Document:

Exhibit 10.3

 

 RESTRICTED STOCK AWARD AGREEMENT

May 24, 2016 Performance-Based Award (“ROIC”)

 

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made effective and entered into as of May 24, 2016, by and between PIER 1 IMPORTS, INC., a Delaware corporation (the “Company”), and ______________________ (the “Grantee”).

 

WHEREAS, pursuant to the provisions of the Pier 1 Imports, Inc. 2015 Stock Incentive Plan (the “Plan”), the Committee that administers the Plan has the authority to grant Awards under the Plan to employees of the Company and its Affiliates; and

 

WHEREAS, the Committee has determined that the Grantee be granted a Restricted Stock Award under the Plan for the number of shares and upon the terms set forth below;

 

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

 

1.            Grant of Award.  The Grantee is hereby granted a Restricted Stock Award under the Plan (this “Award”), subject to the terms and conditions hereinafter set forth, with respect to a maximum ________________________________________________(__________) restricted shares of Common Stock.  Restricted shares of Common Stock covered by this Award (the “Performance-Based Shares”) shall be represented by a stock certificate registered in the Grantee’s name, or by uncertificated shares designated for the Grantee in book-entry form on the records of the Company’s transfer agent, in each case subject to the restrictions set forth in this Agreement.  Any stock certificate issued shall bear the following or a similar legend:

 

“The transferability of this certificate and the shares of Common Stock represented hereby are subject to the terms, conditions and restrictions (including forfeiture) contained in the Pier 1 Imports, Inc. 2015 Stock Incentive Plan and the Restricted Stock Award Agreement entered into between the registered owner and Pier 1 Imports, Inc.  A copy of such plan and agreement is on file in the offices of Pier 1 Imports, Inc., 100 Pier 1 Place, Fort Worth, Texas 76102.”

 

Any Common Stock certificates or book-entry uncertificated shares evidencing such shares shall be held in custody by the Company or, if specified by the Committee, with a third party custodian or trustee, until the restrictions thereon shall have lapsed, and, as a condition of this Award, the Grantee shall deliver a stock power, duly endorsed in blank, relating to any certificated restricted shares of Common Stock covered by this Award.

 

2.            Transfer Restrictions.  Except as expressly provided in this Agreement and the Plan, this Award and the Performance-Based Shares are non-transferable.  Upon any attempt to effect any such disposition, or upon the levy of any such process, this Award shall immediately become null and void and the Performance-Based Shares shall be forfeited.

 

3.            Restrictions.

 

(a) Certain Definitions.  For purposes of this Award, the term:

 

“Closing Price(s)” means on any date the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in the composite transactions table for the principal U.S. national or regional securities exchange on which the common stock is listed for trading. If the common stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, then the “Closing Price” of the common stock will be the average of the bid and ask prices (or, if more than one in either case, the average of the average bid and the average ask prices) for the common stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or similar organization. If the common stock is not so quoted, the “Closing Price” of the common stock will be such other amount as the Committee may ascertain reasonably to represent such “Closing Price.” The Closing Price shall be determined without reference to extended or after-hours trading.

“Final Stock Price” means the average of the Closing Prices for the 20 Trading Days (as herein defined) during the 20-trading-day-period ending on and including the last Trading Day of the Measurement Period (as hereinafter defined).

 

“Initial Stock Price” means the average of the Closing Prices for the 20 Trading Days during the 20-trading-day-period beginning on and including the first Trading Day of the Measurement Period.

“Invested Capital” means for any particular fiscal year, the sum of the Company’s (i) average of the beginning and ending fiscal year inventory balances, plus (ii) the average of the beginning and ending fiscal year net fixed asset balances, less (iii) the average of the beginning and ending fiscal year accounts payable balances.

“Measurement Period” means the Company’s three (3) fiscal years beginning on and including February 28, 2016 and ending on and including March 2, 2019.

“NOPAT” means the Company’s operating income, for any particular fiscal year, less taxes, with taxes being the product of applying the Company’s effective tax rate for the applicable fiscal year to the Company’s operating income for that fiscal year.

“Peer Group” means the companies in the Russell 1000 Specialty Retail Index as constituted on the first day of the Measurement Period, with the addition of any other specialty retailers included in the Company's peer group for executive compensation purposes and not included in the Russell 1000 Specialty Retail Index.  The Company's peer group for executive compensation purposes shall be as determined by the Committee prior to or within sixty (60) days of the first day of the Measurement Period.

“ROIC” means the Company’s return on invested capital calculated by dividing NOPAT  by Invested Capital.

 

“TSR” means a company’s total shareholder return, calculated by dividing (i) the sum of (A) the cumulative amount of such company’s dividends for the Measurement Period, assuming same day reinvestment into the common stock of the company on the ex-dividend date, plus (B) the difference of (1) the Final Stock Price for such company, minus (2) the Initial Stock Price for such company, by (ii) the Initial Stock Price for such company.

The TSR of a component company in the Peer Group and of the Company shall be adjusted to take into account stock splits, reverse stock splits, and special dividends that occur during the Measurement Period.  The determination of TSR shall be subject to the following additional adjustments:

2

	
(i)

	
If during the Measurement Period two component companies of the Peer Group merge or otherwise combine into a single entity, the surviving entity shall remain a component company of the Peer Group and the non-surviving entity shall be removed from the Peer Group.

	
(ii)

	
If during the Measurement Period a component company of the Peer Group merges into or otherwise combines with an entity that is not a component company of the Peer Group, such component company shall be removed from the Peer Group.

	
(iii)

	
If during the Measurement Period a component company of the Peer Group files a petition for reorganization under ch. 11 of the U.S. Bankruptcy Code or liquidation under ch. 7 of the U.S. Bankruptcy Code, such component company shall remain as part of the Peer Group and be designated with a TSR of negative 100%.

	
(iv)

	
If a component company of the Peer Group becomes a debtor entity operating under the protection of the U.S. Bankruptcy Code during the Measurement Period and subsequently emerges from bankruptcy protection during the Measurement Period, such component company shall not be reintroduced into the Peer Group.

“Trading Day(s)” means a day on which (i) trading in the common stock generally occurs on the New York Stock Exchange or, if the common stock is not then listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the common stock is then listed or, if the common stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the common stock is then traded, and (ii) a Closing Price for the common stock is available on such securities exchange or market.

 

For purposes of the definition of Invested Capital, NOPAT and ROIC, the “Company” includes the Company’s consolidated subsidiaries.

 

(b) Vesting.  The target amount of Performance-Based Shares under this Award is ______________ (_____________) Performance-Based Shares (the “Target Performance-Based Shares”). Provided that (y) the Company’s three-year average ROIC for the Measurement Period equals or exceeds the threshold percentage as shown on the table set forth on the execution page hereof (the “Execution Page”), and (z) the Grantee is employed by the Company or an Affiliate on the date of filing of the Company’s Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”) for the Company’s fiscal year ending March 2, 2019, and subject to the other terms and conditions of this Agreement, the restrictions on the Performance-Based Shares covered by this Award shall lapse and such shares shall vest over a range from 50% to 200% of the Target Performance-Based Shares as shown on the table set forth on the Execution Page.  Any fractional shares created by such vesting will be rounded down to the nearest whole share.

 

The determination by the Committee with respect to the achieving of condition (y) above shall be effective upon the filing of the Company’s Annual Report on Form 10-K with the SEC for fiscal year 2019.

 

c) TSR Modifier.  Any Performance-Based Shares which vest under this Award will be increased or decreased by ten percent (10%) as shown in the following table:

	
Company's Percentile Rank

(as determined below)

Within Peer Group

	
Modification

of

Vested Shares

	
75% and above

	
+ 10%*

	
above 25% and below 75%

	
no modification

	
25% and below

	
-10%

	*Provided the Company’s absolute TSR is not negative  

          

3

Any fractional shares created by such modification of vested shares will be rounded down to the nearest whole share.

The annual equivalent return (“AER”) of the TSR shall be calculated for the Company and each component company of the Peer Group over the Measurement Period.  Each AER shall be ranked from highest to lowest.  The percentile rank of the AER of the Company shall then be determined relative to the AER ranking of each component company in the Peer Group (the “Company’s Percentile Rank”).  The Company’s Percentile Rank shall then be utilized, as shown in the table above, to determine the percentage, if any, of the modification of Performance-Based Shares that vested under this Award. The AER calculations shall be derived utilizing a calculation consistent with the annual equivalent return calculation employed by Bloomberg L.P.’s comparative total return (COMP) function as of the date of this Agreement.  Performance-Based Shares that vest under this Award will not be modified upward if the Company’s absolute TSR is negative.

(d) Termination of Employment.  Upon termination of employment of the Grantee with the Company or any Affiliate of the Company (or the successor of any such company) for any reason, the Grantee shall forfeit all rights in the Performance-Based Shares to the extent not vested, and the ownership of such shares shall immediately vest in the Company.  For purposes of this Award, no termination of Grantee’s employment shall occur as a result of the transfer of Grantee between the Company and any Affiliate or as a result of the transfer of the Grantee between two Affiliates.  The cessation of a relationship between the Company and an Affiliate with which the Grantee is employed whereby such company is no longer an Affiliate shall constitute a termination of employment of the Grantee.

4.            Voting and Dividend Rights.  With respect to the Performance-Based Shares for which the restrictions have not lapsed, the Grantee shall have the right to vote such shares, but shall not receive any cash dividends paid with respect to such shares.  Any dividend or distribution payable with respect to the Performance-Based Shares that shall be paid in shares of Common Stock shall be subject to the same restrictions provided for herein. Any other form of dividend or distribution payable on shares of the Performance-Based Shares, and any consideration receivable for or in conversion of or exchange for the Performance-Based Shares, unless otherwise determined by the Committee, shall be subject to the terms and conditions of this Agreement, with such modifications thereof as the Committee may provide in its absolute discretion.

5.            Distribution Following End of Restrictions.  Upon expiration of the restrictions provided in Section 3 hereof as to the Performance-Based Shares and after modification of the number of such shares provided in Section 3 hereof, if any, the Company in its sole discretion will either cause a certificate evidencing such amount of Common Stock to be delivered to the Grantee (or in the case of the Grantee’s death after such events cause such certificate to be delivered to the Grantee’s legal representative, beneficiary or heir) or provide book-entry uncertificated shares designated for the Grantee (or, in the case of the Grantee’s death after such events, provide book-entry uncertificated shares designated for Grantee's legal representative, beneficiary or heir) on the records of the Company's transfer agent free of the legend or restriction regarding transferability, as the case may be; provided, however, that the Company shall not be obligated to issue any fractional shares of Common Stock.  All Performance-Based Shares which do not vest as provided in Section 3 hereof, shall be forfeited by the Grantee along with all rights thereto, and the ownership of such shares shall immediately vest in the Company.  All vested Performance-Based Shares which are not distributed due to a modification as provided in Section 3 hereof, shall be forfeited by the Grantee along with all rights thereto, and the ownership of such shares shall immediately vest in the Company.

4

6.            Tax Withholding.  The obligation of the Company to deliver any certificate or book-entry uncertificated shares to the Grantee pursuant to Section 5 hereof shall be subject to the receipt by the Company from the Grantee of any minimum withholding taxes required as a result of the grant of the Award or lapsing of restrictions thereon.  The Grantee may satisfy all or part of such withholding tax requirement by electing to require the Company to purchase that number of unrestricted shares of Common Stock designated by the Grantee at a price equal to the Fair Market Value on the date of lapse of the restrictions or, if such day was not a Trading Day, on the first preceding Trading Day.  The Company shall have the right, but not the obligation, to sell or withhold such number of unrestricted shares of Common Stock distributable to the Grantee as will provide assets for payment of any tax so required to be paid by the Company for Grantee unless, prior to such sale or withholding, Grantee shall have paid to the Company the amount of such tax.  Any balance of the proceeds of such a sale remaining after the payment of such taxes shall be paid over to Grantee.  In making any such sale, the Company shall be deemed to be acting on behalf and for the account of Grantee.

7.            Securities Laws Requirements.  The Company shall not be required to issue shares pursuant to this Award unless and until (a) such shares have been duly listed upon each stock exchange on which the Company’s Common Stock is then listed, and (b) the Company has complied with applicable federal and state securities laws.  The Committee may require the Grantee to furnish to the Company, prior to the issuance of any shares of Common Stock in connection with this Award, an agreement, in such form as the Committee may from time to time deem appropriate, in which the Grantee represents that the Performance-Based Shares acquired by Grantee under this Award are being acquired for investment and not with a view to the sale or distribution thereof.

8.            Incorporation of Plan Provisions.  This Agreement is made pursuant to the Plan and is subject to all of the terms and provisions of the Plan as if the same were fully set forth herein, and receipt of a copy of the Plan is hereby acknowledged.  Capitalized terms not otherwise defined herein shall have the same meanings set forth for such terms in the Plan.  If there is any conflict between this Agreement and the Plan, the Plan controls.

9.            Miscellaneous.  This Agreement (a) shall be binding upon and inure to the benefit of any successor of the Company, (b) shall be governed by the laws of the State of Delaware, and any applicable laws of the United States, and (c) may not be amended without the written consent of both the Company and the Grantee.  No contract or right of employment shall be implied by this Agreement, nor shall this Agreement interfere with or restrict in any way the rights of the Grantee’s employer to discharge the Grantee at any time for any reason whatsoever, with or without cause.  The terms and provisions of this Agreement shall constitute an instruction by the Grantee with respect to any uncertificated Performance-Based Shares.

This Award along with all other Awards received by the Grantee (including any proceeds, gains or other economic benefit actually or constructively received by the Grantee upon any receipt or exercise of any Award) shall be subject to the provisions of the Company’s claw-back policy as set forth in Section 10 of the Company’s Code of Business Conduct and Ethics (as amended from time to time) including any amendments of such claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

5

EXECUTION PAGE OF RESTRICTED STOCK AWARD AGREEMENT

10.            Certain Additional Information.  This Section 10 sets forth certain information referred to in Section 3 of this Agreement.  For purposes of this Agreement, three-year average ROIC shall be expressed as follows:

	
Three-Year Average ROIC

	
=

	
(

	
(

	
NOPAT (FY17)

Invested Capital (FY17)

	
)

	
+

	
(

	
NOPAT (FY18)

Invested Capital (FY18)

	
)

	
+

	
(

	
NOPAT (FY19)

Invested Capital (FY19)

	
)

	
)

	
÷ 

	 3

	
Performance-Based Award Vesting Schedule

	
 3–Year Average ROIC

2/28/16 – 3/2/19

(FY17 – FY19)

	
Percent of Target Performance-Based Shares Vested

	
Less than ____%

	
0%

	
*____% - ____%

	
50% - 74%

	
*____% - ____%

	
75% - 99%

	
*____% - ____%

	
100% - 124%

	
*____% - ____%

	
125% - 149%

	
*____% - ____%

	
150% - 174 %

	
*____% - ____%

	
175% - 199%

	
____ %+

	
200%

	
*Vesting of shares between the minimum and maximum three-year average ROIC targets in each band shall be interpolated. For example, if three-year average ROIC is ___%, then 62% of the Target Performance-Based Shares would vest. If three-year average ROIC is ___%, then 162% of the Target Performance-Based Shares would vest.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

	COMPANY:	 	 	GRANTEE:	 
	 	 	 	 	 
	Pier 1 Imports, Inc.	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	By: 	

	 	 	 	 	 
	 	
Alexander W. Smith

	 	 	 	 	 
	 	
President and CEO

	 	 	 	 	 
	 	 	 	 	Address:	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Email: 	 	 

 

6Exhibit 10.1

 

May 24, 2016

Sense Technologies, Inc.

Bruce Schreiner

2535 N. Carleton Avenue

Grand Island, NE  68803

 

STRICTLY CONFIDENTIAL

Dear Sirs:

This letter serves as a non-binding letter of intent between R and D USA, LLC d/b/a Scribner Natural Products (collectively "we" or the "Investor") and Sense Technologies, Inc. (the "Company"), a corporation established under the laws of British Columbia, Canada and having a place of business at 2535 N. Carleton Avenue, Grand Island, Nebraska, United States whereby the Investor hereby proposes to the company to acquire or procure acquisition of a portion of the issued share capital in the Company, by way of subscription of new shares and/or (if thought desirable) derivative instruments convertible into shares of the Company. Together with all rights, benefits and interest thereof or arising therefrom or in connection thereto, and free from liens, charges, encumbrances or third party rights, in consideration for which we shall transfer and assign of all our beneficial interests ("Business Interests") in Scribner's' soy meal and soy oil products and non-GMO products, certified organic products, refined oils, agricultural oils, and other related specialty fertilizer crop products.

1.   Structure.  At present, we are structuring the transaction as a sale of the Business Interests to the Company, in consideration for which the Company shall raise $350,000 for the purpose of working capital for the soybean processing mill, and issue and allot to the Investor, or as we direct, (i) common shares or (ii) convertible preferred shares, which shares will be identical to the common shares of the Company except that they will have a conversion feature permitting the holder of such shares to convert them into an aggregate number of common shares.  Such process will commence at the date of the signing of the Definitive agreement described in paragraph 3. The shares will be issued in two tiers of a number of common shares of the Company to be determined before entering the Definitive Agreement, the first tier to be issued at the date of the Definitive Agreement, and the second will be tied to the benchmark of the financial results of the acquired Business interests (alone) qualifying the Company to list on the NASDAQ Stock Exchange, which effort will in no way be impeded by the Company. We may, however, opt for another form of transaction, based upon a review of the proposed tax, financial, corporate and legal structures, and other legitimate considerations of the Investor (and such transaction, in any form whatsoever, being referred to herein as an "acquisition").  No commissions or investment fees will be paid regarding this transaction.

2.   Due Diligence.  Upon your execution of this Letter of Intent and our obtaining approval of this Letter of Intent by the Members of Investor, we will commence a formal due diligence process ("Due Diligence Exercise") which is expected to take approximately (six) weeks ("Due Diligence Period").  During the Due Diligence Period and during the time that negotiation and drafting of the Definitive Agreement is in progress, the Company will allow us and our agents, lawyers, accountants and advisors ("Advisors") full and complete access to the Company's books, records, information and data relating to the business affairs, financial legal, structural and regulatory conditions of the Company and its current business of developing and marketing automotive backing awareness products (Existing Company Business").  You will use your best endeavors to ensure that any information provided to us or our Advisors is accurate and not misleading.

During the Due Diligence Period, we will use our reasonable endeavors to procure the Company's access to the financial, legal and operational affairs of the Investor.

 

3.   Definitive Agreement.  Following completion of the Due Diligence Period (or earlier, if we are at our sole discretion so decide), and subject to the results of the Due Diligence being satisfactory to us and the Investor, you will begin preparation of the legally binding agreement (the "Definitive Agreement") with the Closing to occur subject to the events listed in Annexure A hereto and such other conditions customary to the nature of the acquisition.

Nevertheless, execution of the Definitive Agreement will be conditional upon (i) the Investor being satisfied with the results of the Due Diligence Exercise on the Company; (ii) the Company being satisfied with the results of the Due Diligence Exercise on Business Interests.  The Definitive Agreement shall contain customary representations, warranties, covenants, undertakings and indemnities, including by the Company's principal shareholders, together with any non-competition agreements required by us relating to the existing Company's business and restraints on the disposal by the Company's principal shareholder of shares in the Company post-closing for an agreed period.

Closing of the specific agreement to raise capital and subscription of new shares and, if any, derivative instruments convertible into shares of the Company shall be conducted simultaneously  and inter-conditional with every other condition to be agreed between the Investor and the Company, including but not limited to those listed in Annexure A hereto.  Notwithstanding, the urgency for the need to raise $350,000 in capital is acknowledged, and is to commence immediately upon signing of this Letter of Intent.

4.  Exclusivity.  The parties acknowledge that further evaluation of the possible acquisition of the Company's business and assets could result in the Investor and the Company incurring significant expense.  Each party will be required, among other things, to retain lawyers and accountants and to continue to employ the services of its consultants and to divert certain of its internal corporate resources for consideration of the proposed acquisition.  In light of these expenses, and in recognition that the further exploration of the proposed acquisition will benefit the Company and the Investor, the parties hereby agree that, for a period extending from the date hereof until the earlier of (i) the mutual termination of negotiations hereunder, (ii) the signing of the Definitive Agreement and (iii) the date falling six months from the date of acceptance of this Letter of Intent (the "Negotiation Period"),

	
(a)

	
the Company shall grant to the investor an exclusive right to negotiate for the transactions contemplated hereby and shall not authorize and shall use its best efforts not to permit any of its directors, officers, employees, agents or representatives of the Company or its beneficial owner or his affiliates to directly or indirectly, solicit, initiate, facilitate or encourage (including by way of furnishing or disclosing information) any merger, consolidation or other business combination involving the Company, acquisition of or any other form of dealing with all or any significant portion of the Company, or inquiries or proposals concerning or which could reasonably be expected to lead to, any of the foregoing (an "Acquisition Transaction") or negotiate, explore or otherwise communicate in any way with any third party (other than the Investor or its affiliates) with respect to any Acquisition Transaction or enter into any agreement arrangement or understanding requiring it to abandon, terminate or fail to consummate the proposed transaction with the Investor; and

	
(b)

	
the Investor agrees that it shall pursue its due diligence and other activities in connection with the potential acquisition of the Company in good faith and with diligence.

 

 

If either party shall be in breach of the obligations above, then the breaching party shall be liable to indemnify the non-breaching party against all claims, liabilities, costs and expenses suffered or incurred therefore, in an aggregate amount not to exceed US$100,000.  The Company shall promptly advise the Investor of all the material terms and conditions of any inquiries or proposals relating to an Acquisition Transaction and the identity of the party making any such inquiry or proposal or on whose behalf such inquiry or proposal is being made.  The Definitive Agreement will incorporate agreements of the parties extending this undertaking through the Closing date.

5.   Operation of the Business.  The proposed terms and conditions set forth herein are based upon the assumption that (i) the Company will continue to maintain its status as a public reporting company, with its shares available for quotation and trading on the OTC, (ii) it will continue to carry Existing Company Business in the ordinary course of business consistent with its practice, and (iii) its financial position shall not materially deteriorate from that as at February 28, 2016.  Without prejudice to the generality of the foregoing, the Company shall (a) not enter into or amend any existing agreements and contracts (otherwise than in the ordinary course of business) including but not limited to agreements with its directors or officers or employees, or (b) enter into any new transaction or arrangement other than in the ordinary course of business.

6.   Confidentiality

6.1  Each of the Investor and the Company (each, a "Party") shall not, without the prior written approval of the other Party, disclose or use for any purpose as contemplated in this Letter of Intent, the other Party's Confidential Information.

6.2   Each party shall take reasonable steps to ensure that its employees, servants and agents and any contractors or sub-contractors engaged for the purpose of the transactions in this Letter of Intent, do not make public, disclose or use for any other purpose the other Party's Confidential Information.

6.3   Each Party (in this paragraph, "recipient Party") shall on demand from the other Party return to the other Party, or, at the option of the other Party, destroy, any documents, records or material s supplied by the other Party to the recipient Party in connection with the transactions contemplated by this Letter of Intent.

6.4   For the purpose of this Clause 6, "Confidential Information" means the confidential information of a Party which related to the subject matter of this Letter of Intent and the Due Diligence Exercise and includes information relating to:

	
(a)

	
 the business, financial and operational information and plans of the Company;

	
(b)

	
 the business, financial and operational information of the Investor;

	
(c)

	
 any information proprietary to, or otherwise designated in writing as confidential by, the  disclosing Party; and

	
(d)

	
the subject matter of this Letter of Intent and/or the Definitive Agreement to be entered into between the Parties (if any) and the identity of the Parties

 

but excluding any information which:

	
(a)

	
 is in or comes into public domain prior to the disclosure by the disclosing Party thereof;

	
(b)

	
is independently developed by the disclosing Party without breach of this paragraph;

	
(c)

	
is received by the disclosing Party without confidentiality limitation from a third party, or

	
(d)

	
is required to be disclosed pursuant to a statutory obligation, the rules and regulations of applicable stock exchanges, any other federal, state or foreign regulatory agency, FINRA and/or any stock exchange where the securities of the Company is or may become listed, the order of a court or competent jurisdiction or that of a competent regulatory body.

Notwithstanding Clause 6.4(d), the Company acknowledges and agrees that it will, if required by the Investor and/or the Business Interests, enter into separate confidentiality agreements with them on such terms as they may require agreeing to keep confidential, and use only for the purposes of assessing whether to proceed with the transactions contemplated herein, al information supplied by them relating to their business affairs, financial, legal and other conditions of their business, or of which the Company may become aware, pursuant to the Due Diligence exercise to be carried out by the Company.

7.   No Trading.  The Investor acknowledges to and agrees with the Company that, unless and until the information contained herein, in any Definitive Agreement, or in any other document, instrument, due diligence or other record, or any other item containing Confidential Information, becomes publicly disclosed as appropriate, no officer, director, equity owner, partner, employee, contractor or other person may lawfully engage in purchase and sale transactions of the equity securities of the Company listed on any stock exchange or other public market.

8.    Public Disclosure.  Neither the Investor nor the Company may issue, approve or make, or cause, permit or suffer any agent or employee thereof to issue, approve or make, any news release or other public announcement or any other form of disclosure concerning this Letter of Intent and/or the Definitive Agreement or any of the content thereof or the identity of the parties thereto without the prior written consent of the other party.  This restriction survives termination of this Letter of Intent (by reasons of breach or entering into the Definitive Agreement or otherwise).

9.   Costs.  Each party shall be solely responsible for bearing their own costs and expenses incurred in relation to this Letter of Intent and the transactions contemplated herein, including the costs of the Due Diligence exercise to be undertaken by it, whether or not the Definitive Agreement is entered into.

10.  Governing Law.  This Letter of Intent shall be governed by, and construed in accordance with the laws of Nebraska without regard to the principles of conflicts of laws applied thereby, and shall supersede any and all prior written or oral agreements between the parties hereto.  No change, modification, alteration, or addition to any provision of this Letter of Intent shall be binding unless in writing and signed by an authorized representative of each of the parties hereto.

11.  Counterparts.  Acceptance of this Letter of Intent may be executed in any number of counterparts, each of which when delivered shall be deemed an original and all of which together shall constitute one and the same document.  Signatures may be made by facsimile transmission.

 

12.  Binding/Non Binding Effect.  Except for this paragraph and the provisions of paragraphs 4 through 11 (the "Binding Provisions"), this Letter of Intent and all discussions and negotiations relating to the proposed transactions are not intended to constitute a binding agreement or enforceable rights for obligations between the parties, but reflect only the interest of the parties to proceed with the negotiation of the transactions described above.  All references herein to the parties' obligations and commitments (except as set out in the Binding Provisions) shall be interpreted to mean intended obligations and communications.  Neither party shall have any liability to the other party if a party fails to proceed with the transaction for any reason; provided, however, that nothing herein shall relieve a party of any liability for breach of any of the binding provisions.

The basic terms and conditions as outlined above are open for acceptance by having one copy of this Letter of Intent signed and returned to the Investor on or before May 31, 2016, beyond which the same shall automatically lapse and (save the Binding Provisions) cease to be in effect.  We sincerely look forward to working with you on this transaction with the strong belief that it will be mutually beneficial for all parties involved.

We, the undersigned hereby acknowledge and confirm our acceptance to this Letter of Intent.

Yours sincerely,

For and on behalf of

R and D USA, LLC

d/b/a Scribner Natural Products

/s/ Richard W. Bell                               

Name: Richard W. Bell

Title: Member/Manager

Date: 5/25/2016

For and on behalf of

Sense Technologies, Inc.

/s/ Bruce Schreiner                                 

Name: Bruce Schreiner

Title: President

Date: 5-25-16

 

ANNEX A

Conditions Precedent

(in this Annexure A, any reference to "Company" shall mean each of the Company and any of its subsidiaries)

	(i)	Investor having satisfied itself with the results of its financial, operational and legal due diligence on the Company and its subsidiaries;

	(ii)	the Company having satisfied itself with the results of its financial, operational and legal due diligence on Business Interest of Investor;

	(iii)	approval from members (or its designated committee) and the equity holders for the Investor has been obtained;

	(iv)	approval from the board of directors (or its designated committee) and the equity holders of the Company (if so required) has been obtained;

	(v)	all necessary regulatory approvals to enter into and consummate the transactions provided in the Definitive Agreement shall have been obtained, and all applicable publication and other requirements under the applicable laws, rules and regulations have been fully satisfied or complied with, as applicable; and

	(vi)	employment contracts with the key people of the Company on terms satisfactory to the Investor and the Company (and which include customary confidentiality, irrevocable assignment of intellectual property, non-solicitation and non-co9mpetition covenants) have been executed.

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