaser,
other than in the normal course of business, best described as drawings,
loan repayments and reimbursements. These items are not yet dealt with in
the books. Whatever adjustments will be necessary to the financial
statements of the Company to account for these items should be made at
the year end 31 March 1998.
3.3.8 No provision is made for bad or doubtful debts of the Company.
3.4.4 The Company has acquired assets of a capital nature exceeding $3,000.00
in value, but only in the ordinary course of business.
3.4.7 Refer to the text under 3.3.4 above.
3.4.8 The Company has no loss of profits insurance cover.
3.4.9 The Company is always changing its software product lines and its selling
prices and terms and conditions of sale.
4.1 (a) The Company has only be trading seventeen months, and a period of
three preceding financial years is not pertinent.
(b) The Company has only included one item of work in progress in the
books - KPMG/the Purchaser has been advised of details relating to
computers delivered by the Company but not invoiced-out.
(c) The Company may have slow moving, out of date or fashion,
redundant or obsolete stock to the extent that the value life span
of a hardware product can be extremely brief.
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(d) The assessment of stock value undertaken in the preparation of the
accounts of the Company for the period ending 30 September 1997
was a xxxxxx assessment of value than that undertaken for the
accounts of the Company for the period ending 31 March 1997.
5.3 There is a difference between GST paid, and what is reported in the
current financial statements of the Company as being payable. Xxxxx
Xxxxxx the Company's accountant is investigating the difference. As at
end September 1997 $30,000.00 was reported as being payable although the
Company has only paid $12,000.00 odd. Completion of the transaction
contemplated by the Agreement will take place before this resolved and
this will be something for the Purchaser and the Company to complete and
account for.
6.1 The fringe benefit tax payable by the Company reported in the financial
statements is understated. Xxxxxxx Xxxxx on behalf of the Company ceased
filing FBT returns in approximately June 1997. Xxxxxxx Xxxxx had
previously given to Xxxxx Xxxxxx the FBT records for the end of year
accounting purposes. However when the Company accounting records were
returned from Xxxxx Xxxxxx's office, they didn't include the FBT
material. The difference has arisen from the difficulty in calculating
the fringe benefit tax payable in respect of one of the rented motor
vehicles. IRD has issued a penalty bill for the sum of $238.17 and this
is to be paid prior to Completion. The reconciliation of the FBT for the
Company will have to be dealt with post-Completion by the
Company/Purchaser to the Company's account.
No tax returns have been filed in respect of the period commencing 1
April 1997, and no tax paid.
6.3 No provision for tax has been made in either of the year end 31 March
1997 accounts, or in the 30 September 1997 accounts of the Company.
6.5 A number of debtors of the Company have extended payment terms. Some
debtors are more than three months old.
7.4 A number of repayments have occurred subsequent to the 30 September 1997
accounts:
(a) in the 30/9/97 balance sheet of Parrilott Pty Limited, the loan to
International Telecommunications of $100.00 and the shareholders
loan of $452.00 have both been repaid. Of the loan from NZ OnLine
Limited of $42,681.00, the sum of $40,421.00 has been repaid to
the Company.
(b) In the 30/9/97 balance sheet of the Company, the loan to Ciga of
$1,434.00, and to International Telecommunications Specialists
Limited of $3,165.00, have been repaid.
8.3 The Company is a party to maintenance contracts with Viko and the Sky
Tower which
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may be regarded as onerous. Certain provisions in the System Development
Agreement with Hanimex referred to in 8.4 below may be regarded as
unusual or onerous.
8.4 The Company is a party to a software licensing agreement with Xxxxxxxx
Xxxx Xxxx and M & H Trustee Services Limited dated the 15th day of
September 1997. The Company is also party to a System Development
Agreement dated the 15th day of September 1997 with Xxxxxxx (NZ) Limited.
The Company is also party to a Memorandum of Understanding with Xxxxxxx
(NZ) Limited dated 30 July 1997 (copy attached).
8.7 Refer to the Hanimex (NZ) Limited Systems Development Agreement referred
to under heading 8.4 above.
8.8 There is no insurance in place of the type contemplated and required by
clause 6.6 of the System Development Agreement with Hanimex (NZ) Limited
dated 15 September 1997.
If Completion is effected without first obtaining the prior written
approval of Hanimex (NZ) Limited under the Systems Development Agreement,
that will constitute an Event of Default under clause 7 of the Systems
Development Agreement, giving Hanimex certain exercisable rights as
detailed in that Agreement. Similarly, under the Lease of the company's
premises with Chamko Holdings Limited dated 11 June 1996, the sale of the
Shares will constitute a change in the effective management or control of
the Company and will be deemed to be an assignment of the Lease requiring
lessor consent, which if not obtained prior to Completion will constitute
a default under the Lease. There may be similar requirements for other
party consent under the company motor vehicle leasing arrangements, the
Equipment Finance Limited financing arrangement and the Melco NZ Limited
arrangement.
9.8 The Company has received a claim from Xxxxx Xxxxxx, an employee who left
the Company's employment in September 1997, for redundancy of $6,795.61.
This claim is presently unresolved and is being resisted by the Company.
Xxxxx Xxxxxx was prior to his employment with the Company an employee of
initially Xxxxxxx Xxxxx, and then subsequently Ciga Computers Limited.
9.4 Details of salary increases and new employees have been provided in
facsimile transmissions to the Purchaser. They are not repeated in this
Letter for brevity reasons.
9.9 There is leave due to certain employees of the Company as advised in
facsimile transmissions to the Purchaser. Details of which are not
repeated in this letter for brevity reasons.
11.6 There may well be structural, drainage or other material defects
affecting the building
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and structures on or comprising the Premises, however the Vendor has no
actual knowledge of any thing of that nature. The standard repair and
condition of the building is generally speaking consistent with its age
and use. The building may have been constructed maintained, altered or
repaired using materials containing any deleterious building material.
The Premises may have been effected by flooding or subsidence, but the
Vendor has no actual knowledge of same.
11.7 There are significant pieces of real estate in the vicinity of the
Premises which apparently are or are about to be placed on the market for
sale. The Vendor has no actual knowledge of any sale or development
proposals which might affect the Premises, but continues to rely upon the
continuation of the term of years provided to the Company under the Lease
of the Premises.
12.1 (a) Hanimex Proprietary Limited owns 50% of the intellectual property
in the software known as "Badge". The arrangement with Xxxxxxx is
a verbal arrangement.
(b) The licence with Hanimex (NZ) Limited and the licence with the
Vendor relating to software and intellectual property matters,
referred to under Warranty 8.4 above contains certain rights and
obligations relating to Intellectual Property generally and
specifically, as does the earlier Hanimex agreement referred to in
8.4 above.
(c) The only intellectual property rights of the Company are those
defined as Intellectual Property, and the rights licensed to the
Company by the Xxx Xxxxxxxx Trust under the Software Licensing
Agreement.
12.4 The Company uses two names in its trading, New Zealand OnLine, and
Digital Scanning Services.
13.7 (a) Xxxxxxx Xxxxx'x sister Xxxxxxx Xxxxxx cleans for the Company in
return for payment of $100.00 per month.
(b) A motor vehicle is leased to the Company by Ciga Finance Limited
for a monthly rental of $650.00 including GST.
13.12 From time to time in the past, International Telecommunications
Specialists Limited has provided loan funds to the Company. All such loan
moneys have been repaid. No money is owing by the Company to
International Telecommunications Specialist Limited at the date of this
Letter.
14.1 (a) On or about the date of incorporation of the Company in 1996,
Xxxxxxx Xxxxx had an arrangement with Xxx Xxxxxx and Xxxxxx
Xxxxxxx that those two gentlemen would each acquire a 25%
shareholding in the Company. Xxx Xxxxxx and Xxxxxx Xxxxxxx lent to
Xxxxxxx Xxxxx (not the Company) the sum of
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$25,000.00 each. No shares were transferred to Xxx Xxxxxx or
Xxxxxx Xxxxxxx by Xxxxxxx Xxxxx. No formal agreement to sell was
signed. The proposal did not proceed. Xxxxxxx Xxxxx has since
repaid Xxx Xxxxxx. He is yet to repay Xxxxxx Xxxxxxx. The Company
has no liability to either of those two individuals.
(b) In April 1997 or thereabouts, the Company entered into an
arrangement whereby up to 25% of the share capital of the Company
was to be transferred to Asia Pacific Holdings Limited, and the
Company would take up to 25% for the shares in the capital of that
Company. The two managing directors of those two companies,
Xxxxxxx Xxxxx and Xxxxx Xxxxxx decided to terminate that
arrangement and instead, Xxxxxxx Xxxxx and/or The Xxx Xxxxxxxx
Trust entered into an alternate arrangement and incorporated a
company Advanced Communications Group Limited, to conduct business
on behalf of the proposed joint venture parties. The Company was
not and is not involved in Advanced Communications Limited, nor
does Asia Pacific Holdings Limited have any current entitlement to
shares in the Company.
Attached:
copy Hanimex Memorandum of Understanding
copy Information Memorandum
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NZ OnLine Limited
-----------------
Information Memorandum
----------------------
Prepared for:
Xxxxxxx Investments (NZ) Ltd
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1. Preface
This document identifies all relevant issues that have been discussed during the
process of the purchase of the shares in NZ OnLine Limited by Xxxxxxx
Investments Limited.
2. Company shareholding
All 1200 shares in the company are unencumbered and owned by Xxxxxxxx Xxxx Xxxx
and M & H Trustee Services Limited (jointly) as Trustees of the Xxx Xxxxxxxx
Family Trust.
2.1. Subsidiaries & Associates
Parrilott Pty Ltd - Australian Trading Company
To become a wholly owned subsidiary upon acquisition by BKI
2.2. Related Companies
See 2.1 above
Ciga Finance Ltd -- Rents the Toyota Car to the Company
Share Capital - $1000, 1 share to Judge Xxxx, 999 shares
Xxxxxxx Xxxxx Xxxxxxx
International Telecommunications Specialists Ltd Trading
- 50/50--RT& wife
Ciga Computers Limited - renamed now dormant Not trading
- Kirkliston Investments Ltd Share Capital - $1000, 1 share
to Judge Xxxx, 999 shares Xxxxxxx Xxxxx
Advanced Communications Group Ltd Does not
trade
- 50% owned by RT and 50% by Xxxxx Xxxxxx.
PhotoDigital Solutions
- to market NZOL products to photographic
industry in Australia & R.0.W.
- 50/50 (RT & Xxxxx Xxxxxx)
3. Suppliers
3.1. Major Suppliers
Sealcorp Computer Products in NZ and Australia
Renaissance in NZ
Tech Pacific in Australia
Melco in NZ
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3.2. Current Invoices
An amount of $1170.00 is in dispute by Gilmours.
3.3. Australian stock acquired from Hanimex
Parrilott Pty Limited, the Australian subsidiary of New Zealand OnLine Limited
Stock, has acquired touch screen monitors which are to be incorporated into yet
to be developed product, to be called Pictrix Junior Pharmacy, and has acquired
scanners which are to be sold in the normal course of trading. The total value
of these products is $AUD5O,000 and is recorded in the balance sheet of New
Zealand OnLine Limited as stock.
3.4.
3.4.2 The company has expensed monies since 30/9197 as disclosed to KPMG
that are not part of the normal couse of business, these can best
be described as drawings, loan repayments and reimbursements which
would be offset against loan advances etc.
3.5 The company entered into an arrangement where up to 25% of the
capital of the firm was to be swapped for 25% in another firm.
This deal lapsed at the end of March/April. Xxxxxxx Xxxxx has a
personal obligation to pay $15,000 to Asia Pacific Holdings
Limited. This is not a liability to the firm.
3.6 GST differs in the accounts with what has been paid to the Tax
department. This metIer is still awaiting resolution by the
accountant.
3.7 Clause 6.4. These is a doubtful debt of $900.00 and that there are
also debtors beyond 90 days.
3.8 The company is in a long term contact of supply see System
Developement agreement between Xxxxx, Hanimex (NZ) Ltd and NZOL
signed 15/9/97 and will be entering into a similar contract with
Hanimex Pty Limited by December 1997.
3.9 Clause 9.9. There is as at 30/9/97 6 days of leave due to
employees of NZOL.
4. Customers
4.1. NZ based customers
1? Hanimax NZ & Aust
o Bluescreen
o Pictrix
o e-mail
o ISP
o software development
o reseller of hardware
Obligations under a full contract signed 15/09/97 to provide various services as
described in the System Development Agreement.
1? Viko NZ
o Pictrix Bureau
To maintain their bureau network. A royalty that is charged for data bought in
form the Pictrix network/annual
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maintenance agreement. This is formalised in a letter between the parties.
1? Prism Reproductions Ltd NZ
o Imaging
No formal agreements - supply on purchase order on an as required basis.
1? Gilmours (Foodstuffs) NZ
o Imaging
Proposal and acceptance letters exist between parties. Terms of trade are
described in a proposal and accepted by letter agreement.
1? CSA Action(ad agency) NZ
o Imaging
No formal agreements -- supply on purchase order on an as required basis.
I? Rotorua Museum NZ
o Imaging
Informal and ad-hoc work load.
5. Staff
5.1. Current staff
See fax attached dated Nov 19th, 1997.
6. Employment Contracts
There are no formal employment contracts in existence.
6.1. Redundancy
No specific provisions for redundancy exist however Xxxxxxx Xxxxx believes there
is an obligation, to pay redundancy in the event this occurs.
6.2. Holiday Pay
No specific holiday pay provisions exist as the company closes down over the
Christmas/New Year period for 3 weeks.
Pay increases are scheduled for the New Year - effective 1 January 1997.
6.3. Special Employment related Issues
Xxxxx Xxxxxx - amount in dispute $6795.61 - unresolved.
Company has offered employment to Xxxx Xxxxxxx as of 5 January 1998.
7. Premises
7.1. Lease
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Auckland - the company has a lease on the premises at 00 Xxxxxxx Xx xx Xx Xxxx.
There is a rent review annually. The lease expires 9 June 1998, however the
company has a right of renewal for a further 2 year period.
8. Vehicles
8.1. Current Needs
The company has a finance lease on a vehicle (Honda Finance) as well as a rental
agreement (Ciga Finance Limited) on another vehicle. The lease is for a 3 year
period commencing December 1996. The company has a lease to own agreement (with
Equipment Finance Limited) for a drum scanner which commenced 27/9/96 and is for
a 3 years.
9. Financial
9.1. Personal guarantees
o Melco NZ Ltd -- for trading account.
o Company Motor vehicle leasing company.
o Building Lease to Landlord.
o Equipment Finance Limited
9.2. GST
The company's GST position is inaccurately overstated in the set of accounts as
at 19/11/97 and the Fringe benefit is understated - probably.
9.3. Tax
No provision has been made for company taxation.
9.4. Investments
Deleted
9.5. Intellectual Property
See schedule to be provided by Xxxxxxx Xxxxx.
9.6. Arm's Length Supplies
Family member is responsible for cleaning contract with company.
12.1 The company only owns 50% of the software known as "Badge"
12.2 See licensing agreement 15/9/97 between Xxxxxxxx Xxxx Xxxx,
MH Trustee Services Limited and XXXX referred to as the
software Licencing agreement.
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MEMORANDUM OF
UNDERSTANDING
Parties
HANIMEX (N.Z.) LIMITED
NEW ZEALAND ONLINE LIMITED
X.X. XXXXX
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MEMORANDUM OF UNDERSTANDING dated 30 July 1996
PARTIES
1. HANIMEX (N.Z.) LIMITED at Auckland (Hanimex)
2. NEW ZEALAND ONLINE LIMITED at Auckland (Online)
3. XXXXXXX XXXXX XXXXX of Auckland, Company Director (Xxxxx)
INTRODUCTION
A. The parties have identified certain business opportunities which require
a number of inputs in order to develop them further and to assess their
commercial viability.
B. The parties are able to contribute a range of complementary inputs into
the furtherance of such opportunities with the objective of promoting
their own individual business objectives.
C. It has been agreed that the parties will work together to establish and
maintain an exclusive relationship for the development of their mutual
interests with the intention that further terms and conditions will be
negotiated in relation to the development of any significant business
opportunities within the general principles set out in this Memorandum.
TERMS
1. Interpretation
1.1 In the interpretation of this Agreement, unless the context otherwise
requires:
1.1.1 References to the parties include their respective executors,
administrators, successors and permitted assigns:
1.1.2 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done.
1.2 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.
2. Parties Contributions
2.1 Xxxxx has established expertise in the field of software development and
engineering with particular reference to image management and transfer
technology. Xxxxx wishes to utilise these skills in the development and
promotion of new businesses and services which could have commercial
application across a wide range of industry sectors and imaging
applications.
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2.2 Online has been established to develop and promote comprehensive business
and service solutions utilising photographic imaging technology (Business
Solutions) for different industry sectors drawing upon the inputs of a
range of service and product suppliers including the expertise of Xxxxx.
It is the intention of Online to provide:
o Access to software which is developed to cater for the specific
needs of particular industry sectors.
o Complete Business Solution packages based on the software
developed for a special industry sector including all necessary
software, software support, software upgrades and software
communication equipment, and (if required) hardware and financing
to enable marketing of a turnkey package.
2.3 Hanimex wishes to promote and further its interests in the supply of a
range of inputs which will be required by Online in the development and
promotion of new Business Solutions. In particular Hanimex has the
ability to provide.
o Access to commercial photographic facilities and a nationwide
retail photographic processing chain.
o The trade supply of photographic imaging technology including
hardware and consumables.
o Marketing and sales assistance and advice.
2.4 The parties agree that there are potential benefits for each of them in
working together in the development of new Business Solutions. It is the
intention of the parties to seek the exclusive but separate support of
the other parties to this Memorandum in the areas in which they have the
ability to supply appropriate skills, capital, services and products.
3 Exclusive Supply
3.1 Upon execution of this Memorandum Hanimex shall pay to Online the sum of
$50,000 exclusive of GST) in consideration of the covenants of Online
specified in clause 3.2.
3.2 Until otherwise agreed between the parties Online and Xxxxx for the
consideration provided by Xxxxxxx specified in clause 3.1 shall.
3.2.1 Work with Xxxxxxx in respect of all Business Solutions or
prospective Business Solutions; and
3.2.2 Source exclusively from Hanimex all inputs which Hanimex can
supply in relation to the Business Solutions as contemplated in
clause 2.3 and
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3.2.3 Not approach any other parties nor seek their involvement or input
into the development and/or promotion of any Business Solutions
where Hanimex is able to provide such inputs.
4. Industry Agreements
4.1 The parties intend to mutually consult and be involved in the development
of business plans for the development of new Business Solutions. It is
contemplated that such plans will identify a number of industry sectors
and potentially commercially viable imaging applications which can be
jointly exploited.
4.2 Following completion of a business plan for any specific industry
Business Solution if the parties agree that such plan is viable then the
parties will negotiate in good faith to define their respective inputs to
such Business Solution. The parties may then determine if it is prudent
to cater into a formal agreement for the development, promotion and
ongoing servicing of the particular Business Solution. It is the
intention of the parties that any such formal agreement will include
provision for and/or reflect the following principles:
o The promotion of the best commercial interest of each of the
parties recognising the different skills and resources which they
can each contribute
o Online and\or Xxxxx will develop the software.
o Specific provisions for determining ownership and rights of access
to and use of the software developed.
o Online will receive an income on the granting of access rights to
customers for software in respect of which it has Ownership
rights.
o Online will source exclusively from Hanimex all photographic
imaging hardware and related consumables which Hanimex can
reasonably supply
o Online will promote and supply a turnkey package inclusive of a
licence to use the software developed, and the exclusive ongoing
sourcing to all hardware and consumables from Hanimex where
Hanimex is able to supply.
o Online will provide ongoing support and development of the
software systems as required.
o Hanimex will provide ongoing hardware support for hardware
supplied by it.
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5. Nature of Relationship
5.1 The parties pursuant to this Memorandum undertake to work together in
their mutual best interest to explore the development of future potential
business opportunities. Some opportunities have been identified at the
date of signing of this Memorandum but it is anticipated that more
opportunities will arise in the future. It is not possible in this
Memorandum to provide for all eventualities. The future commitment of the
parties is to work together and negotiate in good faith but if agreement
can not be reached in relation to any specific Business Solution then the
parties will be free to pursue their interests in relation to those
Business Solutions independently.
5.2 Should the relationship of the parties be terminated for any reason then:
5.2.1 Any existing industry agreements which have been entered into
pursuant to clause 4.2 shall continue in force for their full term
without any alteration to their terms and conditions except as
mutually agreed by the parties, and
5.2.2 The parties will negotiate in good faith their respective rights
in relation to any Business Solutions or potential Business
Solutions (other than those already covered by an existing
industry agreement) into which any party has provided inputs with
the purpose of resolving an equitable basis upon which to
recognise the value of those inputs and the apportionment of any
future benefits which may arise. Until agreement has been reached
any such rights shall be deemed to be jointly held by the parties
and no party shall be entitled to utilise those rights without the
consent of the others.
5.3 Nothing contained in this Memorandum shall be deemed or construed to
constitute any party a partner, agent or representative of any of the
other parties or to create any trust or commerical partnership.
5.4 No party shall have the authority to act for or incur any obligation on
behalf of any other party except as specifically provided for in writing.
6 Confidentiality
6.1 No party shall without the prior written consent of the others disclose
or permit to be disclosed to any third party any Confidential Information
relating to this Memorandum or the proposed business opportunities or
technology which is the subject of this Memorandum.
EXECUTED by the parties.
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SIGNED for and on behalf of )
XXXXXXX (N.Z.) LIMITED by ) /s/ [ILLEGIBLE]
-----------------------------------
SIGNED for and on behalf of )
NEW ZEALAND ONLINE )
LIMITED by ) /s/ X X XXXXX
-----------------------------------
SIGNED by )
XXXXXXX XXXXX XXXXX )
) /s/ X X XXXXX
-----------------------------------
X X Xxxxx
(C) Lowndes Jordan
Auckland 1996
[INIT]
E-221
================================================================================
STORICAL COMPANY EXTRACT 8/12/1997 14:58 PAGE: 1
8 712 099 PARRILOTT PTY. LIMITED
================================================================================
Section 1274B
This extract has been prepared by the Australian Securities Commission from
information it obtained, by using a data [ILLEGIBLE], from the national
database. If you believe that this extract contains any error or omission please
advise the A.S.C. promptly.
The information Division of the Australian Securities Commission is certified
under the Australian Quality Standard AS 3901 International Standard ISO 9001).
-----------------------------COMPANY IDENTIFICATION-----------------------------
Docimage No
--------------
Australian Company Number 078 712 099
Current Company Name PARRILOTT PTY. LIMITED
Incorporated in NEW SOUTH WALES
Registration Date 28/05/1997
Principal Activity SHELF COMPANY
-----------------------------CURRENT COMPANY DETAILS----------------------------
Period from 28/05/1997
Name PARRILOTT PTY. LIMITED
Name Start 28/05/1997
Type AUSTRALIAN PROPRIETARY COMPANY 012 701 791
Status REGISTERED
Class LIMITED BY SHARES
Subclass PROPRIETARY COMPANY
--------------------------------COMPANY ADDRESSES-------------------------------
Type CURRENT REGISTERED OFFICE 011 744 791
Start Date 09/06/1997
Address LVL 00 00 XXXXXX XX XXXXXX XXX 0000
Type PREVIOUS REGISTERED OPFFICE 012 701 791
Start Date 28/05/1997 To 08/16/1997
Address GROUND FL 00-00 XXXXXXXXX XX XXXXXXX XXX XXX 0000
-----------------------------COMPANY OFFICE HOLDERS-----------------------------
[ILLEGIBLE]: A date or address shown as UNKNOWN has not been updated since the
ASC took over the records in 1991. For details, order the appropriate historical
state or territory documents, available in microfiche or paper format.
Role CURRENT DIRECTOR 012 239 264
Appointed 29/15/1997
Name XXXXXXX XXXXX XXXXX
Born 07/16/1948 AUCKLAND NEW ZEALAND
Address 37 FERRY PDE HERALD ISLAND NEW ZEALAND
Role CURRENT DIRECTOR 000-000 000
Appointed 29/05/1997
Name XXXXXXX XXXXXXX XXXXXXX
Born 15/01/1956 SYDNEY NSW
Address 00 XXXX XX XXXXXXXX XXX 0000
Role PREVIOUS DIRECTOR 011 754 418
Appointed 28/15/1997 Ceased 29/05/1997
/s/ X X XXXXX
E-222
================================================================================
STORICAL COMPANY EXTRACT 8/12/1997 14:58 PAGE: 2
8 712 099 PARRILOTT PTY. LIMITED
================================================================================
Docimage No
--------------
Name XXXX XXXXXXXXX XXXXXXXXX
Born 27/02/1948 HOBART TAS
Address GROUND FL 0 0-00 XXXXXXXXX XX XXXXXXX XXX XXX 0000
Role CURRENT SECRETARY 012 239264
Appointed 29/05/1997
Name XXXXXXX XXXXX XXXXX.
Born 07/06/1948 AUCKLAND NEW ZEALAND
Address 37 FERRY PDE HERALD ISLAND NEW ZEALAND
Role CURRENT SECRETARY 012 239 264
Appointed 29/05/1997
Name XXXXXXX XXXXXXX XXXXXXX
Born 15/O1/1956 SYDNEY NSW
Address 00 XXXX XX XXXXXXXX XXX 0000
Role PREVIOUS SECRETARY 011 754 418
Appointed 28/05/1997 Ceased 29/05/1997
Name XXXX XXXXXXXXX XXXXXXXXX
Born 27/02/1948 HOBART TAS
Address GROUND FL 0 0-00 XXXXXXXXX XX XXXXXXX XXX XXX 0000
----------------------------------SHARE DETAILS---------------------------------
Share details are not provided if;
a) The company is not limited by shares: or
b) The company has been registered less than 18 months and the first Annual
Return has not been lodged. Note that other documents pertaining in Share
Structure may be ordered via DOCIMAGE.
-------------------------------REGISTERED CHARGES-------------------------------
There are no current charges recorded in the ASC's Australian Register of
Charges for this corporation.
NOTES:
* This extract may not contain all charges registered prior to the start of
the Corporations Law. Please check STATE/TERRITORY records held by the
ASC.
* This extract may not contain provisional charges which lapsed prior to
1991.
* [ILLEGIBLE] details of provisional charges deleted after 1991, order the
relevant DOCIMAGE documents. These details will NOT appear in a Charges
Extract.
* For details on the amounts and property relating to charges, or details
of documents for Satisfactions, Assignments or Changes, print a CHARGES
EXTRACT.
-----------------------------ASC DOCUMENTS RECEIVED-----------------------------
NOTES:
* Documents already listed under Registered Charges are not repeated here.
* Data from Documents with no Date Processed are not included in this
Extract.
* Documents with "***" pages have not yet been imaged and are not available
via DOCIMAGE. Imaging takes approximately 2 weeks from date of lodgement.
* The ASC will provide a maximum of 150 documents.
* The document list for a current extract will also be limited unless you
requested ALL documents for this extract.
Document List period requested - All documents
[INIT]
E-223
CERTIFICATE OF NON-REVOCATION
I XXXXXX XXXXX XXXXXXX of Auckland, in New Zealand, Solicitor HEREBY CERTIFY
that:
1. BY Xxxx dated the 21st day of December 1997 XXXXXXXX XXXX XXXX appointed
me his Attorney.
2. AT the date hereof I have not received any notice or information of the
revocation of that appointment by the death of the said XXXXXXXX XXXX
XXXX or otherwise.
DATED at Auckland this 24th of December 1997
/s/ [ILLEGIBLE]
-----------------
E-224
"A"
This is the copy charge created by Brockes Investments (NZ) Ltd dated 24
December 1997 referred to in the attached Certificate of Tax Executor
/s/ [ILLEGIBLE]
---------------
[ILLEGIBLE]
Secretary
24/12/97
--------------------------------------------------------------------------------
DATED the 24 day of December 1997
---------------------------------
XXXXXXX INVESTMENTS (NZ) LIMITED
("Mortgagor")
XXXXXXXX XXXX XXXX
and
M & H TRUSTEE SERVICES LIMITED
("Mortgagee")
---------------------------------
ALL OBLIGATIONS MORTGAGE
OVER ALL THE SHARES IN
NEW ZEALAND ONLINE LIMITED
---------------------------------
---------------------------------
XXXXXX XXXXXXX XXXXXXX
SOLICITORS
AUKLAND
--------------------------------------------------------------------------------
E-225
2
Contents
Page No
Recitals
1. Interpretation 3
2. Security 7
3. Payment 8
4. Covenants 9
5. Mortgagee may remedy breach 11
6. Representations and warranties 11
7. Enforcement events 12
8. Mortgagee's powers on enforcement of security 14
9. Protection of persons dealing with mortgagee 15
10. Power of attorney 15
11. Dividends and voting 16
12. Set-Off 17
13. Notices 17
14. Costs and expenses 18
15. Partial invalidity 19
16. Xxxxxxx and remedies 19
17. Release 19
18. No merger 19
19. Consideration 19
20. Certificates, approval and consents 20
21. Governing law and jurisdiction 20
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4
(a) New Zealand OnLine Limited;
(b) Xxxxxxxx Xxxx Xxxx;
(c) M&J-I Trustee Services Limited;
(d) Xxxxxxx Xxxxx Xxxxx.
"Rights" means:
(a) bonus shares, debentures or other securities;
(b) options or rights to take up shares, debentures or other
securities;
(c) dividends, distributions, or returns of capital or other moneys;
and
(d) other rights, moneys or securities of any nature (including,
without limitation, rights moneys or securities arising from
consolidation or subdivision of capital, redemption or conversion
of shares, reduction of capital, liquidation or a scheme
arrangement),
at any time (whether now or in the future) attributable to or arising
from the Shares.
"Secured Moneys" means all moneys (if any) (of whatever nature) which the
Mortgagor (whether alone or with any other person) presently is, or at
any time prior to the Mortgagor fulfilling its obligations under the
Relevant Clauses of the Share Sale Agreement becomes, actually or
contingently liable to pay to the Mortgagee (whether alone or with any
other person) under this Deed and in any other Relevant Document.
"Secured Obligations" means all obligations of the Mortgagor (whether
present or future) contained or implied in this Deed, and in any other
Relevant Document.
"Share Sale Agreement" means the Agreement for Sale and Purchase of
Shares dated even date with this Deed made between the Mortgagee as
Vendor and the Mortgagor as Purchaser in connection with all the Shares
in the Company;
"Shares" means the 1,200 Ordinary Shares in the Company divided into
three classes consisting of 600 A Shares, 300 B Shares and 300 C Shares.
"Transfer" means, with respect to the Shares or Rights, a transfer (or
such number of separate transfers as the Mortgagee may require) of the
shares or Rights duly executed by the Mortgagor (or in the case of any
share legally owned by any trustee for the Mortgagor, duly executed by
that person) with the name of the transferee, date and consideration left
blank, but otherwise, if appropriate, in proper from for registration by
the Company.
1.2 References: Except to the extent that the context otherwise requires, any
reference it this deed to:
E-227
7
(b) Unless the context otherwise requires:
(i) words denoting the singular number also include the plural
and vice versa and words denoting any gender include all
genders; and
(ii) words denoting individuals include companies and other
corporations and vice versa.
(c) References to any legislation or to any provision of any
legislation shall be deemed to be references to that legislation
or provision as amended, re-enacted or substituted from time to
time and, unless otherwise stated, to New Zealand legislation,
and, unless the context otherwise requires, shall also include any
statutory instruments issued under any such legislation or
provision.
(d) References to any document (however described), including any
Relevant Document, shall include references to that document as
modified, novated, supplemented, varied or replaced from time to
time.
(e) Anything which may be done at any time may also be done from time
to time.
2. SECURITY
2.1 Mortgage over Shares: The Mortgagor hereby assigns to the Mortgagee by
way of mortgage all of the Mortgagor's right, title and interest (present
and future, legal and equitable) in the Shares, and the Rights
attributable to or arising from the Shares, as security for the
performance and observance by the Mortgagor of all the Secured
Obligations and for the payment of the Secured Moneys.
2.2 Other Securities: The Secured Moneys shall include all moneys owing by
the Mortgagor to the Mortgagee notwithstanding that those moneys or any
part thereof may be expressed to be secured by or charged against any
other security held by the Mortgagee and notwithstanding that any other
arrangement or agreement may not express any moneys referred to therein
as being intended to be secured by this deed. Nothing contained in this
deed shall discharge, xxxxx or prejudice any other security at any time
held by the Mortgagee for payment of any part of the Secured Moneys.
2.3 Further Assurances: The Mortgagor shall execute and deliver to the
Mortgagee all such transfers, assignments, securities, instruments, and
other deeds or documents, and shall do all things, as may be necessary or
as the Mortgagee may require to:
(a) perfect the Mortgagor's title to the Mortgaged Property or any
part thereof; or
(b) perfect the security intended to be created by this deed; or
(c) transfer to or vest in the Mortgagee (or any purchaser from the
Mortgagee) the Mortgaged Property or any part thereof or
(d) facilitate the realization of the Mortgaged Property or any part
thereof; or
E-228
8
(e) exercise all or any of the rights, powers and remedies conferred
on the Mortgagee; or
(f) secure to the Mortgagee the full benefit of the provisions of this
deed.
4 Completion of Documents: The Mortgagee may fill in any blanks in this
deed or any Transfer and complete in favour of the Mortgagee, or anyone
purchasing under the powers given by this deed, any Transfer or any other
document executed by or on behalf of the Mortgagor.
5 Notice to Company: The Mortgagee may at any time give notice to the
Company of the existence of this deed and of the mortgages created by
this deed.
6 Mortgagee May Register: The Mortgagee may at any time, whether before or
after the occurrence of an Enforcement Event, and without prejudice to
any of its other rights, powers and remedies under this deed, cause
itself to be registered as the holder of any of the Shares, or Rights
attributable to or arising from any Shares, in order to hold those Shares
or Rights as mortgagee in terms of this deed, and for that purpose may
present any Transfer to the Company for registration
7 Section 80A(2) Property Law Act 1952: For the purposes of section 80A(2)
of the Property Law Act 1952 only, and without prejudice to the
restriction contained in clause 4.1(b), the maximum amount up to which
the Secured Moneys shall rank in priority to any subsequent security
given over any part of the Mortgaged Property is, subject only to the
overriding provisions of any deed of priority hereafter executed by the
Mortgagee in respect of a particular subsequent securityholder, the
Priority Amount.
PAYMENT
1 Payment of Secured Moneys: The Mortgagor shall duly and punctually pay
the Secured Moneys to the Mortgagee in the manner and at the times agreed
upon between the Mortgagor and the Mortgagee or, failing agreement, upon
demand.
2 Time for Payment: Except to the extent otherwise provided in any relevant
Agreement, each part of the Secured Moneys shall be paid to the Mortgagee
no later than midday on its due date for payment or, where that date is
not a day on which registered banks are open for business in the place
for payment (a "bank business day"), on the immediately preceding bank
business day. Any payment received later than midday on any day shall be
deemed to have been made on the next following bank business day.
3 Payments to be Free and Clear: Each part of the Secured Moneys shall be
paid:
(a) free and clear of any restriction or condition;
E-229
10
the business and affairs of the Company, and whenever requested
supply and make available so far as the same are known to the
Mortgagor, or, so far as it is within the power of the Mortgagor,
arrange for the Company to supply and make available, to that
chartered accountant all information required by that chartered
accountant relating to the business and affairs of the Company;
(k) Registration of Transfers: if the Mortgagee presents to the
Company for registration any transfer of any Mortgaged Property,
take all steps available to the Mortgagor to procure registration
of that transfer by the Company; and
(l) Liens: not permit any lien or similar right in favour of the
Company to arise or exist over any Mortgaged Property.
4.2 Accounts and Information for Mortgagee: The Mortgagor shall:
(a) Notice of Proceedings: promptly give notice to the Mortgagee of
the service of any notice adversely affecting the Mortgaged
Property or any material part thereof, or the commencement of any
proceedings adversely affecting the Mortgaged Property or any
material part thereof;
(b) Details of Rights: promptly upon becoming aware of the existence
of any Rights attributable to or arising from any of the Shares
(other than shares which are for the time being listed on the New
Zealand Stock Exchange), provide to the Mortgagee full details of
those Rights;
(c) Notices: deliver to the Mortgagee a copy of any notice of meeting
or other notice sent to shareholders of the Company, and a copy of
any resolution passed by the shareholders of the Company;
(d) Notify Enforcement Events:
(i) promptly upon becoming aware of the same notify the
Mortgagee of the occurrence of any event which is, or which
with the passing of time or the giving of notice or both
would become, and Enforcement Event;
(ii) at any time at the request of the Mortgagee promptly
provide to the Mortgagee a certificate signed by the
Mortgagor that, except as previously notified in writing to
the Mortgagee, no such event has occurred.
4.3 Mortgagee May Retain Certificates: The Mortgagee shall be entitled to
retain and hold all share certificates, documents of title and Transfers
deposited with the Mortgagee in accordance with this deed until such time
as the Mortgagee execute is obliged by this deed to deliver to the
Mortgagor a final release of this deed.
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11
5. MORTGAGEE MAY REMEDY BREACH
5.1 Mortgagee May Remedy Breach: Whenever the Mortgagor fails to observe or
perform any of the Mortgagor's obligations under this deed, the
Mortgagee, without prejudice to its other rights, powers and remedies,
shall be entitled, but not obliged, to pay all moneys and do all things
which it deems necessary or desirable to remedy any such default or
otherwise protect the security created by this deed.
5.2 Reimbursement of Moneys Expended: The Mortgagor shall pay to the
Mortgagee upon demand any money expended by the Mortgagee under clause
5.1 (including all legal costs as between solicitor and client and goods
and services and similar taxes thereon).
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties: The Mortgagor represents and warrants
that:
(a) Valid Obligations: this deed and each other Relevant Document to
which the Mortgagor is expressed to be a party constitute the
legal, valid and binding obligations of the Mortgagor, enforceable
in accordance with their respective terms;
(b) Effective Mortgage: the security created by this deed is an
effective first ranking mortgage over the Mortgaged property;
(c) Title: subject to the Mortgagee having provided such to the
Mortgagor on completion of the Mortgagor's purchase of the Shares
from the Mortgagee, under the Shares Sale Agreement the Mortgagor
is the beneficial owner of, and has good title to, the Shares, and
the Shares are free of all securities;
(d) No Laws Violated: neither the execution and delivery of this deed
or any other Relevant Document, nor the exercise of any right or
the performance or observance of any obligation under any of them,
nor any transaction contemplated thereby, will:
(i) violate or contravene any law to which the Mortgagor is
subject; or
(ii) conflict with, or result in the breach of, any agreement,
document, arrangement, obligation or duty to which the
Mortgagor is expressed to be a party or by which the
Mortgagor or any of the Mortgagor's assets may be bound and
which is not within the Mortgagee's knowledge at the date
of execution of this Deed; or
(iii) create, or result in the creation or imposition of, any
security on any part of the Mortgagor's assets other than
the security created by this deed or any other Relevant
Document; or
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12
(iv) result in the acceleration of any of the Mortgagor's
indebtedness, or anything which constitutes (or which, with
the passing of time or the giving of notice or both, would
constitute) an event of default, cancellation event,
prepayment event or similar event (whatever called) under
any agreement relating to its indebtedness;
(e) Authorisations:
(i) all internal corporate authorisations required by the
Mortgagor in connection with the entry into, execution or
performance by the Mortgagor and the validity and
enforceability of this Deed and each other Relevant
Document to which the Mortgagor is expressed to be a party,
and the transactions contemplated by these documents have
been obtained or effected and are in full force and effect
and there are no qualifications or limitations affecting
those authorisations which have not been notified by the
Mortgagee
(ii) no revocation or modification of or proceeding respecting,
any such authorisation has been made or threatened or is
pending or current;
(iii) there has been no default in compliance with any such
authorisation.
6.2 Repetition: The representations and warranties contained in clause 6.1
(other than the representation and warranty contained in clause 6.1(b)
shall be deemed to be repeated by the Mortgagor on the first day of each
month during the term of this deed by reference to the facts and
circumstances existing on each such date.
7. ENFORCEMENT EVENTS
7.1 The security created by this deed shall become enforceable if any of the
following events occurs:
(a) Non-Payment the Mortgagor fails to pay any part of the Secured
moneys on the due date for payment thereof or within 2 business
days of its due date where non payment on its due date has arisen
solely by reason of a technical, computer or similar error outside
the control of the Mortgagor; or
(b) Breach of clauses 4.1(a), 4.1(b) or 4.1(c) the Mortgagor commits
any breach of the provisions of clauses 4.1(a), 4.1(b) or 4.1(c);
or
(c) Other Breach: the Mortgagor or any Relevant Person commits any
material breach of, or omits to observe any covenant under, this
Deed (other than those referred to in clauses 7.1(a) and 7.1(b))
or any other Relevant Document and the Mortgagor has not remedied
that breach within 30 days of its receipt of a written notice from
the Mortgagee requiring that breach to be remedied; or
(d) Cessation of Business: any Relevant Person ceases or threatens to
cease to carry on all or substantially all of its business or
operations (except for the
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13
purpose of and followed by an amalgamation or solvent
reconstruction on terms previously approved in writing by the
Mortgagee); or
(e) Dissolution: an application or an order is made, or a resolution
is passed or proposed, for the dissolution of the Mortgagor or any
Relevant Person (except for the purpose of and followed by an
amalgamation or solvent reconstruction on terms previously
approved in writing by the Mortgagee); or
(f) Receiver, etc. an encumbrancer takes possession or a liquidator,
provisional liquidator, trustee, receiver, receiver and manager,
inspector appointed under any companies or securities legislation,
or similar officer, is appointed in respect of any Relevant Person
or the whole or any part of its assets, or application is made for
the appointment of any of the officials referred to in this
clause; or
(g) Corporations (Investigation and Management) Act 1989: any step is
taken to appoint or with a view to appointing a statutory manager
(including the making of any recommendation in that regard by the
Securities Commission) under the Corporations (Investigation and
Management) Act 1989 in respect of any Relevant Person, or any
Relevant Person, or any associated person (as that term is defined
in that Act) of any Relevant Person is declared at risk pursuant
to the provisions of that Act.
(h) Distress or Judgment: a distress, attachment or other execution is
levied or enforced upon or commenced against any of the assets of
the Mortgagor or any Relevant Person and is not discharged or
stayed with 14 days, or a judgment is obtained against the
Mortgagor or any Relevant Person and is not satisfied, stayed or
discharged within 14 days; or
(i) Insolvency the Mortgagor or any Relevant Person is unable to pay
its debts when due, or is deemed or presumed unable to pay its
debts under any law, xx enters into dealings with any of its
creditors with a view to avoiding or in expectation of insolvency,
or makes a general assignment or an arrangement of composition
with or for the benefit of any of its creditors, or stops or
threatens to stop payments generally.
(j) Material Adverse Effect: any other event or series of events,
whether related or not, occurs, or circumstances arise or exist,
which have a material adverse effect on the ability of the
Mortgagor or any Relevant Person to materially comply with all or
any of its obligations under the Relevant Documents; or
(k) Invalidity of Relevant Documents
(i) any material provision of any Relevant Document:
(aa) ceases to have effect in whole or in part, otherwise
than ir accordance with its terms or as permitted by
the Relevant Documents, or by performance; or
E-233
14
(bb) is or becomes void, voidable, illegal, invalid or
unenforceable (other than by reason only of a party
waiving any of its rights), or of limited force and
effect, or the performance of any such provision
becomes illegal; or
(ii) the Mortgagor or any Relevant Person or any person on its
behalf alleges or claims that any event described in
sub-paragraph (i) has occurred; or
(l) Change of Control: there occurs any change in the ownership of the
shares in Xxxxxxx Investments (NZ) Limited; or
(m) Steps Relating to Company: a resolution is passed or proposed or
any other step of any nature is taken:
(i) to alter the Constitution of the Company, or to alter the
rights, privileges or conditions attaching to any Mortgaged
Property, in such a manner as might in the reasonable
opinion of the Mortgagee detrimentally affect the interests
of the Mortgagee; or
(ii) to increase or reduce the capital of the Company; or
(iii) to obtain the approval of shareholders of the Company to a
disposal of assets by the Company if that approval is
required pursuant to the Constitution of the Company, or
the listing requirements of any stock exchange, or all
relevant laws; or
(iv) to sanction any compromise or arrangement between the
Company and its members or creditors; or
(v) to compulsorily acquire any shares in the Company; or
(n) Abnormal Distribution: the Company declares, pays or makes any
dividend or other distribution to its shareholders if, in the
opinion of the Mortgagee, an effect of that dividend or other
distribution is or will be to materially and adversely affect the
value of the Shares.
8. MORTGAGEE'S POWERS ON ENFORCEMENT OF SECURITY
8.1 Powers: At any time after the occurrence of an Enforcement Event the
Mortgagee may (without it being necessary to appoint any receiver under
this deed or give any prior notice to the Mortgagor, and without
prejudice to any other rights, powers or remedies it may have under this
deed or by law):
(a) declare the whole of the Secured Moneys to be due and payable,
whereupon they shall immediately become due and payable; and
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15
(b) sell or dispose of the Mortgaged Property or any part thereof free
from adverse interests by public auction or private contract on
such reasonable terms as the Mortgagee thinks fits but for not
less than the audited net asset value (to be certified by the
Mortgagee's Accountants in accordance with New Zealand generally
accepted accounting principles) of the Company at the time of sale
and the Mortgagee may buy in or rescind or vary any contract for
sale and may resell.
8.2 Enforcement by Mortgagee: The power of sale and other rights, powers and
remedies conferred upon the Mortgagee by this deed or by law may be
exercised or enforced by the Mortgagee, or by any authorised person on
behalf of the Mortgagee.
9. PROTECTION OF PERSONS DEALING WITH MORTGAGEE
9.1 No purchaser or other person dealing with the Mortgagee, or with any
agent or attorney of the Mortgagee, shall be concerned to enquire whether
the security created by this deed has become enforceable, or whether the
powers which the Mortgagee or that agent or attorney is purporting to
exercise have become exercisable, or as to the necessity for or the
expediency of the stipulations or conditions subject to which any sale,
disposal, calling in, collection or conversion of any moneys or assets,
or to see to the application of any money paid to the Mortgagee or that
agent or attorney.
10. POWER OF ATTORNEY
10.1 Attorney: For the purpose of enabling the Mortgagee to obtain the full
benefit of this deed the Mortgagor hereby irrevocably appoints the
Mortgagee, and any assignee of the Mortgagee's rights under this deed:
(a) to be the attorney of the Mortgagor, at any time after the
occurrence of an Enforcement Event, to do anything which the
Mortgagor agrees to do under the provisions of this deed or which
in the opinion of the Mortgagee or the attorney is reasonably
necessary or expedient to give effect to any right, power or
remedy conferred upon the Mortgagee by this deed or by law or
otherwise;
(b) to be the attorney of the Mortgagor, at any time after the
occurrence of an Enforcement Event:
(i) to receive from the Company dividends, bonuses,
distributions, and other moneys, which may at any time be
payable or paid in respect of any Mortgaged Property;
(ii) to sign any transfer of, and to transfer, any Mortgaged
Property to any persons either on a sale thereof or to hold
the same for the Mortgagee or otherwise;
(iii) to appoint any person nominated by the Mortgagee as the
Mortgagor's proxy or other representative of the Mortgagor
with power to vote at any meeting of the Company;
E-235
16
(iv) to attend and vote at any meeting of the Company;
(v) to sign any resolution, entry or memorandum pursuant to
section 362 of the Companies Act 1955 or section 122 of the
Companies Act 1993, in such manner and for such purpose as
the Mortgagee may from time to time direct;
(vi) to commence, prosecute, settle and compromise actions or
proceedings relating to any Mortgaged property; and
(vii) to exercise any other rights, powers or remedies which the
Mortgagor may have as the holder or owner of the Shares or
as the owner or beneficiary of any Rights mortgaged under
this deed.
10.2 Authority to Company: The production of this deed by the Mortgagee shall
be sufficient authority for the Company to recognise the Mortgagee, or
any assignee as entitled to exercise all of the powers referred to in
clause 10.1, and as between the Mortgagee, or any assignee on the one
hand, and the Company on the other hand, the Company shall not be bound
or entitled to enquire if any Enforcement Event has occurred or if any of
the powers referred to in clause 10.1 have become exercisable.
10.3 Delegation and Conflict: Any attorney appointed pursuant to clause 10.1
may:
(a) delegate its powers (including this power of delegation) to any
person for any period, and revoke a delegation; and
(b) exercise or concur in exercising its powers even if the attorney
has a conflict of duty in exercising those powers or has a direct
or personal interest in the means or result of that exercise of
powers.
10.4 Ratification: The Mortgagor hereby ratifies anything lawfully done by an
attorney appointed pursuant to clause 10.1 or any delegate in accordance
with this clause 10.
11. DIVIDENDS AND VOTING
11.1 Mortgagor Entitled: Until an Enforcement Event occurs and when an
Enforcement Event ceases or is remedied to the satisfaction of the
Mortgagee, the Mortgagor shall be entitled:
(a) to receive all dividends paid in respect of the Shares; and
(b) to exercise all rights of voting in respect of the Shares,
and, if the Mortgagee is registered as holder of the Shares the Mortgagee
shall, until an Enforcement Event occurs, account to the Mortgagor for
dividends received in respect of the Shares, and at the request and
expense of the Mortgagor execute a form of proxy in a form acceptable to
the Mortgagee to enable the Mortgagor or the Mortgagor's nominee to vote
at meetings of the Company. The Mortgagee shall,
E-236
17
without prejudice to its other rights, powers and remedies, be entitled
to revoke any such proxy forthwith upon the occurrence of an Enforcement
Event.
11.2 Liability of Mortgagee: If the Mortgagee is registered as the holder of
the Shares, the Mortgagee shall not unless it sees fit be obliged to
enforce payment of any dividends or other payments in respect of those
shares, to vote at any meeting of shareholders of the Company or any
class thereof, or to take any other steps which the holder of the Shares
may be entitled to tale, and the Mortgagee shall not be under any
liability whatsoever to the Mortgagor by reason of the Mortgagee having
failed to do, or having done, any of those things.
12. SET-OFF
12.1 The Mortgagor authorises the Mortgagee if an Enforcement Event is
subsisting to apply (without any prior notice or demand) any moneys then
due and payable by the Mortgagee to the Mortgagor in or towards
satisfaction of the Secured Moneys. For the purposes of this clause the
Mortgagee shall not be obliged to exercise any of its rights under this
clause, which shall be without prejudice and in addition to any other
rights under the Relevant Documents and any right to set-off combination
of accounts, lien or other right to which it is at any time otherwise
entitled (whether by law, contract or otherwise).
13. NOTICES
13.1 In Writing: Each notice or other communication to be given or made to
either party under this deed shall:
(a) Writing: be given or made in writing by facsimile or letter and be
signed by the sender, or in the case of the Mortgagee, by an
authorised person or the sender;
(b) Address: be given or made to that party at the address or
facsimile number, and (in the case of the Mortgagee) marked for
the attention of the person (if any), from time to time designated
by the Mortgagee to the Mortgagor for the purposes of this deed;
and
(c) Deemed Delivery: not be effective until received by that party,
and any such communication or notice shall be deemed to be
received by that party:
(i) (if given or made by letter) when left at the address of
that party or 5 working days (in the place of intended
receipt) after being put in the post (by airmail if to
another count), postage prepaid, and addressed to that
party at that address; or
(ii) (if given or made by facsimile) upon production of a
transmission report by the machine from which the facsimile
was sent which indicates that the facsimile was sent in its
entirety to the facsimile number of the recipient,
E-237
18
provided that any notice or communication received or
deemed received after 5pm on a working day in the place to
which it is sent, or on a day which is not a working day in
that place, shall be deemed not to have been received until
the next working day in that place.
13.2 Initial Address and Numbers: The initial facsimile number, address and
person (if any) so designated by each party, are set out below:
(a) The Mortgagor
Xxxxxxx Investments (NZ) Limited
0 Xxxx Xxxxxx
Xxxx Xxxx
X0 Xxx 00000
Xxxxxxxxx
Xxxxxxxx
Xxx Xxxxxxx
Facsimile: (00) 000 0000
Attention: The Chief Executive Officer
(b) The Mortgagee
Xxxxxxxx Xxxx Xxxx and M & H Trustee Services Limited
C/- Xxxxxx Xxxxxxx Harford
Solicitors
Level 5
Xxxxxxx Xxxxxx Building
Cnr Kent and Crowhurst Streets
Newmarket
P 0 Box 9892
Auckland
Facsimile: (00) 000 0000
Attention: Xxxxxx Xxxxxxx
14. COSTS AND EXPENSES
14.1 Costs and Expenses: The Mortgagor shall pay to the Mortgagee upon demand
all reasonable costs and expenses on a full indemnity basis (including
reasonable legal fees and goods and services and similar taxes thereon)
incurred by the Mortgagee in connection with:
(a) the successful enforcement of, any rights under this deed, or in
successfully recovering the Secured Moneys; and
E-238
20
20. CERTIFICATES, APPROVAL AND CONSENTS
20.1 Certificate: The certificate of the Mortgagee as to any amount or fact
which might reasonably be expected to be within the Mortgagee's knowledge
shall be prima facie evidence of that amount or fact.
20.2 Consents: The Mortgagee may give or withhold an approval or consent,
conditionally or unconditionally, and at the discretion of the Mortgagee,
but not unreasonably.
21. GOVERNING LAW AND JURISDICTION
21.1 This deed shall be governed by and construed in accordance with the laws
of New Zealand, and the parties hereby submit to the non-exclusive
jurisdiction of the Courts of New Zealand.
EXECUTION AS A DEED
SIGNED by XXXXXXX INVESTMENTS (NZ) LIMITED
by its two directors
/s/ XXXXXXX XXXX XXXXXXX
-----------------------------
Xxxxxxx Xxxx Xxxxxxx
/s/ XXXXXXX XXXXX XXXXXXX
-----------------------------
Xxxxxxx Xxxxx Xxxxxxx
E-239
2) Fixed Assets
Refer attached schedule.
The depreciation rate for two major items of plant, the Juke Box and the
Drum Scanner have been changed from the IRD rates of 40% to 15%. This was
done to reflect the projected ecomonic and technological life of the
items as advised by the directors.
[INIT]
E-240
AGREEMENT FOR SALE
AND PURCHASE OF SHARES
Parties
TILE SHAREHOLDERS OF NEW ZEALAND ONLINE
LIMITED
X X XXXXX
XXXXXXX INVESTMENTS (N.Z.) LIMITED
XXXXXXX INVESTMENTS LIMITED
Relating to New Zealand Online Limited
E-241
NZ ONLINE LIMITED
Depreciation Schedule for the Period Ended 30 September 1997
deprec.
proceeds value Deprec. ccum. deprec.
on 1 Apr. rate depre value
p'chs. Cost disposal 1997 d.v. 30-Sep-97 30-Sep-97
-----------------------------------------------------------------------------------------
FURNITURE
Mc Greals Aug-96 403 355 18.00 32 80 323
Blue star Sep-96 226 202 18.00 18 42 184
Hawkes Nov-96 436 403 18.00 36 69 367
Blue star Jan-97 637 608 18.00 55 83 554
additions:
4 drawer filing cabinets *2 Apr-97 600 0 12.00 36 36 564
4 drawer criterion unit Apr-97 300 0 12.00 18 18 282
criteron desk & return Apr-97 700 0 12.00 42 42 658
Damba chairs *5 Apr-97 1000 0 15.00 75 75 925
Graphic One chair Apr-97 200 0 15.00 15 15 185
Office chair Apr-97 200 0 15.00 15 15 185
Bookshelf - large Apr-97 50 0 15.00 4 4 46
Bookcase white Apr-97 50 0 15.00 4 4 46
Bluestar desks *5 Apr-97 2000 0 12.00 120 120 1880
Black leather desk Apr-97 200 0 12.00 12 12 188
bookshelves - unpainted *5 Apr-97 200 0 15.00 15 15 185
grey drawer cabinet unit Apr-97 500 0 12.00 30 30 470
whiteboards *3 Apr-97 200 0 15.00 15 15 185
noticeboard Apr-97 50 0 15.00 4 4 46
rubbish bins *5 Apr-97 50 0 15.00 4 4 46
dexion shelving units *2 Apr-97 1000 0 15.00 75 75 925
metal shelving units *3 Apr-97 500 0 15.00 23 23 278
wooden shelf unit Apr-97 10 0 15.00 1 1 9
wooden work bench Apr-97 150 0 15.00 11 11 139
TV arm extension Apr-97 200 0 15.00 15 15 185
Miscellaneous office equipment Apr-97 700 0 15.00 53 53 648
text books Apr-97 500 0 9.50 24 24 476
filing cabinet May-97 813 0 15.00 61 61 752
Sundry Furniture Jun-97 996 0 15.00 75 75 922
-----------------------------------------------------------------------------------
12671 1569 409 886 1019 11652
-----------------------------------------------------------------------------------
BUILDING FIT OUT
Paint/xxxxxxx - Xxxxxxxx Jul-96 2533 2316 11.40 132 349 2184
Partitions - Xxxxxxx Aug-96 14000 12656 14.40 911 2255 11745
Sundry - Hawker Aug-96 182 168 11.40 10 23 159
Wiring - Connector Aug-96 855 790 11.40 45 110 745
Electrics - Electrix Sep-96 2809 2622 11.40 149 336 2473
Windows - tinting Sep-96 890 831 11.40 47 107 783
Sundry - Xxxxx Oct-96 1849 1744 11.40 99 205 1644
Partitions - Brace Nov-96 447 420 14.40 30 57 590
Cables - Connector Nov-96 76 72 11.40 4 8 68
Blinds - Weathermaster Nov-96 414 394 11.40 22 42 372
Partitions - Xxxxxxx Feb-97 856 835 14.40 60 81 775
Cables - Connector Feb-97 102 100 11.40 6 8 94
additions:
-------- -------- --------------------------------
26013 22950 1317 3580 21433
-------- -------- --------------------------------
[INIT]
E-242
COMPUTER EQUIPMENT
Comtech Jul-96 635 406 48.00 98 326 309
Bus. Systems Aug-96 235 160 48.00 38 114 121
Origo Aug-96 861 585 48.00 141 416 445
Comtech Aug-96 70 48 48.00 11 34 36
Newtech Sep-96 360 259 48.00 62 163 197
Comtech Sep-96 270 194 48.00 47 122 148
Page one Sep-96 250 180 48.00 43 113 137
Bus. Systems Sep-96 2773 1997 48.00 479 1256 1517
Beta Comp. Sep-96 2501 1801 48.00 432 1132 1369
Beta Comp. Sep-96 40 29 48.00 7 18 22
Jukebox - Monaco Sep-96 25831 18598 15.00 1395 8628 17203
additions:
Pentium 200 Apr-97 8000 0 40.00 1600 1600 6400
Pentium 166 Apr-97 5000 0 40.00 1000 1000 4000
Acer Pentium 90 Apr-97 5000 0 40.00 1000 1000 4000
Data General Pentium 90 Apr-97 5000 0 40.00 1000 1000 4000
Data General 486 DX2 66 Apr-97 3000 0 40.00 600 600 2400
Advance 486 DX2 66 Apr-97 3000 0 40.00 600 600 2400
Advance 486 DX2 40 Apr-97 2000 0 40.00 400 400 1600
Solster H.D. Apr-97 500 0 40.00 100 100 400
Syquest 270Mb Apr-97 1000 0 40.00 200 200 800
Beta 486DX Apr-97 5000 0 40.00 1000 1000 4000
Modem dynalink 1414vc sn:129365 Apr-97 300 0 40.00 60 60 240
Modem dynalink 1414vc sn:114957 Apr-97 300 0 40.00 60 60 240
D-link de890tc Hub sn Apr-97 500 0 40.00 100 100 400
D-link de950 print se Apr-97 500 0 40.00 100 100 400
D-link 816TP 16 port Apr-97 1000 0 40.00 200 200 800
Acer 486DX266 sn:4921 Apr-97 3500 0 40.00 700 700 2800
Acer 486DX266 sn:fcci Apr-97 4500 0 40.00 900 900 3600
HP laserjet 4p sn:nlb Apr-97 1800 0 40.00 360 360 1440
HP laserjet 4plus sn: Apr-97 3000 0 40.00 600 600 2400
Beta 486 DX 33 sn:94t Apr-97 2000 0 40.00 400 400 1600
Advance 486DX66 sn:99 Apr-97 2000 0 40.00 400 400 1600
Advance 486DX66 sn:48 Apr-97 4000 0 40.00 800 800 3200
HP Scanjet 3C sn:vs00 Apr-97 1800 0 40.00 360 360 1440
Advance 486DX40 4Mb.s Apr-97 2000 0 40.00 400 400 1600
Advance 486DX40 4Mb s Apr-97 2000 0 40.00 400 400 1600
Advance 486DX2 66 4Mb Apr-97 2500 0 40.00 500 500 2000
Advance 486DX2 66 8Mb Apr-97 2500 0 40.00 500 500 2000
Advance 486DX40 4Mb.s Apr-97 2000 0 40.00 400 400 1600
Beta 386DX40 4Mb. Sn: Apr-97 2000 0 40.00 400 400 1600
DG 486SX33 4Mb. sn:48 Apr-97 2000 0 40.00 400 400 1600
DG 486SX2 66 8Mb. sn: Apr-97 3000 0 40.00 600 600 2400
386DX40 4Mb 120HD Apr-97 2000 0 40.00 400 400 1600
AST 485SX 8Mb. Laptop Apr-97 105000 0 40.00 2100 2100 8400
TRL 14" svga sn:hc002 Apr-97 350 0 40.00 70 70 280
Advance 14" svga sn:h Apr-97 350 0 40.00 70 70 280
DG 14" svga sn:m156LO Apr-97 350 0 40.00 70 70 280
DG 14" svga sn:m156LO Apr-97 350 0 40.00 70 70 280
Topfly 14" svga sn:40 Apr-97 350 0 40.00 70 70 280
Advance 14" svga sn:h Apr-97 350 0 40.00 70 70 280
Etc 14" svga sn:94100 Apr-97 350 0 40.00 70 70 280
Scan 12"amber sn:hc08 Apr-97 100 0 40.00 20 20 80
[INIT]
E-243
KGN 14"svga sn:cad135 Apr-97 350 0 40.00 70 70 280
Advance 14" svga sn:h Apr-97 350 0 40.00 70 70 280
KGN 14"svga sn:ks2838 Apr-97 350 0 40.00 70 70 280
KGN 14"svga sn:cad135 Apr-97 350 0 40.00 70 70 280
BMVDU sn:0194625 Apr-97 50 0 40.00 10 10 40
Taxan 12' mono sn:w71 Apr-97 50 0 40.00 10 10 40
Altos terminal sn:01Q Apr-97 500 0 40.00 100 100 400
Altos terminal sn:01Q Apr-97 500 0 40.00 100 100 400
Epson colour 720 DPI Apr-97 800 0 40.00 160 160 640
HP 540 deskjet printe Apr-97 400 0 40.00 80 80 320
HP 540 deskjet printe Apr-97 400 0 40.00 80 80 320
HP laserjet 4L printe Apr-97 800 0 40.00 160 160 640
Toshiba dot matrix 15 Apr-97 250 0 40.00 50 50 200
Citizen GSX140 printe Apr-97 100 0 40.00 20 20 80
Dianpon A4 scanner sn Apr-97 70000 0 40.00 5250 5250 64750
Sony CD ROM burner Apr-97 1800 0 40.00 360 360 1440
Wellfleet router sn:A Apr-97 5000 0 40.00 1000 1000 4000
Wellfleet router sn:A Apr-97 5000 0 40.00 1000 1000 4000
Philips 30P PABX phon Apr-97 3000 0 40.00 000 000 0000
Telephone hand sets Apr-97 500 0 40.00 000 000 000
Key phones * 2 Apr-97 1000 0 40.00 200 200 800
Data outlets/panel Apr-97 2000 0 40.00 400 400 1600
Kodak photo CD player Apr-97 1000 0 40.00 200 200 800
Kodak portable photoC Apr-97 1000 0 40.00 200 200 800
Microtek flatbed scan Apr-97 1500 0 40.00 300 300 1200
Toshiba video recorde Apr-97 200 0 40.00 40 40 160
Hitachi camcorder Apr-97 500 0 40.00 100 100 400
Miscellaneous softwar Apr-97 10000 0 40.00 2000 2000 8000
Miscellaneous cables, Apr-97 2000 0 40.00 400 400 1600
Scanner HP4C 1255 0 40.00 251 251 1004
GL620 Computer 5135 0 40.00 856 856 4279
Cheque 365 Aug-97 1174 40.00 78 78 1095
Cheque 394 Sep-97 815 40.00 27 27 788
Cheque 389 Sep-97 540 40.00 18 18 522
Haminex Digital Camera Sep-97 20208 40.00 674 674 19534
Sundry Equipment Sep-97 829 40.00 28 28 801
Hardware Sep-97 446 40.00 15 15 431
----------------------------------------------------------------------------------
269727 0 24257 3590 37049 46618 223109
-----------------------------------------------------------------------------------
MOTOR VECHICLE
1995 Toyota Corolla GL s/w Apr-97 9000 0 26.00 585 585 8415
disposals
-------- -------- --------------------------------
TOTAL FIXED ASSETS $316,411 $48,775 $40,037 $51,802 $264,609
-------- -------- --------------------------------
[INIT]
E-244
AGREEMENT dated 24th December 1997
PARTIES
1. XXXXXXXX XXXX XXXX of Whangarei, District Court Judge and M&H TRUSTEE
SERVICES LIMITED at Auckland (Vendors).
2. XXXXXXX XXXXX XXXXX of Auckland, Company Director (Xxxxx).
3. XXXXXXX INVESTMENTS (N.Z.) LIMITED at Auckland (Purchaser).
4. XXXXXXX INVESTMENTS LIMITED a company incorporated under the laws of
Alberta, Canada (BKI)
INTRODUCTION
A. The Vendors are the holders of the Shares together with all rights
attaching to the Shares.
B. The Vendors have agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendors all of the Shares for the
Consideration and upon the terms and conditions contained in this
Agreement which records the agreement of the parties made on 28 November
1997.
X. Xxxxx has agreed to guarantee the obligations of the Vendors under this
Agreement.
D. BKI has agreed to guarantee the obligations of the Purchaser under this
Agreement.
TERMS
1. Interpretation
1.1 Defined Terms: In this Agreement the following terms shall have the
meanings specified:
Accounting Discrepancies any discrepancies in accounting
practice revealed by the KPMG audit as
at the Last Accounting Date which are
not deemed by the New Zealand
Institute of Chartered Accountants to
be the accepted accounting practices.
Associated Person has the meaning given in section
0D7(l) of the Income Tax Act 1994.
Business Day a day (other than a Saturday or
Sunday) on which registered banks are
open for business in Auckland.
Business Records all books of account, Financial
Statements, 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 of the Company or pertaining
to its affairs.
[INIT] 2
E-245
Cashflow net income of the Company after tax
and before interest, as shown in the
audited financial statements as
verified by KPMG, adjusted for the
following add-backs:
(i) depreciation
(ii) depletion
(iii) deferred taxes
(iv) amortisation of goodwill
(v) amortisation of research and
development costs.
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 but
excluding claims of suppliers of goods
subject to retention of title
provisions supplied in the normal
course of business.
Company New Zealand Online Limited, a company
incorporated under the Companies Act
1993 under No. AK/816483 having its
registered office at Auckland and
having its capital divided into 600
fully paid up ordinary A shares (A
Shares), 300 fully paid up ordinary B
shares (B Shares) and 300 fully paid
up ordinary C shares (C Shares).
Completion Completion by the parties of the sale
and purchase of the Shares as provided
in clause 5.
Completion Date the actual date of Completion being 24
December 1997 or such later date as
the parties may agree in writing.
Consideration the sum of the $500,000 and the Earn
Out Sum subject to adjustment as
provided in clauses 2.4 and 3.4.
Constitution the Constitution of the Company.
Costs Includes any and all costs (on a
solicitor and own client basis),
expenses, damages, penalties,
interest, compensation, and awards.
Disclosure Letter the letter from the Vendor to the
Purchaser intended to be dated the
same date as this Agreement (the final
pre-signature draft attached as
Annexure 6) disclosing information
constituting exceptions to the
Warranties and further particulars
relevant to this Agreement.
[INIT] 3
E-246
Disclosure Any disclosure contained the
Disclosure Letter and the Due
Diligence Information.
Due Diligence Information The information, particulars and
documentation provided to the
Purchaser by the Vendors or their
representatives and advisors in the
course of the Purchaser's due
diligence enquiries in relation to the
Company.
Earn Out Sum the value calculated by applying a
multiple of 4 to the actual audited
Cashflow of the Company for the Year
ending on 31 March 1998 calculated on
the basis that an allowance is made
for income tax at the rate of 33%.
Employment Contract the agreement referred to in clause
4.1.5.
Escrow Agreement the Escrow Agreement in the form
annexed as Annexure 3 to be entered
into by BKI, the Vendors, the
Purchaser and the Trustee.
Exchange Rate the average between the Westpac Trust
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 Business Day
prior to the date of the relevant
transaction.
Financial Statements each and every part of the financial
statements of the Company which have
been provided by the Vendors to the
Purchaser copies of which are annexed
as Annexure 1.
GST Act the Goods and Services Tax Act 1985.
GST Goods and Services Tax levied under
the GST Act.
Intellectual Property all 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
in the following software:
[INIT] 4
E-247
o Imageline
o Opac - museum kiosk and web
software
o Badge - world swimming champs
security badge creation software
(50% ownership - Hanimex Pty
Limited owns the other 50%)
o Invoice2 - invoice generating
programme
o Watermark - image water marking
software
o Cashbook32 - cash flow programme
o Skycam - FlashPic (blue screen)
software
(together with all enhancements and
upgrades of this software) but all
other software is excluded, including
the following software:
o Pictrix pharmacy unit
o fotoline
o TravelLine
o SpeedCam
o CatCD
o Realty Pro
o Bureau Management Software (BMS)
Interest Rate the cost of funds rate for the BKI
Group.
Last Accounting Date 30 September 1997.
Penalty Rate The Westpac Trust Indicator Lending
Rate plus 8%.
Premises the premises at 00 Xxxxxxx Xxxxxx, Xx
Xxxx, Xxxxxxxx.
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.
[INIT] 5
E-248
Related Company a related company as defined section
2(3) of the Companies Act 1993.
Shares all of the existing issued shares in
the capital of the Company being
acquired by the Purchaser pursuant to
this Agreement.
Statutory Books the Company's Constitution, and its
Certificate of Incorporation,
Directors' and Members' minute book,
Register of Members, Register of
Directors and Secretaries, Interests
Register, Register of Charges and Seal
Register (if any).
Strike Price in respect of the BKI shares to be
issued pursuant to this Agreement is
the last sale price for BKI shares on
the Toronto Stock Exchange on 31 March
1998.
Subsidiary a subsidiary as defined in sections 5
to 8 of the Companies Act 1993.
Taxation all forms of taxation (including
without limitation capital gains tax,
income tax, surtax, estate duty, stamp
duty, rates, GST, PAYE, withholding
tax, provisional tax, duties, customs
and other import or export duties and
all other statutory, fiscal, central
or local government or municipal
impositions, duties and levies) and
all re-assessments, penalties,
Charges, Costs and interest relating
to such taxation for non-compliance or
otherwise.
Trustee Montreal Trust Company of Canada, or
such other trustee approved by the
Alberta Stock Exchange to hold BKI
shares pursuant to the Escrow
Agreement.
Warranties the representations, warranties, and
undertakings of the Vendors set out in
Schedule 1.
Year a financial year from 1 April to 31
March in the next 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 Words in the singular shall include the plural and vice versa;
1.2.3 Words importing one gender shall include the other genders;
[INIT] 6
E-249
1.2.4 Any obligation not to do anything includes an obligation not to
suffer, permit or cause that thing to be done;
1.2.5 Headings have been inserted for convenience only and shall not
affect the construction of this Agreement;
1.2.6 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;
1.2.7 References to clauses, schedules and annexures shall be construed
as references to the same in this Agreement;
1.2.8 References to money are references to New Zealand currency.
1.3 Joint and Several: The covenants herein expressed or implied shall bind
all persons by whom they are given 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 or the provisions of this
Agreement and the Employment Contract, the provisions of this Agreement
shall prevail in each case.
2. Agreement for Sale and Purchase
2.1 Sale and Purchase: The Vendors agree to sell and the Purchaser agrees to
purchase the Shares 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 Shares and is consequently the core acquisition price pursuant to
Section OB1(c) of the Income Tax Act 1994.
2.3 Audit: The Purchaser shall be entitled at its cost to appoint KPMG to
audit the Financial Statements and the financial statements for the
Company for the Year ended 31 March 1997 and for each Year of the Earn
Out Period (as defined in clause 3.3.1). Such audit shall be conducted by
KPMG adopting New Zealand GAAP which shall be applied consistently over
the various audit periods.
2.4 Consideration Adjustment:
2.4.1 The Purchaser shall have the right to adjust the Earn Out Sum if
the KPMG audits as at 31 March 1997 or for the Years of the Earn
Out Period reveal any Accounting Discrepancies in the calculation
of the Earn Out Sum or if there are any adjustments made to the
salary paid by the Company to Xxxxx which affect the Cashflow.
[INIT] 7
E-250
2.4.2 The Vendors shall be provided with a copy of the KPMG audit report
and working papers and a period of 10 Business Days following
receipt of such report to review their contents.
3. Consideration and Payment
3.1 Satisfaction of Consideration: The Consideration shall be paid or
satisfied by the Purchaser as follows:
3.1.1 $500,000: $500,000 shall be paid in cash on the Completion Date as
follows:
(a) An amount equivalent to the total of the Vendors current
account advances to the Company and the advances of the
Vendors secured by the registered first debenture shall be
paid by the Purchaser to the Company and the parties shall
procure the Company contemporaneously to effect repayment
of such advances; and
(b) Any balance shall be payable in cash to the Vendors.
3.1.2 Earn Out Sum: The Earn Out Sum (subject to adjustment as provided
in clauses 2.4 and 3.4) shall be paid in the manner provided in
clauses 3.2 and 3.3 by way of the issue and allotment to the
Vendors 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.
3.2 Issue of Shares: BKI shall issue the shares pursuant to clause 3.1.2
(Earnout Shares). The Earnout Shares shall be:
3.2.1 Issued in one tranche by 30 June 1998.
3.2.2 Issued in numbers which have a value (based on the Strike Price
converted to $NZ at the Exchange Rate as at 31 March 1998) equal
to the Earn Out Sum calculated for the Year which ended on 31
March 1998.
3.2.3 Issued initially to the Trustee to be held in escrow 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 Vendors if the
Company produces sufficient cumulative Cashflow between 1 April
1998 and the Years ending on 31 March 1999 and 31 March 2000
(Earnout Period).
3.3.2 Earnout Shares shall be released to the Vendors in 2 tranches on
30 June 1999 and 30 June 2000 (Release Dates).
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 as at
[INIT] 8
E-251
31 March 1998) the cumulative Cashflow of the Company between 1
April 1998 and the end of the Year prior to the relevant Release
Date.
3.4 Final Adjustment of Acquisition Price:
3.4.1 It is agreed that the Earn Out Sum shall be reduced on the basis
of a $NZ 1.00 reduction for each $NZ 1.00 by which the cumulative
Cashflow of the Company over the Earnout Period falls short of the
Earn Out Sum calculated initially according to the formula
provided in clause 1.1.
3.4.2 Prior to 30 June 2000 there shall be a final calculation of the
Earn Out Sum based on the cumulative Cashflow for the two Years
ending on 31 March 2000.
3.4.3 The Earn Out Sum and the Consideration shall then be adjusted
accordingly. Any Earnout Shares which are not required to be
released to the Vendors following such final calculation shall be
cancelled.
3.5 Dividends on Earnout Shares: Any dividends declared or bonus or rights
entitlements issued in respect of Earnout Shares held in escrow pursuant
to clauses 3.2 or 3.3 shall be issued to and held in trust by the
Trustee. Such dividends declared or entitlements in respect of shares
which are released to the Vendors shall be paid or applied to the Vendors
when the shares are released. Any dividends or entitlements held in trust
by the Trustee in respect of BKI shares which are cancelled will be
forfeited to BKI on the date of cancellation.
4. Parties' Obligations on or before Completion
4.1 Vendors' Obligations: On or before Completion the Vendors shall:
4.1.1 Deliver to the Purchaser the Disclosure Letter unaltered and
signed by the Vendors.
4.1.2 Access to Premises and Business: Ensure that the Purchaser and its
representatives have full access to the Premises, the Statutory
Books and the Business Records from the date of this Agreement and
will be given promptly all information they may reasonably require
concerning the business or affairs of the Company;
4.1.3 Filing of Satisfactions of Charges: File memoranda of satisfaction
with the Registrar of Companies with respect to the debenture
granted by the Company to the Vendors.
4.1.4 Service Agreement: Procure the execution by the Company of an
employment contract with Xxxxx in the form annexed as Annexure 2.
4.1.5 Personal Assets: Procure that all assets owned by the Company but
principally employed for the personal use of Xxxxx are sold and
removed from the Company asset register by the Completion Date.
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4.1.6 Consultation: Consult with the Purchaser in relation to all
matters which materially affect the Company or its operations
including items of capital expenditure and general expenses above
$3000 or falling outside the ordinary course of business of the
Company.
4.1.7 Related Companies: Procure that at no cost to the Company all of
the issued shares in Parrilott Pty Limited have been transferred
to the Company.
4.1.8 Licence Agreement: Procure that the existing licence agreement
between the Trust and the Company is amended upon the terms of the
Variation Agreement attached to this Agreement, comprising item 4
of Schedule 4.
4.1.9 Hanimex and Vendor Agreements: Procure that the agreements between
Hanimex (N.Z.) Limited and the Company and the Vendors and the
Company are amended on the terms of the Hanimex Variation
Agreement and Variation of the Software Licensing Agreement
attached to this Agreement comprising item 5 of Schedule 4.
4.1.10 Solvency Certificate: Provide a director's certificate stating as
at Completion that the Company:
(a) is able to pay its debts as they become due in the normal
course of business;
(b) is not (to the director's knowledge) engaged in business in
a manner or degree likely to create a substantial risk of
loss to the Company's creditors; and
(c) has not incurred any obligation without the director
believing on reasonable grounds that the Company would be
able to perform the obligation when it is required to do
so.
4.2 Purchaser's Obligations: The Purchaser shall use best endeavours
(including the giving of its own guarantors support) to obtain a release
of all of the Company's existing directors of all personal liabilities
which may arise after Completion in relation to personal guarantees (as
specified in Item 3 of Schedule 4) provided by them in respect of
obligations of the Company. Should any such releases not be procured then
the Purchaser shall indemnify such directors in respect of all Costs and
Proceedings which arise in relation to their personal guarantees for acts
or omissions of the Company after Completion.
5. Completion
5.1 Initial Settlement: Completion shall take place on the Completion Date at
the offices of the Company at 2.15 p.m. or at such other time or place as
the parties shall agree at which time the Purchaser shall be entitled to
the possession of the business conducted by the Company and the Vendors
will hand to the Purchaser:
5.1.1 Share Transfers: Transfers of the Shares to the Purchaser duly
executed by the Vendors in registrable form;
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5.1.2 Share Certificates: The share certificates (if any) for the Shares
or if none have been issued a statutory declaration by an officer
of the Company to such effect;
5.1.3 Pre-emptive Rights Waivers: A waiver signed by all the Vendors
whereby they waive all rights of pre-emption conferred on them by
the Constitution or otherwise in respect of the transfer of all or
any of the Shares;
5.1.4 Directors' Resolutions: Evidence of the passing of effective
resolutions of the Directors of the Company to register the
transfer of the Shares into the name of the Purchaser and in the
Register of Members of the Company in respect of the Shares.
5.1.5 Shareholders' Resolutions: Evidence of the passing of effective
shareholders' resolutions appointing Xxxxxxx Xxxxxxx as a director
of the Company in addition to Xxxxx.
5.1.6 Releases of Charges over Shares: Unconditional releases of any
Charges over any of the Shares;
5.1.7 Company Records: The Statutory Books and the Business Records of
the Company that exist;
5.1.8 Pre-conditions: Evidence satisfactory to the Purchaser that the
Vendors have fulfilled their obligations under clause 4;
and against compliance with the above provisions the Purchaser shall pay
or satisfy the payment of the $500,000 pursuant to clause 3.1.1, and
shall hand to the Vendors the following documents:
5.1.9 An executed directors certificate of Xxxxxxx Investments (NZ)
Limited in the form presented to the Purchaser by the Vendor's
solicitors;
5.1.10 The executed Mortgage of Shares ("Mortgage of Shares") from the
Purchaser as Mortgagor to the Vendors as Security Holder in the
form attached to this Agreement as item 6 of Schedule 4; and
5.1.11 The original share certificates relating to all the Shares along
with a certified copy of the Share Register of the Company
certified by a director as complete, noting the Purchaser as
holder of the Shares.
5.2 Security: Pending completion of the full settlement of the Consideration
pursuant to clause 2.4 and 3, including the release of all shares
entitled to be released to the Purchaser under the Escrow Agreement, the
Purchaser shall provide security to the Vendors by way of a mortgage over
the Shares in the form attached.
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5.3 Intellectual Property
In this clause 5.3 the following terms shall have the meanings specified:
Wider Intellectual Property all intellectual property rights (of
whatever form) held by an Owner and
whether existing at the date of this
Agreement or later created, developed
or otherwise owned (but excluding the
Intellectual Property and the Realty
Pro software)
IP Item an item (of whatever kind or form) in
which an Owner holds Wider
Intellectual Property
Owner Xxxxx or the Vendors (in their
capacity as trustees of Xxx Xxxxxxxx
Family Trust) or any Associated Person
of Xxxxx
Proposal A document fairly describing the
identity, function and commercial
significance of a Wider Intellectual
Right and any IP Items utilising that
Wider Intellectual Property Right
5.3.1 Intellectual Property relating to the Business: The parties
acknowledge and confirm that all intellectual property (of
whatever form) in any future enhancements or upgrades of the
Intellectual Property will be the property of the Company and
Xxxxx hereby assigns and will procure the assignment by each Owner
of all future copyright in that intellectual property (to the
extent owned by Xxxxx and each Owner) to the Company, effective
from the date that the relevant copyright comes into existence.
Subject to, and without limiting the balance of this clause 5.3,
the parties acknowledge that all intellectual property rights in
the Wider Intellectual Property and each IP Item are held by, and
will remain held by, their relevant Owner.
5.3.2 Proposal: Xxxxx and the Vendors must ensure that prior to an Owner
selling, licensing, gifting or otherwise disposing of any Wider
Intellectual Property
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Right or IP Item the Owner provides the Company with a Proposal
for that Wider Intellectual Property Right or IP Item.
5.3.3 IP Item Option: Xxxxx and the Vendors hereby grant an option (and
will procure the like granting of an option by all Owners) to the
Company in respect of all the Wider Intellectual Property Rights
and IP Items contained in a Proposal to take an exclusive
irrevocable, perpetual world-wide licence to use, market, sell and
maintain (including the right to develop enhancements and upgrades
of those Wider Intellectual Property Rights and the IP Items) for
a royalty of 7.5% (plus GST, if any) of the amount received by the
Company for the sale or licence of those IP Items and Wider
Intellectual Property Rights ("the Option").
5.3.4 Right of First Refusal: If the Company fails to exercise the
Option within 30 days of its receipt of the Proposal, then the
Owner will be free to offer the Proposal to others but before
entering into any unconditional arrangement with anyone (other
than the Company), the Owner must first offer back the Proposal to
the Company on terms no less favourable.
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6. Default
6.1 Default by Vendors: Without prejudice to clause 8, if any of the
provisions of clauses 4 or 5 are not fully complied with on Completion,
the Purchaser may (in addition to and without prejudice to all other
rights or remedies available to the Purchaser under this Agreement or
otherwise) at the Purchaser'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 Vendors
from liability to comply as soon as possible with the Vendors'
obligations under clauses 4 and 5).
6.2 Default by Purchaser: If from any cause whatsoever except default of the
Vendors
6.2.1 Interest: any portion of the Consideration is not paid upon the
due date for payment the Purchaser shall pay to the Vendors
interest, calculated at the Penalty Rate on the portion of the
Consideration so unpaid from the due date for payment until
payment.
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6.2.2 Other Action: the Purchaser and/or BKI shall be in default under
this Agreement (Default) then the Vendor may
(a) Sue the Purchaser for specific performance; or
(b) Cancel this agreement (but only for a Default of clause 3
or 5.1.9 to 5.1.11) and sue the Purchaser for damages;
(c) Exercise its rights under the Mortgage of Shares;
(d) Xxx the Purchaser for damages.
7. Warranties
7.1 Vendors' and Xxxxx'x Warranties: The Vendors and Xxxxx warrant and
undertake to the Purchaser in terms of the Warranties and it is agreed
that:
7.1.1 Parrilott Pty Limited: The Warranties shall be given in respect of
Parrilott Pty Limited as well as in respect of the Company. For
such purposes the term Shares shall be deemed to refer to all of
the issued shares in Parrilott Pty Limited.
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.
7.1.3 Reliance on Warranties: The Vendors and Xxxxx acknowledge that the
Purchaser has entered into this Agreement in reliance (among other
things) on the Warranties.
7.2 Vendors' and Xxxxx'x Covenants: The Vendors and Xxxxx warrant, represent
and undertake to the Purchaser and also as a separate covenant to the
Company:
7.2.1 Indemnity: That they will keep the Purchaser and the Company fully
indemnified against all and any depletion in or reduction in the
value of the Shares or any of the assets of the Company and all
Proceedings and Costs reasonably suffered or incurred by the
Purchaser or the Company 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 a breach or non-fulfilment;
and
7.2.2 No Representations Made: That no promise or representation has
been made to them in connection with any of the Warranties or the
Disclosure Letter in respect of which the Company or any of the
directors or employees of the Company might be liable; and
7.2.3 No Breach of Warranties Prior to Completion: That the Vendors and
Xxxxx will, so far as they are able, procure that (except only as
may be necessary to give effect to this Agreement) neither they
nor the Company shall do, allow or
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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
7.2.4 Disclosure of Change in Circumstances: Xxxxx will forthwith
disclose in writing to the Purchaser any matter or thing which may
arise or become known to him 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 Shares or which might
have a material adverse effect on the value of the Shares or any
of the assets of the Company.
7.3 Warranty Limitations: Notwithstanding any other provisions of this
Agreement, the Warranties are made and given subject to the provisions of
Schedule 3 and clause 7.6.
7.4 Purchaser Warranties to Vendors:
7.4.1 The Purchaser has the legal right and power to:
(a) enter into this Agreement; and
(b) purchase the Shares from the Vendors on the terms provided
in this Agreement; and
(c) enter into the Escrow Agreement the Mortgage of Shares and
all documentation contemplated by this Agreement (Relevant
Documents).
7.4.2 The execution, delivery and performance of this Agreement and the
Relevant Documents by the Purchaser has been duly authorised by
all necessary corporate action on its part and each of them is
valid, binding and enforceable against the Purchaser in accordance
with its terms.
7.4.3 The Purchaser will not cause the Company to give any financial
assistance to any person for the purpose of, or in connection
with, the purchase of the Shares, it being acknowledged that this
warranty does not apply to the Employment Contract or the
replacement by the Purchaser of an amount of shareholders advances
to the Company that is equal to the Vendor's current shareholder
advances to the Company and the replacement of the Vendor's
debenture by the Purchasers debenture.
7.5 BKI Warranties to Vendors:
7.5.1 BKI is a company duly incorporated and organised, validly existing
and in good standing under the laws of Alberta, Canada.
7.5.2 The execution, delivery and performance of this Agreement and the
Relevant Documents by BKI has been duly authorised by all
necessary corporate action
[INIT] 14
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on its part and each of them is valid, binding and enforceable
against BKI in accordance with its terms.
7.6 Disclosure Letter
7.6.1 The Warranties are subject to and shall be qualified by the terms
and matters disclosed in the Disclosure Letter.
7.6.2 The Purchaser shall not be entitled to claim that any fact gives
rise to any claim against the Vendors under the Warranties or
otherwise under this Agreement if it has been fully and fairly
disclosed in the Disclosure Letter or the Due Diligence
Information.
7.6.3 The Purchaser shall not be entitled to claim that any fact causes
any of the Disclosures to be untrue, incorrect, misleading or not
fully and fairly disclosed in the Disclosure Letter if true and
correct information concerning such factors is fully and fairly
disclosed in the Due Diligence Information.
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 the Vendors 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 Purchaser may, without prejudice to any other rights available
to it under clause 8.2 of this Agreement, by notice in writing to the
Vendors, rescind this Agreement.
8.2 Effect of Rescission: Rescission of this Agreement under clause 8.1 shall
not extinguish any right of the Purchaser 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 Company shall be destroyed
or damaged to an extent which in the opinion of the Purchaser
materially and adversely affects the Company or the carrying on of
the business of the Company; 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 Company
or the financial position, business, assets or profitability of
the Company or the value of the Shares to the Purchaser,
the Purchaser shall be entitled by notice in writing to the Vendors to
rescind this Agreement, but the occurrence of such an event shall not
give rise to any right to
[INIT] 15
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damages or compensation except where Xxxxx has failed to give notice of
such event as required by clause 7.2.4.
9. Conditions
9.1 This Agreement is conditional upon:
9.1.2 Government or Regulatory Consents: Consent being given by any
Canadian government or regulatory body whose consent is required
to enable Completion of this Agreement; and
9.1.6 Stock Exchange Approval: The approval of the Alberta Stock
Exchange; and
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 Failure of Conditions: Should:
9.3.1 Not Satisfied: Any of the conditions set out in clause 9.1 not be
fulfilled or waived (as the case may be) by the Completion Date or
such later date as may be agreed by the parties; or
9.3.2 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;
[INIT] 16
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then this Agreement shall be voidable by notice in writing and upon issue
of such notice this Agreement shall then be at an end and the parties
shall not have any further rights or obligations except that the Vendors
will repay any deposit or part payment of the Consideration.
10. Non Competition
10.1 Non-Competition: In consideration of the Purchaser entering into this
Agreement and as a condition precedent the Vendors and each of them
acknowledge that the value of the Earn Out Sum is dependent upon and the
Purchaser has agreed to pay the Earn Out Sum on the basis that the Xxxxx
or any Associated Person of Xxxxx will not carry on a business the same
as or in substantial competition with that at present carried on by the
Company being the cutting and implementation of computer codes (but not
the conceptualisation, design and specification of the processes and
programmes for software applications, other than in respect of
enhancements and upgrades of the existing products sold by or licensed to
the Company), marketing and sale of digital imaging and
telecommunications software applications owned by or licensed to the
Company now (or licensed in the future by Xxxxx or any Associated Person
of Xxxxx) (Business) in opposition to the Company after Completion for
the period specified below and accordingly the Xxxxx jointly and
severally covenants and agrees with the Purchaser that neither:
10.1.1 Business: Xxxxx nor any Associated Person of Xxxxx will during the
3 years following Completion at any place in New Zealand or
Australia be directly or indirectly engaged or connected or
interested in a Business 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 or directly or indirectly assist financially any such
Business except:
(a) as a servant of the Company, the Purchaser or a Subsidiary
of the Purchaser; or
(b) with the prior written consent of the Purchaser; or
(c) as holder of not more than 5% of the shares in the capital
of any public company if and only so long as such shares
are listed on any official stock exchange; and
10.1.2 Orders: Xxxxx nor any Associated Person of Xxxxx will during the 3
years following Completion 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 the Company
from any person, firm or company who at the Completion Date was or
had previously been a customer of the Company; and
10.1.3 Employees: Xxxxx nor any Associated Person of Xxxxx will during
the 3 years following Completion on their own account or for any
person, enterprise, firm, trust, joint venture or syndicate entice
or attempt to entice away from the Company or the Purchaser any
employee of the Company or of the Purchaser or of any Subsidiary
of the Purchaser.
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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 the Purchaser and the Purchaser's successors and
assigns.
11. Post Completion Management of the Company
11.1 Main Operating Objectives: The parties acknowledge that post-Completion
their main objective with the Company is to ensure that the Company
maximises (subject to prudent and reasonable financial constraints) its
marketing and sales opportunities which become available in order to
maximise Cash Flow and the provisions of this Agreement shall be read and
construed subject to this clause 11.
11.2 Conduct of the Purchaser: The Purchaser will exercise all voting rights
and other powers of control available to it in relation to the Company in
its capacity as shareholder and director appointor to ensure that:
11.2.1 The Company complies with the provisions of its Constitution
(except to the extent that they are inconsistent with this clause
11) where applicable, and with this Agreement; and
11.2.2 The Company and the parties achieve their objective detailed in
clause 11.1.
11.3 Term of these Arrangements: The arrangements provided for in clause 11
shall continue in full force and effect until the earlier of:
11.3.1 The date Vendor and Purchaser unanimously agreeing in writing that
they should be terminated or
11.3.2 The date all Earn Out shares are released to the Purchaser.
11.4 Board Representation: The Company shall have a board of two directors
which shall comprise:
11.4.1 Xxxxx, or at his election Xxxxx'x nominee, and
11.4.2 One representative appointed by the Purchaser (the Purchaser
having the power to replace such representative). The Purchaser's
appointment for the purpose of this clause 11.4.2 shall initially
be Xxxxxxx Xxxxxxx
11.4.3 Each director shall have one vote and the chairman of Directors
shall not have a casting vote.
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11.5 Purchaser to Procure Representation: The Purchaser undertakes to take all
steps and actions as shall be necessary to ensure that the Vendor retains
and continues to enjoy on an ongoing basis the representation described
in clause 11.4.
11.6 Strategic Planning: The Purchaser shall ensure that at all times during
the term of these arrangements that Xxxxx on behalf of the Vendor is
integrally involved in the strategic planning process of the Company.
Such involvement shall include without limitation participation in all
meetings with executives of the Company or shareholder representatives
concerning business or financial strategy or planning and involvement in
all debt structuring decisions and all licensing, marketing and sales
strategy and implementation concerning the Company.
11.7 Decisions of Key Matters: Without limiting the ambit of clause 11.6
decisions concerning the following matters shall only be made by the
board if assented to by Xxxxx on behalf of the Vendor:
11.7.1 Business activity by the Company which falls outside the existing
business areas of the Company;
11.7.2 All changes in borrowing facilities or capital structure of the
Company;
11.7.3 The dividend policy of the Company;
11.7.4 The appointment to the board of the directors of the Company of
any alternate representative or representatives of the Purchaser
(such consent to such appointment not to be unreasonably
withheld);
11.7.5 Any expenditure by the Company in excess of $5,000.00 per item
where not previously approved in the budgets;
11.7.6 Any transaction between the Company and any shareholder or
Related Company thereof;
11.7.7 The formation of any Subsidiary;
11.7.8 Budgets developed in accordance with clause 11.8;
11.7.9 Adoption of any new accounting policies (or changes to existing
policies and the approval of year end financial accounts with the
Company);
11.7.10 Any other action impacting upon the constitutional structure of
the Company, but subject to clause 11.12.2;
11.8 Budgets: The Purchaser shall procure that the Company shall have budget
proposals prepared in respect of the Company at least 30 days before the
end of each financial year of the Company. The budget shall contain
details of planned expenditure and the proposed financing of that
expenditure. The board of the Company shall endorse or amend those budget
proposals so that they are in a form that the board is prepared to adopt
no later than 10 days prior to the beginning of the next financial year
of the
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Company. The budget may later be amended only be resolution of the Board
and in any case, only with the consent of Xxxxx.
11.9 Approval of Acquisitions and Divestments: All major acquisitions and
divestments of the Company must be previously approved by Xxxxx.
11.10 Accounting and Information and Management Systems:
11.10.1 Auditors: The Purchaser shall procure the audit of the financial
statements of the company in respect of each financial year. KPMG
shall be the auditor.
11.10.2 Preparation of Accounts: The Purchaser shall procure that
financial accounts for the Company are prepared in respect of
each financial year and shall be prepared:
(a) In accordance with all application New Zealand legislation;
(b) In accordance with accounting principles, standards and
practice generally accepted in New Zealand at the time that
such accounts are completed; and
(c) In a manner consistent with the preparation of the
financial accounts of the Company prior to Completion,
so as to give a true and fair view of the state of affairs of the
Company at the relevant date and of the profits and losses for
the period to which such accounts relate. Such accounts shall be
provided to Xxxxx without delay.
11.10.3 Monthly Financial Statements. The Purchaser shall procure that
within 20 days after the end of each month the statement of the
Company's income and expenditure for that month and year to date
is prepared to the extent practicable in accordance with the
standards referred to in clause 11.10.2. Such accounts shall be
provided to Xxxxx without delay.
11.10.4 Other information: In addition to the above matters, the
Purchaser shall provide to the Vendor or any of them all
information provided from time to time as may be reasonably
requested by the Vendors.
11.11 Further Issues or Transfer of Shares: No new shares or other convertible
securities in the Company shall be issued to a party other than the
Purchaser without the consent of the Vendors. The consent of the Vendors
shall also be required to any transfer of shares or other convertible
securities, such consents shall not be unreasonably withheld but may be
granted on terms which include the requirements for the proposed
transferee to enter into a deed of covenant to observe the terms of the
arrangements provided in this clause 11. In the event of any of the
Shares or other convertible securities being transferred by the Purchaser
post-Completion and while the arrangements provided for in this clause 11
continue in full force and effect, such transfer shall not affect and
shall be without prejudice to the continuing liability and obligations of
the Purchaser under this clause 11.
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11.12 Governing Document:
11.12.1 In the case of any conflict or inconsistency between on the one
hand, the terms and provisions of any other agreement or
contractual document between the parties relating to, or
affecting the business or affairs of the Company and on the other
hand, the terms and provisions of this clause 11, the terms and
provisions of this clause 11 as may be applicable shall prevail.
11.12.2 If there is any conflict or inconsistency between the terms and
the provisions of this clause 11 and the Constitution for the
time being of the Company, the terms and provisions of this
clause 11 shall prevail, but Xxxxx will not veto a change to the
Constitution of the Company.
11.13 Purchaser Default: If during the term of these arrangements there is a
material breach of these arrangements by the Purchaser then;
a) the Vendors shall have an option to repurchase the Shares
at the net asset value of the Company at the time of the
breach. The net asset value shall be determined by KPMG;
b) the Purchaser covenants to keep the Vendors and Xxxxx fully
indemnified against all and any depletion in the Earn Out
Sum or the Earnout Shares and any other loss or damage
which they or either of them may suffer as a result of the
material breach by the Purchaser of its obligations under
these clause 11 arrangements.
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 pursuant
to the Arbitration Act 1996.
13. General
13.1 Non-Merger: The warranties, indemnities, representations and undertakings
set out in this Agreement and the Purchaser's obligations in clause 11
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 principal stock exchange on which BKI's
common shares are listed and posted for trading 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;
[INIT] 21
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13.3.1 In Writing: 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:
(a) Vendors c/o Malloy Xxxxxxx Harford
Barristers and Solicitors
P 0 Box 9892
Newmarket
AUCKLAND I
Facsimile: 523 3974
(b) Purchaser 0 Xxxx Xxxxxx
Xxxx Xxxx
AUCKLAND
Facsimile: 376 7891
13.3.3 Notice by Hand: Subject to clause 13.3.6, a notice delivered by
hand shall be received on delivery;
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 p.m. (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 a.m. (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:
13.3.8 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;
13.3.9 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;
13.3.10 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
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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
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
any party any right under this Agreement shall operate as a waiver of
that right. No single or partial exercise of any right shall 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 cooperate 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 Execution:
13.11.1 The execution of a facsimile copy of this Agreement and its
transmission by facsimile to all of the parties or their
solicitors shall be sufficient to constitute a legal contract and
satisfy the requirements of section 2 of the Contracts
Enforcement Act 1956.
13.11.2 If any party requires the original signed facsimile copy shall be
delivered to that party within 5 Business Days of request being
made. If the original is not delivered any party which accepts a
facsimile copy may in any proceeding produce the facsimile copy.
In such case no party may object to such copy being produced as
an original and all parties shall be deemed to have waived any
law of evidence or other requirement that an original be produced
as evidence of the existence or contents of the original.
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13.11.3 Each party shall only become bound by this Agreement when it has
been executed by or on behalf of such party.
14. Limitation of Liability of Trustee
14.1 The parties acknowledge that Xxxxxxxx Xxxx Xxxx of Whangarei, District
Court Judge and M & H Trustee Services Limited at Auckland (Trustees)
have signed this Agreement in their capacity as trustees pursuant to a
Deed of Trust dated 26 January 1996 known as the Xxx Xxxxxxxx Family
Trust (Trust).
14.2 The Trustees together with their executors, administrators or personal
successors shall be under no personal liability under this Agreement. The
liability of each Trustee shall at all times and for all purposes be
limited to the net value of the assets for the time being of the Trust
together with such amount as is equivalent to the net value of the assets
that the Trust would have had except for the wilful neglect or default of
such Trustee.
14.3 The obligations of each Trustee under this Agreement shall end when such
Trustee ceases to be a trustee of the Trust and there shall be no right
of action against either Trustee in respect of any matter arising under
this Agreement after the date the Trustee ceases to be a trustee of the
Trust except any claim arising from the wilful neglect or default of such
Trustee.
15 BKI Guarantee
15.1 In consideration of the Vendors agreeing to enter into this Agreement BKI
unconditionally and irrevocably:
15.1.1 Guarantees by way of continuing obligation to the Vendors, as
primary obligor and not merely as a surety, the due performance by
the Purchaser of all its obligations and liabilities under this
Agreement; and
15.1.2 Indemnifies the Vendors against any loss or damage which they may
suffer as a direct or indirect result of the breach by the
Purchaser of any of its obligations and liabilities under this
Agreement.
15.2 The obligations of BKI under this guarantee will not be discharged,
released or otherwise affected by any delay, grant of time, release,
compromise, forbearance (whether partial or otherwise) or other
indulgence granted by the Vendors to the Purchaser or any other person or
by the Vendors exercising or refraining from exercising any rights
against the Purchaser. The rights of the Vendors under this guarantee are
cumulative and are not exclusive of any rights provided by law and are to
remain in full force until the discharge by the Purchaser of all its
obligations under this Agreement.
[INIT] 24
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EXECUTED by the parties. X.X. Xxxx by his Attorney
[ILLEGIBLE]
SIGNED by )
XXXXXXXX XXXX XXXX )
Witness: [ILLEGIBLE] ) /s/ [ILLEGIBLE]
[ILLEGIBLE] ------------------------------
Auckland X X Xxxx
Xxxxxxxxx
SIGNED for M & H TRUSTEE )Signature /s/ XX XXXXXXX
SERVICES LIMITED ) ------------------------------
by its director Xxxxxx Xxxxxxx )Name XX Xxxxxxx
Xxxxxxx in the presence of: ) ------------------------------
Witness: [ILLEGIBLE] Director
[ILLEGIBLE]
Auckland
Solicitor )Signature
) ------------------------------
)Name
) ------------------------------
Director
SIGNED by ) /s/ X X XXXXX
XXXXXXX XXXXX XXXXX ) ------------------------------
) X X Xxxxx
SIGNED for XXXXXXX (N.Z.) )Signature /s/ XXXXXXX XXXXXXX
INVESTMENTS LIMITED ) ------------------------------
by: )Name XXXXXXX XXXXXXX
) ------------------------------
Director
)Signature /s/ XXXXXXX XXXXXXX
) ------------------------------
)Name XXXXXXX XXXXXXX
) ------------------------------
Director
SIGNED for XXXXXXX )Signature /s/ XXXXXXX XXXXXXX
INVESTMENTS LIMITED ) ------------------------------
by: )Name XXXXXXX XXXXXXX
) ------------------------------
Director
)Signature /s/ XXXXXXX XXXXXXX
) ------------------------------
)Name XXXXXXX XXXXXXX
) ------------------------------
Director
[INIT] 25
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SCHEDULE 1
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. The
Vendors and Xxxxx 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: To the best of the knowledge of Xxxxx and the
Vendors all information contained in any written documentation or
communication supplied by or on behalf of Xxxxx or the Vendors to the
Purchaser in the course of the Purchaser's due diligence investigation or
in discussions or negotiations leading to the signing of this Agreement,
including advice, answers to questions, information, books and papers
given or shown to the Purchaser and/or any of its employees or
representatives by or on behalf of the Vendors or Xxxxx is accurate and
not misleading in its context whether by omission or otherwise. The
Vendors and Xxxxx are not aware of any fact or matter not disclosed to
the Purchaser which renders any such information untrue, incorrect or
misleading.
1.4 All Necessary Disclosures Made: All the facts and circumstances relating
to the Shares and to the assets, business and affairs of the Company
material for disclosure to an intending purchaser of the Shares have been
fully and fairly disclosed to the Purchaser or its advisers. Any such
material facts arising prior to Completion will forthwith be disclosed in
writing to the Purchaser or its advisers.
1.5 Constitution: The Constitution of the Company to be handed to the
Purchaser will be an accurate copy or an original, if available, of the
document in force at Completion and will have annexed a copy of every
resolution required to be annexed by the Companies Act 1993.
2. Shares
2.1 Shares: The Shares constitute the whole of the issued and allotted share
capital of the Company and they are and will be on Completion held by the
Vendors in the Vendors' own right.
2.2 Encumbrances: There is not any and will not at Completion be any Charge
on, over or affecting the Shares. 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.
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2.3 No Subsidiaries: The Company never has had and does not have and will not
prior to Completion without the prior written consent of the Purchaser
create or acquire any Subsidiary or any shares in any other company.
2.4 No Increase in Capital: The Company has not since the Last Accounting
Date and will not pending Completion increase its share capital or
subdivide, amalgamate, or consolidate the Shares or any of them.
2.5 No Decrease in Capital: The Company has not at any time:
2.5.1 Repaid or agreed to repay or redeem or buy back or repurchase any
shares of any class of its share capital or otherwise reduced or
agreed to reduce its issued share capital or any class of its
share capital
2.5.2 Amalgamated or agreed to amalgamate with any other company.
2.6 No Related Companies: The Company has no Related Companies.
2.7 No Change of Capital Structure or Name: Xxxxx will not permit to be
passed before Completion any resolution by the Company:
2.7.1 Altering its share capital;
2.7.2 Altering the rights or obligations attaching to any of the Shares;
2.7.3 Changing its name;
2.7.4 Altering its Constitution.
3. Financial Statements
3.1 Books of Account: All the Business Records and Statutory Books are in the
Company's possession or under its control and have been fully and
correctly completed and will pending Completion continue to be so
completed.
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 Company
and of its plant and machinery, fixed and current assets and liabilities
(actual and contingent), debtors and creditors, work in progress and
stock.
3.2 Retention of Records: The Company holds and will on Completion have in
its possession all books of Account and other records which it is bound
by law to retain in its possession either indefinitely or for a
particular period or periods of time.
3.3 Financial Statements:
3.3.1 True and Fair View: The Financial Statements are complete and
accurate and give and reflect and will at Completion give and
reflect a true and fair view of the Company, its activities and
its financial status in all respects.
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3.3.2 Comply with Statute: The Financial Statements comply with all
applicable requirements of the Companies Act 1993 and the
Financial Reporting Act 1993.
3.3.3 GAAP: The Financial Statements have been prepared in accordance
with generally accepted accounting practice as that term is
defined in the Financial Reporting Act 1993 and to the extent
consistent with such generally accepted accounting practice on a
basis consistent with that adopted for preceding accounting
periods.
3.3.4 No Unusual or Extraordinary Items: The Financial Statements are
not affected by any unusual extraordinary exceptional or
non-recurring items or by any other factor rendering the results
set out in the Financial Statements (or any of them) unusually
better or worse than they (or any of them) might otherwise be or
have been.
3.3.5 Financial Position: The Financial Statements properly reflect the
financial position of the Company as at the Last Accounting Date
and of its results for the accounting period ending on that date.
3.3.6 Full Disclosure: The Financial Statements fully disclose all the
assets and liabilities (whether ascertained, contingent, deferred
or otherwise and whether or not quantified or disputed) of the
Company as at the Last Accounting Date and make full provision
and/or reserve for all such liabilities.
3.3.7 Provisions for Losses: The Financial Statements make full
provision for any foreseeable losses which may arise on Completion
and/or on realisation of stock and/or on Completion of any
existing or proposed contract.
3.3.8 Provision for Bad Debts: The Financial Statements make adequate
provision for all bad and doubtful debts of the Company and for
depreciation of the fixed assets of the Company having regard to
their original cost and estimated useful life.
3.3.9 Financial Commitments: The Financial Statements fully disclose all
financial commitments in existence as at the Last Accounting Date.
3.4 Period Between Agreement and Completion: From the Last Accounting Date to
Completion:
3.4.1 Conduct of Business: The Company has carried on and will carry on
its business in an efficient normal and proper manner so that the
financial standing and position of the Company as at Completion
will not have deteriorated materially from that disclosed in the
Financial Statements;
3.4.2 Liabilities: The Company has not incurred and will not incur any
liability (whether contingent or otherwise) and has not made any
payments except in the normal and ordinary course of business;
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3.4.3 Disposals: The Company has not disposed of and will not dispose of
any material portion of its undertaking or any material part of
its fixed assets or any of its goodwill;
3.4.4 Acquisitions: The Company has not acquired any assets of a capital
nature and will not acquire any assets of a capital nature
exceeding $3,000 in value without the Purchaser's prior consent;
3.4.5 Revaluations: The Company has not revalued upwards and will not
revalue upwards any of its assets;
3.4.6 Capital Investments: The Company has not entered into and will not
enter into any material capital investment or commitment in excess
of $3,000 in aggregate or any major transaction as that term is
defined in section 129(2) of the Companies Act 1993;
3.4.7 Dividends: The Company has not declared, paid or made and will not
declare, pay or make any dividend, bonus or similar distribution;
3.4.8 Insurance: The Company has kept and will keep effectively insured
to the full insurable amounts all assets and undertaking of the
Company against all normal insurance risks including reasonable
loss of profits insurance;
3.4.9 Terms of Trade: The Company has not made or permitted and will not
make or permit any change to any of its product lines or to the
terms or conditions of any agency held by the Company or to the
selling prices or terms and conditions of sale of any products or
services of the Company;
3.4.10 Turnover: The Company has attained a turnover no less than that
for the corresponding period in the previous financial year;
3.4.11 Deposits: The Company has deposited and will deposit all amounts
received by it to the credit of its bank account and such amounts
appear in the appropriate books of Account;
3.4.12 Debts: The Company has paid and will continue to pay all its debts
as they fell or fall due.
3.5 Non-Disclosure of Liabilities: If it is discovered before or after
Completion that the Company had a liability at the Completion Date
(whether contingently or otherwise) to any person prior to the Completion
Date except in the ordinary course of business which liability has not
been fully disclosed to the Purchaser, then without prejudice to any
other rights of the Purchaser, Xxxxx will immediately upon demand by the
Purchaser, pay to the Purchaser the amount of each such liability after
deducting from each such liability any saving to the Company in Taxation
as a result of such liability. For the purposes of this clause:
3.5.1 The word liability shall include liability for or in respect of
Taxation or any reassessment of Taxation which the Company may be
required to pay in respect of any period prior to the Completion
Date and which has not been so fully
[INIT] 29
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disclosed and any amount whatsoever (including all Costs in
connection therewith) arising out of any occurrence or happening
which shall have taken place prior to the Completion Date;
3.5.2 Provision of any amount by way of note to the Financial Statements
shall not be deemed to be provision of that amount in the
Financial Statements.
4. Stock
4.1 Valuation: The methods of valuing stock and work in progress as at the
Last Accounting Date (which included a physical stocktaking) were the
same as those adopted for the 3 immediately preceding financial years.
All redundant and obsolete stock was wholly written off, all slow moving
stock was written down appropriately and the value attributed to the
remaining stock did not exceed the lower of direct cost or net realisable
value.
4.2 Changes to Stock Since Last Accounting Date: The stock on hand at
Completion will comprise the stock as at the Last Accounting Date less
stock sold and with the addition of stock bought in the ordinary course
of business since that date. No stock currently held other than that
written off or written down in the Financial Statements or which are
service spares, is slow moving, out of date or fashion, redundant or
obsolete or which will not realise its book value within 12 months of the
Completion Date.
5. GST
5.1 Registration: The Company is registered for the purposes of the GST Act.
5.2 Not a Member of a Group: The Company has not at any time been a member of
a Group or been treated as a member of a Group for GST purposes. No
application for it to be so treated has at any time been or pending
Completion will be made. No act or transaction has been or pending
Completion will be effected which will result in the Company being held
liable for any GST chargeable against some other company.
5.3 Compliance with GST Act: The Company has complied and pending Completion
will comply in all respects with the GST Act legislation.
5.4 Maintenance of Records: The Company has given obtained made and
maintained and pending Completion will give, obtain, make and maintain
complete correct and up to date invoices, records and other documents
appropriate or requisite for the purposes of the GST Act.
5.5 No Arrears: The Company is not and will not pending Completion be in
arrears with any payment or returns under the GST Act or liable to any
abnormal or non-routine payment or any forfeiture or penalty or to the
operation of any penal provision and where payment is not yet due or
receivable has provided for such payment;
5.6 All Supplies Taxable: All supplies made and to be made pending Completion
by the Company are taxable supplies and the Company is not and will not
pending Completion be denied credit for any input tax.
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6. Taxation
6.1 Returns Made: All forms, notices, elections, computations, payments
(including, without limitation, any fines or penalties) and returns which
should be made by the Company for any Taxation purpose have and will at
Completion have been made and are and will be up-to-date, correct and on
a proper basis and none of them is now the subject of any dispute with
the Inland Revenue Department or any other Taxation collection agency. In
particular the returns in relation to provisional Taxation will not give
rise to any assessment, adjustment or set-off (including any claim for
interest on unpaid Taxation) by the Inland Revenue Department.
6.2 No Knowledge of Dispute: There is no fact known to the Vendors or Xxxxx
after making due enquiry which might be the occasion of any dispute with
the Inland Revenue Department or any other Taxation collection agency or
a claim for Taxation in respect of any period prior to the Completion
Date which is not provided for in the financial statements for the
Company as at the Last Accounting Date.
6.3 Provision in Financial Statements: Full provision and reserves were made
in the Financial Statements in respect of all Taxation liabilities to or
for which the Company was at the Last Accounting Date or at any time
since may have become or may become liable to be assessed or charged or
to pay. Provision of any amount by way of a notice to the Financial
Statements shall not be a provision for the purposes of this paragraph.
6.4 No Non-commercial Transactions: The Company has not at any time entered
into a transaction or series of transactions containing steps inserted
without any commercial or business purpose apart from the obtaining of a
Taxation or stamp duty advantage.
6.5 Debtors Recorded Appropriately: All amounts included in the Financial
Statements or (in the case of an amount arising after the date of the
Financial Statements) in the books of the Company as due from Debtors
represent amounts actually invoiced by the Company to such debtors not
earlier than 3 months prior to the Last Accounting Date (or in the case
of an amount arising after the date of the Financial Statements not
earlier than 3 months prior to the date on which it was recorded in the
books of the Company). No part of such amounts still outstanding has been
released on terms that any debtor pays less than the full book value of
its debt or has been written off or has proved to any extent
irrecoverable or is now regarded as irrecoverable or has been compromised
on any terms.
7. Loans
7.1 No Undisclosed Loans: The aggregate amount appearing in the Financial
Statements as being outstanding in respect of loans owing by the Company
was at the Last Accounting Date the aggregate of all loans or financial
accommodation of whatever nature from any source so outstanding.
7.2 Loans Within Corporate Powers: Such aggregate did not (and the amount
outstanding in respect of loans owing by the Company does not and will
not at Completion) exceed any limitation on the Company's borrowing
contained in its Constitution or in any loan offer, facility letter,
debenture or other deed or document executed by it or, in the case of
borrowings on overdraft, its overdraft facilities.
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7.3 Loans from Directors or Shareholders: All amounts outstanding and
appearing in the books of the Company as loan accounts or as due to
directors or shareholders wholly represent money or money's worth paid or
transferred to the Company as the case may be or remuneration accrued due
and payable for services rendered and (save for such remuneration) no
part thereof has been provided directly or indirectly out of the assets
of the Company.
7.4 No Repayments: The Company has not repaid and pending Completion will not
repay any loans or other financial accommodation in whole or in part nor
has it by reason of any default by it in any of its obligations become
bound or liable to be called upon to repay prematurely any loans or
borrowed moneys and pending Completion no such default will occur.
8. Liabilities and Commitments
8.1 No Capital Commitments: Since the Last Accounting Date the Company has
not except in the ordinary course of business made any capital
expenditure or incurred any capital commitments nor has it disposed of or
realised any substantial capital assets or any interest in such assets.
The Company has no outstanding capital commitment and pending Completion
no capital commitments or disposals of capital assets or land or any
estate or interest in such assets or land will be undertaken by the
Company without the prior written consent of the Purchaser.
8.2 No Guarantees: The Company is not and will not prior to Completion become
a party to any contract of guarantee or indemnity.
8.3 No Material Contracts: The Company has not entered into and will not
enter into any material contract (including the granting of options to
purchase or Charges over all or any of the Company's assets) except in
the normal and ordinary course of business. The Company has not and will
not become a party to any unusual, abnormal or onerous contract or
agreement whatsoever except as disclosed to the Purchaser or as approved
by the Purchaser.
8.4 No Long Term Contracts: The Company is not and will not on Completion be
a party to any contract of service or supply which cannot be terminated
by not more than 1 month's notice without giving rise to any claim for
damages or compensation.
8.5 No Commitments since Last Accounting Date: The Company has not since the
Last Accounting Date been and will not at Completion be a party to any
contract, commitment or arrangement of any nature except such as have
been entered into in the normal and ordinary course of trading and are
capable of being wholly satisfied or performed within 3 months from
Completion or of being terminated within such period without cost to the
Company.
8.6 No Arrangements: The Company is not and will not on Completion be a party
to any joint venture, partnership, syndicate or other consortium
arrangement.
8.7 No Agents: No person is authorised to act as agent for the Company or
otherwise to bind the Company other than the directors of the Company
acting as a board. The Company has not appointed any agents, distributors
or managers in respect of any of its products or services in any part of
the world.
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8.8 No Default under Agreements: The Company is not now, nor pending
Completion will it become, in default under any agreement to which it is
or may become a party or in respect of any other obligations binding upon
it. No event has occurred which would enable any third party to terminate
any contract or any benefit enjoyed by the Company.
9. Employees
9.1 Full Disclosure of Terms: Full disclosure in writing of the current rate
of remuneration, fees and expenses payable to each officer and employee
of or consultant to the Company and the terms of such employment or
consultancy (including obligations in respect of any directors' or
officers' keyman or indemnity insurance) have been made to the Purchaser
in writing. No such officer or employee or consultant has given notice or
is under notice of dismissal or termination of employment of any
consultancy agreement.
9.2 No Amounts Due: No amounts are due to or in respect of any former officer
or employee or consultant and there are no outstanding arrears of salary,
wages, fees, holiday pay or other remuneration.
9.3 No Industrial Disputes: The Company is not involved in any industrial or
trade dispute or any dispute with any trade union or organisation or body
of employees.
9.4 No Changes: No change has been made in the terms of employment or
consultancy by the Company of any person who was employed at the Last
Accounting Date. Pending Completion the Company will not without the
Purchaser's prior written consent engage any new employee or consultant.
9.5 No Other Payments: No moneys other than in respect of remuneration or
emoluments of employment or fees are payable to or for the benefit of any
director or officer of the Company.
9.6 No Profit Sharing: The Company is not and will not prior to Completion
become a party to any agreement with any director, officer, employee or
consultant of the Company under which any such person is entitled to a
share of profits of the Company or to any bonus calculated on profits or
to participate in any share incentive scheme or share option scheme or
similar arrangement. No pensions, retiring allowances or other benefits
are or will be payable by the Company to any director, officer or
employee of the Company during such person's employment or consultancy.
9.7 No Schemes: There are not now and will not on Completion be in existence
any retirement, death or disability benefit schemes for directors or
employees or any obligations to or in respect of any present or past
directors or employees with regard to retirement, redundancy, death,
sickness or disability pursuant to which the Company is or may become
liable to make any payments.
9.8 No Breaches of Contract: Since the Last Accounting Date no liability has
been incurred or payment made by the Company for breach of any contract
(whether express or implied) of service, for redundancy or for
compensation for loss of office or wrongful dismissal or in respect of
retirement, death, sickness or disability. No gratuitous payment has been
made or will prior to Completion be made or promised by the Company to or
in respect of any director or employee.
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9.9 No Liability for Leave Payments: The Company is not and will not at
Completion be under any liability to any person in respect of long
service leave or accrued annual leave.
9.10 Compliance with Legislation: The Premises and operation of the business
of the Company and the terms on which the employees of the Company were
recruited and are employed to the extent that they are required to comply
and will to that extent at Completion comply with the Employment
Contracts Act 1991, the Equal Pay Act 1972, the Human Rights Act 1993,
the New Zealand Bill of Rights Act 1990, the Wages Protection Act 1983,
the Holidays Act 1981, the Health and Safety in Employment Act 1992 and
all applicable legislation governing employment and safety of employees.
10. Statutory Obligations
10.1 Holding of Licences: The Company holds 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 it to
carry on its business fully and effectively. The Company 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 Shares or otherwise howsoever.
10.2 No Requisitions: There has not since the Last Accounting Date been and
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, or the employment of staff by the Company.
10.3 No Illegal Trade Practices: The Company is not, has not been and will not
pending Completion be a party to any agreement, arrangement,
understanding or practice which is contrary to the provisions of the
Commerce Act 1986, the Fair Trading Act 1986, the Consumer Guarantees Act
1993, or the Privacy Act 1993.
10.4 No Breach of Statute: The Company has not committed any breach which was
unremedied at the Last Accounting Date of any statutory provision, order,
bylaw or regulation (in every case whether applicable in New Zealand or
elsewhere) binding on or applicable to it with regard to the formation
and operation of the Company, the carrying on of the business of the
Company or any other matter relating to the Company. The Company has not
since such date and will not prior to Completion commit any such breach.
10.5 All Documents Stamped: All documents which in any way affect the right,
title or interest of the Company in or to any of its property,
undertaking or assets or to which the Company is a party and which
attract stamp duty have been duly stamped. No liability to pay stamp duty
will arise as a result of Completion by virtue of any previous transfer
of any property, undertaking or assets to the Company in particular but
without limitation under section 13(4) of the Stamp and Cheque Duties Act
1971.
[INIT] 34
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10.6 Compliance with Companies Act: The Company has complied with and will up
to Completion comply with all the requirements of the Companies Act 1993
including all requirements for filing of documents with the Registrar of
Companies.
10.7 All Registers Complete: The entries in the Register of Members, Register
of Directors and Secretaries, Interests Register, Register of Charges and
Register of Directors' Shareholdings of the Company are correct and such
registers have been properly kept.
11. Properties and Assets
11.1 Leasehold Premises: The Premises are held upon lease terms which have
been fully disclosed to the Purchaser.
11.2 Title and Compliance: The Company had on the Last Accounting Date and
will on Completion have sole title to and possession and control of all
the freehold and leasehold properties used or occupied by it free from
all leases, tenancies or Charges. Each of the said properties complies
and will on Completion comply with the local body code or ordinances
affecting the same and with all other statutory, local body and other
regulations and requirements.
11.3 All Premises Included: The Premises comprise all the freehold and
leasehold land and premises owned, used or occupied by the Company and
all the estate interest right and title whatsoever of the Company in,
under, over or in respect of any such land or premises.
11.4 Compliance with Statutes: The Company has to the extent to which it is
required to complied with all provisions of the Building Act 1991,
Resource Management Act 1991 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. There are no actions,
claims or proceedings (whether actual or potential) existing in relation
to such matters nor any liability likely to arise in relation to such
matters.
11.5 Compliance with Leases: The Company has 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. No notice of any breach of any such matter has been received
nor are the Vendors aware of any such breach having occurred.
11.6 No Defects: No structural, drainage or other material defects have
appeared in respect of or affected the buildings and structures on or
comprising the Premises. All such buildings are in good and substantial
repair and condition and none has been constructed, maintained, altered
or repaired using materials containing any deleterious building material.
None of the Premises has been affected by flooding or subsidence.
[INIT] 35
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11.7 No Other Matter: There is no other matter of which the Vendors 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
the Company to those Premises or its use of those Premises for its
business which should be revealed to a Purchaser of the Shares of the
Company or other person entering into this Agreement.
11.8 Plant and Machinery: The Company's plant and machinery (including fixed
plant and machinery) and all equipment, furniture and vehicles taking
into account their age and usage are in good repair and condition (fair
wear and tear excepted) and in satisfactory working order.
11.9 Debts Recoverable: The amount of all debts due or recorded in the
Financial Statements or the books of the Company as being due to the
Company as at Completion (less the amount of any provision or reserve
made in the Financial Statements or the books of the Company in respect
of any particular debts) will be good and collectable in full in the
ordinary course of business and in any event not later than 6 months
after Completion. None of such debts is or will at Completion be subject
to any counterclaim or set-off except to the extent of any such provision
or reserve.
11.10 Debtors Recovery: Should any of the debtors of the Company as at the
Completion fail to satisfy its liability to the Company in full within 6
months from the Completion Date and the aggregate amount due to such
debtors exceeds $3,000, the Vendors will immediately upon demand by the
Purchaser pay to the Purchaser (or the Purchaser may deduct from the
Consideration) the amount of such excess amount. Following payment of
such amount the Purchaser shall be entitled to an assignment of the
benefit of such excess debts.
11.11 Changes Since the Last Accounting Date: Since the Last Accounting Date:
11.11.1 No Write-Offs or Write-Downs: None of the assets of the Company
have been written off or written down nor has there been any
agreement for the release of any person under liability to the
Company;
11.11.2 Cash: The Company has neither disbursed nor received any cash
except in the ordinary course of its business and amounts
received by the Company have been deposited with its bankers and
appear in the appropriate books of account;
11.11.3 Depletion in Assets: There has been no depletion in the net
assets of the Company and they have not been materially
diminished by the negligent, wrongful or fraudulent act of any
person;
11.11.4 GAAP: Everything which should according to generally accepted
accounting practices (as defined in the Financial Reporting Act
1993) have been written up or recorded in the Statutory Books and
financial records of the Company with respect to the assets of
the Company (including the Premises), has been written up and
recorded;
11.11.5 Compliance with Notices: There have been no notices, claims or
demands served on the Company in respect of any of its assets
(including the Premises) which hay not been fully complied with.
[INIT] 36
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12. Intellectual Property
12.1 All Intellectual Property Included: The Consideration for the Shares is
assessed on the basis that all licences and all Intellectual Property or
other similar rights relating to the business of or used by the Company,
if any, are at present owned solely and beneficially by the Company. All
of such rights shall remain the property of the Company to the intent
that the Company shall be the sole unencumbered and undisputed owner of
all such things as at Completion.
12.2 No Intellectual Property Agreements: The Company has 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. To the best of Xxxxx'x knowledge and
belief the operations of the Company do not infringe any patent or other
intellectual property right of any kind vested in any other party.
12.3 Disclosure of Intellectual Property: Full details of all Intellectual
Property owned or used by the Company have been given to the Purchaser.
No person has been authorised to make any use whatsoever of any
Intellectual Property owned by the Company. The Company has not disclosed
(except in the ordinary course of its business) any of its know-how,
trade secrets, technical processes, confidential information,
Intellectual Property or lists of customers or suppliers to any other
person.
12.4 Use of Names: The Company is entitled to use its trade names in those
parts of the world in which it currently conducts its business or its
products are sold to its customers. No person has been authorised to make
any use whatsoever of any such name. The use of such names by the Company
does not infringe the rights of any other person or entitle any other
person to a claim against the Company. No such name is being used,
claimed, opposed or attacked by any other person.
12.5 Name: The Company has not consented to and will not before Completion
consent to the adoption of a similar name by any other company or person.
12.6 Intellectual Property Not Disputed: The Intellectual Property rights of
the Company have not been and will not at Completion be challenged or
disputed by any third party. The Vendors are not aware of any facts or
circumstances which might entitle a third party to challenge the
Company's ownership or use of the Intellectual Property used in the
business.
13. Commercial Matters
13.1 All Actions Indemnified: There is no cause of action in respect of which
the Company is not fully indemnified which could and might be used for
the purpose of commencing proceedings either civil or criminal.
13.2 No Legal Proceedings: The Company is not engaged in any Proceedings
whatsoever nor are any Proceedings of any kind being taken against it nor
is Xxxxx aware of any Proceedings against the Company pending or
threatened.
13.3 No Breaches of Contract: The Company is not and will not on Completion be
breach of any contract commitment or arrangement of any nature whatsoever
which
[INIT] 37
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it is now or will then be a party and is not and will not on Completion
be a party to any contract, commitment or arrangement which may be
unenforceable by the Company by reason of the transaction being voidable
at the instance of any other party or ultra xxxxx, void or illegal.
13.4 Insurance: Full details of all insurance policies maintained by the
Company have been supplied to the Purchaser. All such insurances are now
in force and all premiums due have been paid. Pending Completion the
Company 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. No claims are outstanding and nothing has occurred to
give rise to any such claim.
13.5 No Notice from Lenders to Repay: The Company has not received notice
(whether formal or informal) from any lenders of money to the Company
requiring repayment or intimating the enforcement by such lenders of any
security which they may hold over any assets of the Company. Xxxxx is not
aware of any circumstances likely to give rise to any such notice being
given or which would enable any such notice to be given.
13.6 Effect of Acquisition of Shares: Xxxxx has no reason to believe that as a
result of the proposed acquisition of the Shares by the Purchaser:
13.6.1 No Cessation of Supplies: Any supplier of the Company will cease
supplying the Company or may substantially reduce its supplies to
the Company or alter the terms on which it supplies the Company;
or
13.6.2 No Cessation of Custom: Any customer of the Company will terminate
any contract with the Company or cease or materially reduce its
business with it; or
13.6.3 No Notice of Termination of Employment: Any officer or senior
employee of the Company will give notice of termination of his or
her employment with the Company; or
13.6.4 No Termination of Contracts: Any of the licences, consents,
approvals, agreements or contracts currently granted to or entered
into by the Company required in connection with the carrying on of
its business in the manner in which it has been carried on at any
time during the 2 years prior to the date hereof will be
withdrawn, cancelled or be capable of termination.
13.7 Arm's Length Supplies: All supplies of goods or services to the Company
are purchased by the Company direct from manufacturers or suppliers on an
arm's length basis and no commissions or similar payments are made to the
Vendors or any other intermediaries in respect of such supplies.
13.8 No Outstanding Offers: No offer, tender or the like given or made by the
Company and still outstanding is capable of giving rise to a contract
merely by any unilateral act of a third party.
13.9 No Liabilities: The Company does not have and at Completion will not have
any outstanding debts, liabilities, contracts or engagements, guarantees,
undertakings or liabilities (including contingent liabilities) other than
liabilities implied by statute or
[INIT] 38
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disclosed in the Financial Statements or incurred in the ordinary and
proper course of its trading business.
13.10 Continuance of Name: The Company does not and pending Completion will not
use on its letterheads, brochures, sales literature, books, Premises or
vehicles or otherwise carry on its business under any name other than its
corporate name.
13.11 Electronic Storage: The Company has not and will not pending Completion
have any of its records, systems, controls, data or information recorded,
stored, maintained, operated or otherwise dependent upon or held by any
means (including any electronic, mechanical or photographic process
whether computerised or not) which (including all means of access thereto
and therefrom) are not under the exclusive ownership and direct control
of the Company. There has been no breach of any service or maintenance
contract relevant to any such electronic, mechanical or photographic
process or equipment whereby any person or body providing services or
maintenance thereunder may have the right to terminate such service or
maintenance contract.
13.12 Transactions with Associated Persons: The Vendors and their Associated
Persons have not entered into and will not prior to Completion enter into
any loan, borrowing, agreement or other arrangement with or on behalf of
the Company (other than as employee of the Company on terms fully
disclosed to the Purchaser) and are not and will not at Completion be
interested, whether directly or indirectly, in or have any Charge over
any of the assets of the Company.
14. Corporate Matters
14.1 Share Capital: There is not now outstanding and will not be outstanding
at Completion in respect of the Company any option or agreement under
which any person has or may in any circumstances have or acquire the
right to subscribe for or purchase any share or loan capital of the
Company or to convert any stock or share or security into share capital
or into share capital of a different class.
14.2 Attorneys: The Company has not given any power of attorney or any other
authority (express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment or do
anything on its behalf (other than any authority of employees to enter
into routine trading contracts in the normal course of their duties) nor
will it do so prior to Completion.
14.3 Officers: Since the Last Accounting Date no appointments or removals of
any officers of the Company have been made.
14.4 Ultra Xxxxx Contracts: To the best of Xxxxx'x knowledge and belief none
of the activities or contracts or rights of the Company is ultra xxxxx,
unauthorised, invalid or unenforceable or in breach of any contract or
covenant.
[INIT] 39
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SCHEDULE 3
(clause 7.3)
1. Warranty Limitations: Notwithstanding any other provisions of this
Agreement, neither the Vendors or Xxxxx shall not 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 the Purchaser becomes aware or ought to
have become aware of any breach, they shall have received from the
Purchaser written notice containing full details of the relevant
Proceedings including, if practicable, the matter or default which gives
rise to the Proceedings, the breach that results and the amount claimed
in respect of the Proceedings:
1.1.1 Other than Taxation: In the case of any of the Warranties other
than Warranties in relation to Taxation, within a period of 2
years after Completion; or
1.1.2 Taxation: In the case of any of the Warranties in relation to
Taxation, within a period ending the earlier of the date 7 years
after Completion and the date falling six weeks after the date on
which any relevant statutory limitation period in the jurisdiction
relevant to the Taxation Proceedings shall expire;
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 the Vendors and Xxxxx breach of Warranties
exceeds $5,000;
1.3 Limit for Single Proceedings: Unless, in respect of any single breach of
any of the Warranties, the amount of the liability of the Vendors and
Xxxxx 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 the Purchaser or the Company under any policy of
insurance effected by or for the benefit of the Company 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 Provisions Made in Account: If and to the extent that proper provision or
allowance therefor has been made in the Financial Statements;
1.7 Subsequent Changes: If and to the extent that such Proceedings and any
Costs in connection therewith arise or is increased as a result of:
[INIT] 40
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1.7.1 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
1.7.2 The passing of, or any change in, any legislation after the date
of this Agreement; or
1.7.3 Any change in accounting policy or practice of the Company after
Completion including any changes in methods or practices in
relation to stock valuation;
1.7.4 Any voluntary act or omission or transaction of the Purchaser or
the Company after Completion otherwise than in the ordinary course
of the Company's business as carried on at the date of this
Agreement including (without limitation):
1.7.5 The payment of any unusual or abnormal dividend by the Company;
1.7.6 A change of the date up to which the Company makes up its
Statutory Books;
1.7.7 The cessation of any business carried on by the Company;
1.8 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 information disclosed with the Disclosure Information, the
Disclosure Letter or in any document disclosed to the Purchaser or any
officer of or professional adviser to the Purchaser in relation to this
Agreement or the matters contemplated herein or in the Financial
Statements;
1.9 Utilisation of Taxation Relief: In the case of a Proceedings arising in
connection with a payment of Taxation, if and to the extent that such
payment could have been avoided by the utilisation of trading losses or
other reliefs from Taxation (other than trading losses, or other reliefs
arising after the Last Accounting Date) available to the Company;
1.10 Over Provision in Financial Statements: If and to the extent that there
is any over provision in respect of any matter included in the Financial
Statements;
1.11 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 the Vendors or Xxxxx pays an amount
pursuant to a Proceedings in respect of breach of any of the Warranties
and the Company or the Purchaser has a right of reimbursement against any
person other than the Company in respect of or relating to those
Proceedings, the Company or the Purchaser shall (subject to the Company
or the Purchaser, as the case may be, being indemnified to its reasonable
satisfaction by the Vendors or Xxxxx against all reasonable Costs) take
all
[INIT] 41
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reasonable steps or proceedings to enforce such right. If the Purchaser
subsequently recovers such reimbursement from such third party, the
Purchaser shall forthwith repay to the Vendors or Xxxxx as the case
requires such part of the amount paid by either of them by way of damages
for breach of that Warrant as equals the amount which is so recovered by
the Purchaser in respect of the facts, matters or circumstances giving
rise to the breach of that Warranty (after taking account of the Costs of
recovery and (if appropriate) any Taxation arising solely as a result of
the recovery).
4. Conduct of Proceedings by the Vendors/Xxxxx: The Purchaser shall give and
shall procure that the Company shall give, to the Vendors and Xxxxx full
facilities to investigate any Proceedings and the extent of possible
liability under the Warranties and at the request of the Vendors or Xxxxx
shall (subject to the Purchaser being indemnified as to any reasonable
Costs which may be incurred thereby) allow them at their own expense to
participate in, or have the conduct of (as they may elect), all
proceedings of whatsoever nature against the relevant third party arising
out of, or in connection with such Proceedings or dispute, in the name of
the Company or the Purchaser as it may consider necessary in order to
mitigate any Proceedings or Costs arising under this Agreement. Neither
the Purchaser nor the Company shall accept or pay or compromise any such
liability or Proceedings as is referred to above without the Vendors or
Xxxxx either consenting to such action or having a reasonable opportunity
to resist the same.
5. Limitation on Aggregate Liability: The total liability of the Vendors and
Xxxxx under this Agreement whether under the Warranties or otherwise in
respect of all breaches or claims whatsoever shall not exceed a maximum
aggregate sum equivalent to the total Consideration paid to, or otherwise
received by, the Vendors.
6. No Double Liability: No liability shall attach to the Vendors or Xxxxx
for any loss resulting from any breach of the Warranties or otherwise
under this Agreement to the extent that the same loss has been recovered
by the Company or the Purchaser under any indemnity under this Agreement.
No liability shall attach to the Vendors or Xxxxx under any indemnity to
the extent that the same loss has been recovered by a claim under a
Warranty.
7. Insurances: If, in respect of any claim against the Vendors or Xxxxx
which may arise in respect of this Agreement, the Purchaser or the
Company is entitled to claim under any policy of insurance, then the
Vendors and Xxxxx shall not be liable in respect of such claim until a
claim has been made under such policy. Any claims against the Vendors
and/or Xxxxx shall be reduced by any amount actually recovered under any
such policy.
[INIT] 42
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SCHEDULE 4
(clauses 9.1.3)
Item 1. Consents (clause 9.1.3)
Hanimex (N.Z.) Limited
Xxx Xxxxxxxx Trust
Item 2. Charges (clause 4.1.3)
Debenture in favour of the Xxx Xxxxxxxx Trust dated 9 April 1997
Item 3. Guarantees (clause 4.2)
Melco NZ Limited
Company motor vehicle leasing (x2)
Premises lease
Equipment Finance Limited
Note: the above contracts are "not material" for the purposes of
clause 9.1.3
Item 4. The Software Licensing Agreement Variation document (copy
attached) (clause 4.1.8)
Item 5. The Hanimex Variation Agreement (copy attached) (clause 4.1.9)
Item 6. The Mortgage of Shares (clause 5.1.10)
[INIT] 43
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ANNEXURES
1. Financial Statements (clause 1.1)
2. Service Agreement (clause 4.1.4)
3. Form of Escrow Agreement (clause 1.1)
4. Assets Schedule (clause 3.1.2)
5. Disclosure Letter
[INIT] 44
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================================================================================
N.Z. On Line Limited
====================
Financial Statements
====================
For the Six Months
==================
To 30th Sep 1997
================
XXXXX X. XXXXXX A.C.A.
CHARTERED ACCOUNTANT
P.O. BOX 74-000 XXXXXX XXXX
XXXXXXXX
PH 000-0000
================================================================================
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PARRILOTT PTY. LTD. 30-Sep-97
PAGE 2
Balance Sheet
As at 30-Sep-97
LAST YEAR ACCOUNT NAME THIS YEAR
CURRENT LIABILITIES
- LOAN - N.Z. OnLine Ltd. 42,681
- LOAN - Intern.Telecommunicatn. 100
- SUNDRY CREDITORS 1,427
- SHAREHOLDERS LOANS 452
------------- -------
TOTAL CURRENT LIABILITIES 44,660
------------- -------
TERM LIABILITIES
------------- -------
TOTAL LIABILITIES 44,660
============= =======
------------- -------
EXCESS ASSETS/LIABILITIES 53,971
============= =======
END OF REPORT 21 RECORD(S) PRINTED 03:42:O2pm 19-Nov-97
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--------------------------------------------------------------------------------
DATED the day of 1997
BETWEEN
NEW ZEALAND ONLINE LIMITED
("the Company")
AND
XXXXXXX XXXXX XXXXX
("Employee")
--------------------------------------------------------------------------------
EMPLOYMENT CONTRACT
--------------------------------------------------------------------------------
----------
XXXXXX XXXXXXX HARFORD
SOLICITORS
NEWMARKET
--------------------------------------------------------------------------------
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2
EMPLOYMENT CONTRACT
DATED the day of 1997
BETWEEN: NEW ZEALAND ONLINE LIMITED at Auckland
("the Company")
AND: XXXXXXX XXXXX XXXXX of Auckland, Company Director
("the Employee")
THE PARTIES AGREE as follows:
1 TERM
1.1 This Employment Contract records the terms and conditions of the
employment of the Employee by the Company, which will apply to the
Employee from the date this agreement is signed. This Employment Contract
supersedes and replaces all previous written or verbal agreements between
the parties.
1.2 The terms and conditions of this agreement shall come into force on the
date this Contract is signed and shall run for a term expiring on the
3Oth day of March 2001, unless this Agreement shall be earlier terminated
in accordance with the termination provisions of this Agreement. The
parties agree that there is no expectation that further employment will
be offered at the end of the Term and nothing in this agreement shall
oblige the Company to make such an offer, or the Employee to accept any
offer that may be made.
1.3 This Agreement is entered into pursuant to the terms of a certain
Agreement for Sale and Purchase of Shares ("the Share Agreement") dated
the 24th day of December 1997 made between Xxxxxxx Investments (NZ)
Limited ("the Purchaser") as Purchaser and Xxxxxxxx Xxxx Xxxx and M & H
Trustee Services Limited ("the Vendor") as Vendor relating to all the
shares in the Company. Related to the Share Agreement is an Escrow
Agreement and a Deed of Mortgage of all the shares in the Company to be
entered into by (enter alia) the Vendor and the Purchaser. In this
Employment Contract, the term "Relevant Agreement" refers to the Share
Agreement, the Escrow Agreement and the Deed of Mortgage of Shares. In
the event of there being any inconsistency or ambiguity between any
provision in this Employment Contract and any provision in the Share
Agreement, the provisions of the Share Agreement shall prevail.
[INIT]
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3
2 DUTIES AND RESPONSIBILITIES
2.1 You shall be responsible for the overall and daily activities of the
Company and shall carry out and discharge the duties and responsibilities
commonly expected of a Managing Director and a General Manager based on
the size of the operation planned by the Company. You accept that you may
be required to perform other duties or tasks outside the scope of your
normal duties.
2.2 It is expected that your duties will be performed in accordance with the
instructions of the Company and that you will devote all of your normal
working hours and best endeavour to performing your duties in a manner
which will promote the interest of the Company.
3 HOURS OF WORK
3.1 By virtue of the nature of responsibilities on any director and manager,
the nature of the business of the Company and the international nature of
the Company is business, you acknowledge that the performance of your
duties will require work to be carried out outside the normal hours of
business. The salary specified in clause 4.1 will be accepted as full
payment for all work performed in the course of your duties as managing
director and general manager.
4 REMUNERATION
4.1 Your base salary is $55,000 per annum, to be reviewed annually.
4.2 You will be entitled to the payment of a bonus detailed in the Schedule,
upon achieving the criteria set out in the Schedule.
4.3 Motor Vehicle Allowance - You shall be paid an annual Motor Vehicle
Allowance of $18,000.00 gross per annum.
4.4 Expenses - Subject where appropriate to the production of the relative
GST invoices (or other appropriate invoices) you will be reimbursed for
all out-of-pocket expenses properly and reasonably incurred in the
performance of your duties hereunder PROVIDED THAT in each case they are
in accordance with the requirements of the Company's policy on expenses
applicable at the time (if any).
5 PAYMENT OF REMUNERATION
5.1 Base salary will be paid monthly, by direct credit to the bank account of
your choice.
5.2 Any variable component of bonus will be paid by the 30th of the month
following the bonus period, or the Wednesday following the 30th. Any
non-variable component of
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bonus will be paid quarterly, no later than the 30th of the month
following the applicable quarter. Such payments shall be made by direct
credit to a bank of your choice.
5.3 The vehicle allowance shall be paid at the same time as the salary
payment, and paid by direct credit as above.
5.4 No deduction shall be made from your salary without your consent, except
for time lost through sickness or default or accident to yourself unless
required by law or clause 7 below.
5.5 The Company will provide you with a statement of your earnings and
deductions for a pay period at your request or where there is any change
to your salary payments.
5.6 The Company reserves the right to change the date of payment of salaries
to the 15th of each month or the following Monday thereafter, such
payment being made in advance up to and inclusive of the end of the
month. Three months notice of this change will be given.
6 APPRAISAL
6.1 An appraisal will be carried out at least annually, generally in the
month of April.
7 STATUTORY HOLIDAYS
7.1 Public holidays shall be granted and observed in accordance with the
provisions of the Holidays Act 1981.
7.2 Any time worked on a statutory holiday that has been authorised by the
Company shall be taken in lieu on a day that it mutually agreed upon or
credited to your annual holiday accumulation.
8 ANNUAL HOLIDAYS
8.1 Annual holidays are provided in accordance with the provisions of the
Holidays Act 1981 and its amendments.
8.2 Holiday entitlements are calculated to 31st March each year. If a full
year has not been worked then entitlement is calculated at 6% of the
ordinary gross pay earned to date.
8.3 Four (4) weeks holiday may be taken each year including the year ending
31 March 1998.
8.4 If your employment is terminated and your period of employment is less
than one year, the Company shall pay you an amount equal to 6% of your
gross taxable earnings, minus any holiday pay you have already received.
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8.5 Requests for annual leave must be submitted for approval at least 30 days
in advance.
9 SICK LEAVE AND DOMESTIC LEAVE
9.1 You shall be entitled to sick pay of 7 days in each 12 month period of
employment.
9.2 Sick pay shall be accumulative to up to 21 days.
9.3 The Company may, at its discretion, require you to provide a medical
certificate for any sick leave or domestic leave absence. You shall be
required to provide a medical certificate where you are absent for more
than 2 days for sick leave or domestic leave absence.
9.4 You shall ensure notice is given to us that you are sick or taking
domestic leave, not later than one hour prior to your normal commencing
time and you shall notify us as soon as possible when a return to work is
likely.
9.5 The Company shall also have the right to require you to produce
additionally, a medical certificate at our expense, from a doctor
nominated by ourselves.
9.6 Domestic Leave - Where you have any unused sick leave entitlement, leave
of up to 7 days per year shall be granted where you find it essential to
stay at home in an emergency. This will be available in the event of
illness of your spouse, a dependant child or parent, or maternity
confinement. Such leave shall be treated as though it was due to your own
sickness and this shall be set off against your own sick leave
entitlement.
9.7 Sick leave and domestic leave will not be paid on a day on which a
holiday is being observed.
9.8 The Company may at its discretion grant additional sick leave or domestic
leave with/without pay where special circumstances exist.
10 BEREAVEMENT LEAVE
10.1 In the event of the death of any of your immediate family, being your
spouse or defacto partner, child, stepchild, parent, brother, sister,
mother-in-law, father-in-law, brother-in-law, sister-in-law, grandparent,
or grandchild, the Company shall allow paid leave up to a maximum period
of 3 days on each occasion. The Company may, at its discretion, ask you
for confirmation of the bereavement.
10.2 The Company may at its discretion, grant additional leave without pay
where the Company considers special circumstances exist.
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11 SPECIAL HOLIDAYS CLAUSE
11.1 Note that the entitlements in Clauses 10 and 11 are inclusive of and not
in addition to the entitlements for Special Leave provided in Section
30(A) of the Holidays Act 1981 and amendments.
12 UNPAID LEAVE
12.1 Where you need to be away from work for personal reasons the Company may
grant limited time off work without pay. Such leave must be authorised by
the Company in advance.
13 PARENTAL LEAVE
13.1 Parental Leave shall be granted in accordance with the provisions of the
Parental Leave and Employment Protection Act 1987 and its amendments.
14 JURY SERVICE
14.1 Where you are obliged to undertake jury service, the difference between
the fees (excluding reimbursing payments) paid by the Court and your
salary shall be made up by ourselves provided:
15.1.1 That you produce the Court expenses voucher to us.
15.1.2 That you return to work immediately on any day that you are not
actually serving on a jury.
14.2 These payments shall be made for up to a maximum of 15 days in respect of
each separate period of jury service.
14.3 You must advise us on the first normal workday after notification of jury
service is received.
15 TUITION LEAVE
15.1 Where, with the Company's prior written approval, you attend any
job-related course during working hours, you shall be allowed paid time
off.
15.2 Where you pass all the necessary requirements and complete the course,
the Company may reimburse you for the cost of tuition and examination
fees.
15.3 Where you initiate and take tuition leave at your own request and where
you terminate your own employment within 12 months of having the tuition
fees or examination fees
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paid on your behalf, you shall reimburse the Company for fees paid on a
pro rata basis.
16 TERMINATION OF EMPLOYMENT
16.1 The Company may summarily terminate your employment in the case of
serious misconduct and/or serious breach of this contract, having already
received warning from the Company.
16.2 Where you are unable to complete your duties due to sickness your
employment may be terminated by not less than three (3) months notice.
16.3 This Employment Contract may be terminated immediately by the Employee by
written notice to the Company in the event of a Relevant Agreement being
breached by any party thereto other than the Employee and the Vendor
named in clause 1.3.
16.4 If Company issued gear or property is lost, or in the Company's opinion
is wilfully damaged it will be treated as a default by yourself and the
Company shall have the right to recover from you the cost of repairing or
replacing any such items.
16.5 Where employment is terminated by either party and the effective last day
of duty is prior to the normal pay period end date, the Company shall be
entitled to deduct or recover such salary paid in advance.
17. REDUNDANCY
17.1 In the event that your position becomes surplus to the needs of the
Company, you shall be given 3 months notice of termination of employment
(or pay in lieu of notice).
17.2 Redundancy compensation shall be paid to you in the sum of a further
three months salary.
17.3 No redundancy compensation shall be payable in any situation where the
termination of your employment arises as a result of the sale or transfer
of the whole or part of the Company's business and the person acquiring
the business or part being sold or transferred has offered you employment
in the business or part being sold or transferred and the conditions of
employment offered to you by the person acquiring the business or the
part of the business being sold or transferred are similar to, or more
favourable than, those provided for by this employment contract, or are
otherwise acceptable to you.
18 WARNINGS
18.1 the procedure for warnings shall be:
1. Oral warning.
2. Written warning with two weeks minimum evaluation.
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3. Final Notice.
19 SUMMARY DISMISSAL
19.1 Without precluding any other grounds the following will cause instant
dismissal: theft, sabotage, assault on a customer or fellow worker,
deception.
20 RETIREMENT
20.1 The retirement age for all employees if 65. However the employer may
continue to offer employment beyond this age on a casual basis.
21 CONFIDENTIALITY
21.1 For the purposes of this Employment Contract, the term "Confidential
Information" includes any information, regardless of the manner in which
it is recorded, relating to the business, affairs, financial or
commercial arrangements of the Company other than information which:
21.1.1 At the time of disclosure was in the public domain or which
subsequently enters the public domain without fault on your part;
or
21.1.2 At any time is received by you in good faith from a third party
who has lawful possession of such information and the right to
disclose it; or
21.1.3 That it was in your possession or known to you or developed by you
without knowledge of or reference to the Company's information.
21.1.4 Constitutes know-how and business information and methods of the
Employee.
21.2 You shall not at any time (whether during your employment or after
termination or your employment) except as specifically authorised by
Company disclose to any person or copy or make use of in any manner any
Confidential Information.
22 OTHER EMPLOYMENT
22.1 The Employee must not, without the written consent of the employer,
undertake paid employment that conflicts with the interests of the
Company or which impedes the Employee from performing his duties.
23 PERSONAL GRIEVANCE
23.1 All personal grievance claims (as that term is defined in the Employment
Contracts Act 1991) ("Claims") shall be resolved in accordance with this
clause 23.
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23.2 If you have a Claim, you must, within 90 days of the Claim arising or
coming to your attention (whichever is the latter), notify the Company in
writing of the nature of the Claim and the remedies sought ("Claim
Notice").
23.3 We shall then both use our best endeavours to resolve the Claim.
23.4 If within 14 days of the Company receiving the Claim Notice we have not
resolved the Claim, the Company will notify you in writing of the reasons
the Company is not prepared to grant the remedies sought by you.
23.5 The Claim shall then, at the request of either party by written notice to
the other, be referred to mediation.
23.6 The following procedure shall be followed in respect of any mediation:
23.6.1 The mediator shall be as agreed by you and the Company. If we are
unable to agree, the mediator shall be an accredited mediator
appointed by the Chairperson for the time being of the New Zealand
branch of LEADR (Lawyers Engaged in Alternative Dispute
Resolution).
23.6.2 We shall each diligently and in good faith co-operate and
participate in the mediation process making genuine attempts to
find a solution acceptable to both you and the Company.
23.6.3 If no agreement is reached within 28 days of the Company receiving
the Claim Notice or, alternately, if we both agree to abandon the
mediation process then the mediator shall conclusively decide the
matter in question as an arbitrator and his or her ruling shall be
final and binding.
23.7 The subject matter of all Claims and the outcome of any settlement shall
be confidential.
24 DISPUTES
24.1 All disputes (as that term is defined in the Employment Contracts Act
1991) ("Disputes") shall be resolved in accordance with this clause 24.
24.2 If you have a Dispute, you must, within 14 days of he Dispute arising or
coming to your attention (whichever is the latter), notify the Company in
writing of the nature of the Dispute and the remedies sought ("Dispute
Notice").
24.3 We shall then both use our best endeavours to resolve the Dispute.
24.4 If within 14 days of the Company receiving the Dispute Notice we have not
resolved the Dispute, the Company will notify you in writing of the
reasons the company is not prepared to grant the remedies sought by you.
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24.5 The Dispute shall then, at the request of either party by written notice
to the other, be referred to mediation in accordance with the procedure
set out in clause 19.6.
24.6 The subject matter of all Disputes and the outcome of any settlement
shall be confidential.
25 VARIATIONS
25.1 Any of the terms and conditions contained in this contract may be varied
by written agreement of the parties.
26 GOVERNING LAW
26.1 This agreement shall be governed and construed in all respects in
accordance with New Zealand law and the parties hereto submit to the
exclusive jurisdiction of the New Zealand Courts.
27 INDEMNITY OF THE EMPLOYEE
27.1 The Company hereby indemnifies the Employee for costs incurred by you in
any proceedings:
(a) that relates to liability for any act or omission in your capacity
as a director or employee;
(b) in which judgement is given in your favour or in which you are
acquitted, or which has discontinued.
27.2 The Company hereby indemnifies you in respect of:
(a) liability to any person (other than the Company) for any act or
omission in your capacity as a director or employee of the
Company; and
(b) costs incurred by you in defending or settling any claim or
proceeding relating to or any liability under paragraph (a) above
not being a criminal liability in respect of a breach, in the case your
case as a director of the duty specified in Section 131 of the Companies
Act 1993 (duty to act in good faith and in the best interests of the
Company) or, whether as a director or employee, of any fiduciary duty
owed to the Company.
27.3 For the purpose of this clause 27, "indemnify" includes relieve or excuse
from liability whether before or after the liability arises, and
"indemnity" has a corresponding meaning.
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27.4 The indemnity given in this clause 27 shall not extend to any liability
to Hanimex (NZ) Limited under the System Development Agreement dated the
15th of September 1997 until the 31st day of March 2001, on which date
this indemnity shall extend to all such liability in respect of events
arising after that date.
ENTERED into by )
NEW ZEALAND ONLINE )
LIMITED by its director )
XXXXXXX XXXXX XXXXX )
in the presence of ) _____________________________
X X Xxxxx
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
SIGNED by )
XXXXXXX XXXXX XXXXX )
in the presence of ) _____________________________
X X Xxxxx
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
28 INTELLECTUAL PROPERTY
Your intellectual property rights to intellectual property created during
the term of this Employment Contract will be modified to the extent set
out in the Share Agreement.
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SCHEDULE
BONUS SCHEME
In this Schedule:
Annual Budget means the Company's annual budget (1st April to 31st
March in each year) as determined by the Company.
NPAT menus net profit after tax and before interest.
Special Licensing Transactions (as defined below)
shall not be included as income in determining the
Company's actual performance against the Budgeted
NPAT for the purposes of calculating Initial Bonus
and Over-Achievement Bonus.
Budgeted NPAT means the Company's NPAT calculated by reference to
the Annual Budget.
Special Licensing
Transaction means any single fee (excluding hardware) paid by
any of the Potential Transactions (as defined below)
with a total value in excess of NZ$250,000 where the
particular transaction either:
(a) Provides the client with a level of
exclusivity in an industry, market, region,
or country for a specified period of time; or
(b) Gives the client the right to use the
technology as part of another application.
Potential
Transactions means any transaction with any of the following
potential clients in respect of the associated
product:
Potential client: Associated products:
Fuji Japan Pictrix, Pictography drivers
Photo Corporation Digital candid and "blue
screen" technology
Vivitar Camera devices
Ritz Group Pictrix
Hewlett Packard Pictrix gateway software
Harrahs Casino Group "Blue screen" technology
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Bonuses shall be calculated in accordance with the following formulae:
1. Initial Bonus
A variable component to a maximum of $35,000.
The Initial Bonus shall be calculated against the Company's
achievement of Budgeted NPAT. If the Company achieves less than
50% of Budgeted NPAT, no Initial Bonus shall be paid in respect of
that year. If the Company achieves 50% or more of Budgeted NPAT
you shall be paid an Initial Bonus calculated on a pro rata basis
against the Company's performance in achieving between 50% and
100% of Budgeted NPAT.
2. Over-Achievement Bonus
As an additional incentive, 5% of NPAT generated over and above
Budgeted NPAT will be paid after the end of each financial year.
3. Special Licensing Transactions
Income generated from Special Licensing Transactions shall be
apportioned between New Zealand OnLine Limited and the Employee
according to the following table:
(a) 1st November 1987 to 31t March 1998
Xxxxxxx Xxxxx 70%
New Zealand OnLine Limited 30%
(b) 1st April 1998 to 30th September 1998
Xxxxxxx Xxxxx 50%
New Zealand OnLine Limited 50%
(c) 1st October 1998 to 31st March 1999
Xxxxxxx Xxxxx 30%
New Zealand OnLine Limited 70%
(d) 1st April 1999 onwards
New Zealand OnLine Limited 100%
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4. Examples
Example 1:
Budgeted NPAT for the period 1st April 1997 to 31st March $1,000,000
1998
Actual NPAT $900,000
Income generated from Special Licensing Transactions $500,000
Bonus payable:
Initial Bonus (clause 1) - 80% of $35,000 $25,000
Over-Achievement Bonus (clause 2) - 5% of NPAT generated
over and above Annual Budget Nil
Specified Licensing Transaction Bonus (clause 3) -
70% of $500,000 $350,000
Example 2:
Budgeted NPAT for the period 1st April 1998 to 31st March $1,000,000
1999
Actual NPAT $1,500,000
Income generated from Special Licensing Transactions:
(a) For the period 1st April 1998 30th September 1998 $300,000
(b) For the period 1st October 1998 to 31st March 1999 $300,000
Bonus payable:
Initial Bonus (clause 1) - 100% of $35,000 $35,000
Over-Achievement Bonus (clause 2) - 5% of 500,000 $25,000
Specified Licensing Transaction Bonus (clause 3) -
(a) 50% of $300,000 $150,000
(b) 30% of $300,000 $90,000
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--------------------------------------------------------------------------------
DATED the day of 1997
BETWEEN
XXXXXXX INVESTMENTS LTD
("the Issuer")
AND
MONTREAL TRUST COMPANY OF CANADA
("the Trustee")
AND
XXXXXXX INVESTMENTS (NZ) LIMITED
("the Guarantor")
XXXXXXXX XXXX XXXX
and
M & H TRUSTEE SERVICES LIMITED
("the Security Holder")
---------------------------
ESCROW AGREEMENT
CONCERNING SHARES
IN
XXXXXXX INVESTMENTS LIMITED
---------------------------
---------------------------
XXXXXX XXXXXXX HARFORD
SOLICITORS
NEWMARKET
--------------------------------------------------------------------------------
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ESCROW AGREEMENT
DATED the day of 1997
BETWEEN XXXXXXX INVESTMENTS LTD at Alberta, Canada ("the Issuer")
AND MONTREAL TRUST COMPANY OF CANADA at Alberta, Canada ("The
Trustee")
AND XXXXXXX INVESTMENTS (NZ) LIMITED at Auckland (AK/629109) ("the
Guarantor")
AND XXXXXXXX XXXX XXXX of Whangarei, District Court Judge and M & H
TRUSTEE SERVICES LIMITED at Auckland ("the Security Holder")
INTRODUCTION
1. The Security Holder the Issuer and the Guarantor have entered into an
agreement dated the __________ day __________ of 1997 whereby the
Security Holder has agreed to sell his shareholding in New Zealand OnLine
Limited at Auckland to the Issuer, the consideration for the Property
being in part the allotment of shares in the Issuer to the Security
Holder.
2. One of the terms of the Sale Agreement is that the BIL Shares upon
allotment are to be deposited with the Trustee pursuant to the terms of
this Agreement.
3. The Trustee has agreed to undertake and perform its duties according to
the terms and conditions under this Agreement.
THE PARTIES AGREE as follows:
1. Interpretation
1.1 In this Agreement unless the context otherwise requires:
"Sale Agreement" means the agreement between the Security Holder
and the Issuer and the Guarantor dated the 24th day of December
1997.
"Property" means the Security Holder's 600 A shares, 300 B shares
and 300 C shares in New Zealand OnLine Limited at Auckland.
"BIL Shares" mean the shares allotted or to be allotted by the
Issuer to the
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2
Security Holder as part consideration for the purchase of the
Property, and includes any rights to shares, and any option or
other security of the Issuer that are, or may become convertible
into common or ordinary shares or other voting securities of the
Issuer;
"Cash Flow" means net income of NZOL after tax and before
interest, as shown in the audited financial statements as verified
by KPMG Peat Marwick (Auckland), adjusted for the following
add-backs:
(i) depreciation
(ii) depletion
(iii) deferred taxes
(iv) amortization of goodwill
(v) amortization of research and development costs.
"Exchange" means the principal stock exchange on which the
Issuer's Common Shares are listed and posted for trading.
"NZOL" shall mean New Zealand OnLine Limited at Auckland, New
Zealand.
1.2 Clauses of the words importing the singular number shall include
the plural and vice versa.
1.3 References to persons shall be deemed to include the references to
individuals, companies, corporations, firms, partnerships, joint
ventures, associations, organisations, trusts, states or agencies
of state, government departments and local authorities in each
case whether or not having separate legal personality.
1.4 Expressions defined in the main body of this Agreement bear their
defined meaning in the whole of this Agreement including the
recitals.
1.5 Words importing one gender shall include the other genders.
2. Consideration
2.1 In consideration of the sum of ONE DOLLAR ($1.00) paid by the
parties to each other, receipt of this sum being acknowledged by
each of the parties, the Security Holder covenants and agrees with
the Issuer and with the Trustee, and the Issuer, the Trustee and
the Guarantor covenant and agree each with the other and with the
Security Holder as set out below.
3. Securities deposited with Trustee
3.1 The Security Holder hereby agrees to place and deposit in escrow
with the Trustee the BIL Shares which are to be issued to the
Security Holder in part
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consideration for the Property pursuant to the terms of the Sale
Agreement, immediately upon the issue of the BIL Shares.
3.2 The Security Holder agrees to deposit in escrow any further
certificates representing shares in the Issuer which the Security
Holder may receive as a stock dividend on shares hereby escrowed,
and to deliver to the Trustee immediately on receipt thereof the
certificates for any such further shares and any replacement
certificates which may at any time be issued for any escrowed
shares.
3.3 The Parties hereby agree that, subject to the provisions of clause
5, the BIL Shares and the beneficial ownership of or any interest
in them and the certificates representing them (including any
replacement shares or certificates) shall not be sold, assigned,
hypothecated, alienated, released from escrow, transferred within
escrow, or otherwise in any manner dealt with, without the written
consent of the Exchange given to the Trustee or except as may be
required by reason of the death or bankruptcy of the Security
Holder, in which case the Trustee shall hold the said certificates
subject to this Agreement, for whatever person, or company shall
be legally entitled to become the registered owner thereof
3.4 The Security Holder directs the Trustee to retain the BIL Shares
and the certificates (including any replacement shares or
certificates) representing them and not to do or cause anything to
be done to release them from escrow or to allow any transfer,
hypothecation or alienation thereof without the written consent of
the Exchange.
3.5 The Security Holder prior to applying to the Exchange for a
consent for a transfer within escrow shall, before applying, give
notice in writing of his intention to the Issuer and the Trustee.
3.6 If a dividend is declared while the BIL Shares or any of them
continue to be held in escrow under this Agreement, then the
dividend shall be paid to the Trustee, who shall hold the dividend
in escrow on the same terms as the BIL Shares, such dividend to be
subject to release to the Security Holder or return to the Issuer
(as the case may be) in the same manner as the BIL Shares to which
the dividend is attributed. Any options or rights issues or other
securities which may be issued by the Issuer relating to the BIL
Shares granted while any of the BIL Shares are held in escrow
under this Agreement shall also be held by the Trustee in escrow
on the same terms as the BIL Shares, such options or rights or
other issues to be subject to release to the Security Holder or
return to the Issuer (as the case may be) in the same manner as
the BIL Shares to which such options or rights or other securities
are attributable.
4. Trustee Accepts Obligations
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4
4.1 The Trustee accepts the obligations placed on it under this
Agreement and hereby agrees to perform the obligations in
accordance with the terms of this Agreement and any written
consents, orders or directions of the Exchange.
4.2 The Security Holder and the Issuer hereby agree to and do hereby
release and indemnify and save harmless the Trustee from and
against all claims, suits, demands, costs, damages and expenses
which may be occasioned by reason of the Trustee's compliance in
good faith with the terms of this Agreement.
4.3 If the Trustee should wish to resign, it shall give at least 3
months notice to the Issuer which may, with the written consent of
the Exchange, by writing appoint another trustee in its place and
such appointment shall be binding on the Security Holder, and the
new Trustee shall assume and be bound by the obligations of the
Trustee hereunder.
5. Release of Escrowed Shares
5.1 Immediately upon receipt of written notice of NZOL's Cash Flow for
each of the NZOL financial years ending 31 March 1999 and 31 March
2000, the Trustee shall release to the Security Holder that number
of BIL Shares which shall be equal in value to NZOL's Cash Flow
for the preceding fiscal year as notified to the Trustee.
5.2 The Trustee in calculating the number of BIL Shares to release
pursuant to clause 5.1 above shall use:
5.2.1 The average of the Westpac Trust Foreign Exchange buy and
sell rates on 31 March 1998 as the exchange rate for
conversion of the New Zealand dollar denominated NZOL Cash
Flow sum to Canadian dollars; and
5.2.2 The BIL Share price shall be the price of the Issuer's
common shares on the Exchange at the close of business on
31 March 1998.
5.3 The Issuer shall ensure that the Trustee shall receive written
notification of NZOL's Cash Flow no later than the 20th day of
June in the years 1999 and 2000 respectively.
5.4 A release from escrow of all or part of the BIL Shares shall
release from this Agreement those BIL Shares so released. For
greater certainty, this clause does not apply to shares
transferred within escrow.
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5
5.5 Any BIL Shares remaining in escrow following the final release of
shares in April 2000 shall be cancelled by the Issuer.
6. Issuer Wound Up
6.1 If the Issuer is wound up and any BIL Shares remain in escrow
under this Agreement at the time when a distribution of assets to
holders of shares is made by the liquidator, the Security Holder
shall assign his right to receive that part of the distribution
which is attributable to the escrowed shares to the Trustee, for
the benefit of, and in trust for the persons and companies who are
then holders of free shares in the Issuer in proportion to their
holdings in the Issuer except that this section shall not apply to
those of the BIL Shares which are or would be entitled to be
released pursuant to clause 5 but have not yet been so released.
7. Voting Rights
7.1 All voting rights attached to the BIL Shares shall at all times be
exercised by the Security Holder or respective registered holders
thereof
8. Issuer's Obligations
8.1 The Issuer hereby acknowledges the terms and conditions of this
Agreement and hereby agrees to take all reasonable steps to
facilitate its performance and to pay the Trustee's proper charges
for its services as Trustee of this escrow.
9. Security Holder's Obligations
9.1 The covenants of the Security Holder with the Issuer in this
Agreement are made with the Issuer both in its own right and as
trustee for the holders from time to time of free shares in the
Issuer, and may be enforced not only by the Issuer by also by any
holder of free shares.
10. Miscellaneous
10.1 This Agreement may be executed in several parts of the same form
and the parts as so executed shall together constitute one
original agreement, and the parts, if more than one, shall be read
together and construed as if all the signing parties hereto had
executed one copy of this Agreement.
10.2 This Agreement shall enure to the benefit of and be binding on the
parties to this Agreement and each of their heirs, executors,
administrators, successors and permitted assigns (if any).
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6
10.3 The proper law for interpretation of this Agreement is the law of
New Zealand and any proceedings relating to a dispute over this
Agreement shall be brought in the High Court of New Zealand unless
the parties hereto, in writing, submit to arbitration.
11. Facsimile copies and counterparts
11.1 The parties acknowledge that the execution of a facsimile copy of
this Agreement and the transmission thereof by facsimile to each
other or their respective agents or solicitors shall be sufficient
to constitute offer and acceptance and to satisfy the requirements
of Section 2 of the Contracts Enforcement Act 1956.
11.2 If any party requires, the original of any facsimile copy of this
Agreement shall be delivered to the party so requesting within
five (5) working days of receiving the request to do so. If the
original is not delivered, the party accepting the facsimile copy
pursuant to this clause may in any court of law or other
proceeding produce, or exhibit such facsimile copy as if it were
the original hereof and no party to this Agreement may object to
such copy being produced or exhibited as an original and shall be
deemed to have waived any law of evidence or other requirement
that an original executed document be produced or exhibited as
evidence of its existence or of its contents.
11.3 This Agreement may be executed in three or more counterparts each
of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
11.4 This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns (if any). The parties shall only become bound to the terms
of this Agreement, by execution of this Agreement by or on behalf
of such party.
12. Limitation of Liability of Trustees
12.1 The parties acknowledge that Xxxxxxxx Xxxx Xxxx, of Whangarei,
District Court Judge and M & H Trustee Services Limited at
Auckland (together "Trustees" and individually "Trustee") have
signed this Agreement in their capacity as trustees pursuant to a
Deed of Trust dated the 26th day of January 1996 known as the Xxx
Xxxxxxxx Family Trust ("the Trust").
12.2 The Trustees together with the executors, administrators, or
personal successors of the Trustees shall be under no personal
liability under this Agreement. The liability of each Trustee
shall at all times and for all purposes be limited to the net
value of the assets for the time being of the Trust together with
such amount as is equivalent to the net value of the assets that
the Trust
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would have had except for the wilful neglect or default of such
Trustee.
12.3 The obligations of each Trustee under this Agreement shall end
when such Trustee ceases to be a trustee of the Trust and there
shall be no right of action against either Trustee in respect of
any matter arising under this Agreement after the date the Trustee
ceases to be a trustee of the Trust.
Xxxxxxx Investments (NZ) Limited Guarantee
1. In consideration of the Security Holder agreeing to enter into this
Agreement the Guarantor unconditionally and irrevocably:
(a) Guarantees by way of continuing obligation to the Security Holder,
as primary obligor and not merely as a surety, the due performance
by the Issuer and the Trustee of all their respective obligations
and liabilities under this Agreement; and
(b) Indemnifies the Security Holder against any loss or damage which
they may suffer as a direct or indirect result of the breach by
the Issuer and/or the Trustee of any of their respective
obligations and liabilities under this Agreement.
2. The obligations of the Guarantor under this Guarantee will not be
discharged, released or otherwise affected by any delay, grant of time,
release, compromise, forbearance (whether partial or otherwise) or other
indulgence granted by the Security Holder to the Issuer and/or the
Trustee or any other person, or by the Security Holder exercising or
refraining from exercising any rights against the Issuer and/or the
Trustee. The rights of the Security Holder under this Guarantee are
cumulative and are not exclusive of any rights provided by law and are to
remain in full force until the full discharge by the Issuer and the
Trustee of all their respective obligations under this Agreement.
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IN WITNESS WHEREOF the Issuer, the Trustee and the Security Holder have caused
their respective corporate seals or hands to be hereto affixed.
SIGNED for and on behalf of )
XXXXXXX INVESTMENTS LIMITED )
(the Issuer) by XXXXXXX XXXXX XXXXXXX )
in the presence of: ) _____________________________
M B Xxxxxxx
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
Is this the appropriate manner for BKI execution?
SIGNED for and on behalf of )
MONTREAL TRUST COMPANY (the Trustee) )
OF CANADA by its director )
___________________ in the presence of: ) _____________________________
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
Is this the appropriate manner for MTC execution?
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SIGNED for and on behalf of )
XXXXXXX INVESTMENTS (NZ) LIMITED )
(the Guarantor) by its two directors )
_______________________________________
Xxxxxxx Xxxx Xxxxxxx
_______________________________________
Xxxxxxx Xxxxx Xxxxxxx
SIGNED by )
XXXXXXXX XXXX XXXX (the Security Holder )
in the presence of: ) _____________________________
X X Xxxx
Witness:
Signature: _____________________________
Name: _____________________________
Occupation: _____________________________
Address: _____________________________
_____________________________
SIGNED for and on behalf of )
M & H TRUSTEE SERVICES LIMITED )
(the Security Holder) by its two directors )
_______________________________________
X X Xxxxxx
_______________________________________
X X Xxxxxxx
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