Document:

ex_177181.htm

 

 

EXHIBIT 10.1

 

 

 

 

 

 

 

 

 

Agreement for Sale and Purchase of Shares and Current Account

Of Printstock Products Limited

 

 

 

 

 

 

Graham Eric Eagle, Linda Janice Eagle, and Stephen Peter Lunn as Trustees of the GE LJ Eagle Family Trust as to 266,850 shares and Graham Eric Eagle of Napier, Company Director, as to 29,650 shares (collectively the “Vendor”)

 

and

 

Gourmet Foods Limited at Tauranga (the “Purchaser”)

 

and

 

Graham Eric Eagle, Linda Janice Eagle, and Stephen Peter Lunn as Trustees of the GE LJ Eagle Family Trust (the “Covenantor”)

 

Printstock Products Limited (the “Company”)

 

 

 

 

 

	Lunn and Associates	Harris Tate
	Solicitors to Vendor and Covenantors	Solicitors to the Purchaser

 

 

 

 

TABLE OF CONTENTS

 

 

 

	
			1

				
			INTERPRETATION

				
			4

			
	 	 	 
	
			2

				
			SALE AND PURCHASE OF SHARES

				
			9

			
	 	 	 
	
			3

				
			CONDITIONS

				
			10

			
	 	 	 
	
			4

				
			PAYMENT OF THE PURCHASE PRICE

				
			12

			
	 	 	 
	
			5

				
			DETERMINATION OF ADJUSTMENT AMOUNT

				
			12

			
	 	 	 
	
			8

				
			COMPLETION

				
			16

			
	 	 	 
	
			9

				
			DEFAULT AND REMEDIES

				
			18

			
	 	 	 
	
			10

				
			WARRANTIES AND CLAIMS GENERALLY

				
			19

			
	 	 	 
	
			11

				
			NON-COMPETITION

				
			21

			
	 	 	 
	
			12

				
			CONFIDENTIALITY AND ANNOUNCEMENTS

				
			22

			
	 	 	 
	
			13

				
			ASSIGNMENT

				
			23

			
	 	 	 
	
			14

				
			NOTICES

				
			23

			
	 	 	 
	
			15

				
			COSTS

				
			23

			
	 	 	 
	
			16

				
			REMEDIES AND WAIVERS

				
			23

			
	 	 	 
	
			17

				
			DISPUTE RESOLUTION

				
			24

			
	 	 	 
	
			18

				
			MISCELLANEOUS

				
			24

			
	 	 	 
	
			SCHEDULE 1: WARRANTIES

				
			29

			
	 	 	 
	
			SCHEDULE 2: SHAREHOLDING

				
			32

			
	 	 	 
	
			SCHEDULE 3: COMPLETION STATEMENT

				
			33

			

 

 

 

 

THIS AGREEMENT is made on 11 March 2020 in Tauranga, New Zealand

 

 

 

 

BETWEEN

 

Graham Eric Eagle, Linda Janice Eagle, and Stephen Peter Lunn as Trustees of the GE LJ Eagle Family Trust as to 266,850 shares and Graham Eric Eagle of Napier, Company Director, as to 29,650 shares (jointly and severally referred to as Vendor)

 

Gourmet Foods Ltd or nominee (Purchaser)

 

Graham Eric Eagle, Linda Janice Eagle, Stephen Peter Lunn (Covenantor)

 

Printstock Products Limited (NZCN 166196) (Company)

 

INTRODUCTION

 

	
			A.

				
			The Company has the shareholding set out in Schedule 2 (Shares).

			

 

	
			B.

				
			The Purchaser and the Company have entered into this Agreement for Sale and Purchase of Shares and Current Account. The Vendor has agreed to sell the Shares and Current Account on the terms set out in this Agreement. The Purchaser wishes to purchase the Shares and Current Account.

			

 

	
			C.

				
			The Covenantor holds an ownership interest in the Company. The Vendor's sale of the Shares and Current Account is for their benefit and so the Covenantor has agreed to be bound to covenants and obligations of the Vendor under this Agreement, in the manner described.

			

 

	
			D.

				
			This Agreement is entered into to record the terms upon which the Parties will complete the Sale and Purchase referred to above.

			

 

	
			E.

				
			Due diligence date (subclause 3.1.1): 24 March 2020 or such other date as agreed to by the parties.

			

 

 

 

 

IT IS AGREED

 

	
			1 

				
			INTERPRETATION

			

 

	
			1.1

				
			Definitions

			

 

In this Agreement, unless the context otherwise requires:

 

Accounts means the financial statements of the Company (including as a minimum, a profit and loss statement for the prior twelve-month period and a balance sheet listing all assets, liabilities and stockholders’ equity as of the date of closing) and all of the historical records of sales and transactions for no less than the required period of time by statutory regulation in New Zealand.

 

Adjustment Amount means the amount calculated in accordance with clause 5.

 

Adjustment Date means the date designated as such in clause 5.7.

 

Agreement means this agreement together with the Schedules and Annexures to this agreement;

 

Assets means all assets owned by the Company as at the Completion Date;

 

Balance Sheet Date means the balance sheet of Company as of 31 March 2020;

 

Business means all of the businesses carried on by Company as of the date of this Agreement;

 

Business Records means all records and information held by the Company relating to the Business and Company. This includes the Accounts, and all records and information in connection with transactions of the Company, its sales and purchasers, shareholder and director minutes and resolutions, stock records, staff and employment matters, customer records, correspondence and statutory records, all Tax returns, correspondence and documents relating to Tax obligations of the Company.

 

Cash means the consolidated cash of the Company (whether in hand or credited to any account with any banking, financial, lending or other similar institution or organization), including all interest accrued thereon, as at the Completion Date, as shown by the reconciled cashbook balances of the Company and as comprised in the Net Cash which is set out in the Closing Statement;

 

Claim means a claim made by the Purchaser against the Covenantor in respect of the Warranties;

 

Closing Statement Balance means the net asset balance as at 31 March 2020 after adjustments as calculated in accordance with schedule 3 Part A.

 

Closing Statement means the balance sheet for the Company as at the Completion Date prepared in accordance with clause 5 and with the provisions of Schedule 3;

 

Company means Printstock Products Limited, registered number 166196, a New Zealand company;

 

Companies Act means the Companies Act 1993;

 

Completion means the performance by the Vendor and the Purchaser of their respective obligations under clause 8 or, as the context may require, the time when such performance is completed;

 

Completion Date means 1 April 2020 or such other date as the Vendor and the Purchaser agree in writing to effectuate the purchase of Shares and Current Account and consummate the transaction as described in this Agreement;

 

Conditions means the conditions precedent set out in clause 3.1;

 

Conditions Date means 24 March 2020 or such other date as agreed in writing by the parties;

 

 

4

 

 

Confidential Information means the business records of the Company, know-how, equipment operation manuals, trade secrets, technical processes, software, information relating to products, finances, contractual arrangements with customers or suppliers and other information relating to the Company or the Business which by its nature, or by the circumstances of its disclosure to the holder of the information, is or could reasonably be expected to be regarded as confidential;

 

Current Account means the shareholder current accounts as shown in the books of the company following the dividend declared pursuant to clause 2.3 of this Agreement.

 

Default Rate means 10%;

 

Employee Entitlements means entitlements for salary, wages, holiday pay, bonus entitlements or other incentives and any other entitlements under applicable legislation or individual or collective employment agreements or awards accrued as at Completion;

 

Encumbrance means any proprietary claim, entitlement, security interest, mortgage, charge, contractual right of set-off or any other arrangement in the nature of a security over assets or any other agreement or arrangement in favour of any person that has the same effect, and includes any agreement to create or permit an Encumbrance.

 

Financial Indebtedness means any external agency such as bank indebtedness or monetary liability (whether present or future, actual or contingent) relating to financing, financial accommodation or moneys borrowed or raised (however structured, described or documented) to be identified and agreed between the parties during the due diligence period.

 

Goodwill means the goodwill of the Company including, but not limited to, the benefit of all pending contracts, orders and engagements relating to the Company or the Business and the right to all Intellectual Property Rights;

 

GST means goods and services tax as imposed by the Goods and Services Tax Act 1985;

 

Income Tax Act means the Income Tax Act 2007;

 

Intellectual Property Rights means:

 

	 	
			(a)

				
			patents, trademarks, service marks, inventions, copyrights, registered designs, trade names, corporate names, internet domain names, symbols and logos and all goodwill associated with the same; patent applications and applications to register trademarks, services marks and designs or other intellectual property rights;

			

 

	 	
			(b)

				
			Technical Information, databases and data collected; and

			

 

	 	
			(c)

				
			all rights in all of the above provided by statute, treaties, conventions, common law and contract;

			

 

Interim Period means the period commencing on the date of this Agreement and ending at Completion;

 

IRD Order means the Tax Administration (Financial Statements) Order 2014.

 

March Financial Statements means the unaudited financial statements of the Company for the year ended 31 March 2020 together with all notes and information relating to those statements;

 

NZ GAAP means generally accepted accounting practice in New Zealand as defined in section 3 of the Financial Reporting Act 1993;

 

NZ$ or $ means the lawful currency of New Zealand;

 

Premises means the leased properties at 3 Turner Place, Onekawa, Napier

 

Purchase Price means the amount of NZ$1,900,000 subject to adjustment in accordance with clauses 4 and 5;;

 

Purchaser means Gourmet Foods Limited.;

 

Purchaser's Representative means any officer or director or other such person authorised by Gourmet Foods Limited to negotiate, execute documents, bind the Purchaser to performance, or otherwise represent the Purchaser in the performance of the obligations under this Agreement. Such persons are preliminarily identified to be Bryce Cole and David Neibert unless or until modified by written notification to Seller;

 

5

 

 

Purchaser's Solicitors means Harris Tate, 29 Brown Street, Tauranga, New Zealand;

 

Related Company has the meaning specified in section 2(3) of the Companies Act and, where applicable, as if the company concerned were a company incorporated under the Companies Act;

 

Related Party means, in respect of a Party:

 

	 	
			(a)

				
			a Spouse or Partner, a father, mother, son, or daughter of a Party;

			

 

	 	
			(b)

				
			a trustee of a trust where the Party is a settlor or a beneficiary, or any Spouse or Partner, or a father, mother, son or daughter of that Party;

			

 

	 	
			(c)

				
			a parent company or a subsidiary company of either Party; or

			

 

	 	
			(d)

				
			a person which controls that Party, is controlled by that Party or is controlled by the same person who controls the Party (and for the avoidance of doubt includes a shareholder of the Party).

			

 

Restraint Area means within 500km of the business premises at 3 Turner Place, Onekawa, Napier

                

Restraint Period means three (3) years from the Completion Date.

 

Shares means all of the issued share capital of the Company, details of which appear in Schedule 2;

 

Target Statement means the statement at schedule 3 Part A.

 

Target Statement Balance means the net asset balance as at 29 February 2020 after adjustments as calculated in accordance with schedule 3 Part A.

 

Tax includes income tax, GST and all other statutory, government or local taxes, impositions, duties, levies and tariffs, whether they are imposed or payable in New Zealand or elsewhere; and includes any other form of taxation, any reassessment of Tax, and all penalties, fines, interest, costs and expenses payable in connection with them.

 

Tax Authority means a Governmental Authority that is responsible for administering or levying Tax, whether in New Zealand or elsewhere, and in particular (but without limitation), the Inland Revenue Department, the New Zealand Customs Department, the Accident Rehabilitation and Compensation Insurance Corporation in New Zealand and any overseas bodies with similar functions or powers;

 

Tax Legislation means legislation imposing Tax in the relevant jurisdiction, and in the case of New Zealand includes (but without limitation) the Inland Revenue Acts as defined in section 3 of the Tax Administration Act 1994;

 

Title and Capacity Warranties means the Vendor Warranties given in Schedule 1, clause 1;

 

Vendor means the persons or entities listed as Vendor in Schedule 2 and Vendor means each of the Vendors;

 

Vendor’s Representative means Graham Eagle or his substitute (as appointed pursuant to the terms of any agreement between him and the Vendor or any of them);

 

Vendor's Solicitors means Lunn & Associates Limited, 17 Shakespeare Road, Bluff Hill, Napier 4110

 

Warranties means the warranties given by the Vendor and Covenantor to the Purchaser in accordance with clause 10, as set out in Schedule 1;

 

Warranty Claim means a claim made by the Purchaser against the Vendor in respect of any Warranty;

 

	
			1.2

				
			Construction of Certain References

			

 

In this Agreement, unless the context otherwise requires:

 

	 	
			(a)

				
			business day or working day means a day (other than a Saturday or Sunday) on which registered banks are open for general banking business in Wellington, New Zealand;

			

 

6

 

 

	 	
			(b)

				
			control has the meaning specified by NZ GAAP;

			

 

	 	
			(c)

				
			costs incurred by a person include all commissions, charges, losses, reasonable expenses (including legal fees on a solicitor and own client basis) and taxes incurred by that person;

			

 

	 	
			(d)

				
			a disposal of property includes:

			

 

	 	(i)	
			assigning, leasing, lending, subordinating, parting with possession of, granting an option in respect of or otherwise dealing with that property; and

			

 

	 	(ii)	
			the payment of money or any distribution by way of dividend; and

			

 

	 	(iii)	
			an agreement for any of these, but excludes the creation of a security interest;

			

 

	 	
			(e)

				
			fairly disclosed means disclosed in writing in such manner and in such detail as to enable the Purchaser to make a reasonable and informed assessment of the matter concerned;

			

 

	 	
			(f)

				
			a guarantee includes an indemnity, letter of credit, legally binding letter of comfort, suretyship and other agreement the economic effect of which is to provide security, or otherwise assume responsibility, for the indebtedness or obligations of another person;

			

 

	 	
			(g)

				
			indebtedness includes any obligation (whether present or future, actual or contingent, secured or unsecured, joint or several, as principal, surety or otherwise) relating to the payment of money;

			

 

	 	
			(h)

				
			the liquidation of a person includes the dissolution, winding-up or bankruptcy of that person and any analogous procedure under the law of any jurisdiction in which that person is incorporated, domiciled, carries on business or has property;

			

 

	 	
			(i)

				
			loss includes any damage, loss, cost, liability or expense of any kind and however arising (including as a result of any claim), including penalties, fines and interest and including any that are prospective or contingent and any the amount of which for the time being is not ascertained or ascertainable;

			

 

7

 

 

	 	
			(j)

				
			a person includes an individual, body corporate, an association of persons (whether corporate or not), a trust, a state, an agency of a state and any other entity (in each case, whether or not having separate legal personality);

			

 

	 	
			(k)

				
			property includes the whole and any part of the relevant person's business, assets, undertaking, revenues and rights (in each case, present and future and reference to any property includes any legal or equitable interest in it;

			

 

	 	
			(l)

				
			security interest means:

			

 

	 	(i)	
			a mortgage, pledge, charge, lien, hypothecation, encumbrance, deferred purchase, title retention, finance lease, contractual right of set-off, flawed asset arrangement, sale-and- repurchase or sale-and-leaseback arrangement, order or other arrangement of any kind, the economic effect of which is to secure a creditor; and

			

 

	 	(ii)	
			a "security interest" as defined in section 17(1)(a) of the Personal Property Securities Act 1999 in respect of which the relevant person is the debtor;

			

 

	 	(m)	
			security interest with exclusions means a security interest, but does not include:

			

	 	(i)	
			a lien arising solely by operation of law; or

			

 

	 	(ii)	
			a security interest taken in collateral by a seller to the extent that it secures the obligation to pay all or part of the purchase price of that collateral or a debt from a lender providing acquisition finance for that collateral, where that collateral is purchased in the ordinary course of business of the buyer and the purchase price is paid within 60 days of supply;

			

 

	 	
			(iii)

				
			a netting or set-off arrangement entered into in the ordinary course of a person's banking arrangements for the purpose of netting debit and credit balances; or

			

 

	 	(iv)	
			a security deposit given in favour of a landlord;

			

 

	 	
			(n)

				
			subsidiary means:

			

 

	 	
			(i)

				
			a subsidiary as defined in sections 5 and 6 of the Companies Act and, where applicable, as if the company concerned were a company incorporated under the Companies Act; or

			

 

8

 

 

	 	
			(ii)

				
			a subsidiary in terms of any applicable financial reporting standard; or

			

 

	 	
			(iii)

				
			any legal entity whose majority stock or equity is owned and/or controlled by a Party.

			

 

	
			1.3

				
			General References

			

 

In this Agreement, unless the context otherwise requires:

 

	 	
			(a)

				
			Clause or Schedule

			

A reference to a clause or Schedule is a reference to a clause of or Schedule to this Agreement;

 

	 	
			(b)

				
			Varied document

			

A reference to this Agreement or another instrument includes any variation or replacement of either of them;

 

	 	
			(c)

				
			Statutes

			

A reference to a statute or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them (whether before or after the date of this Agreement);

 

	 	
			(d)

				
			Financial references

			

Unless specified otherwise in this Agreement, references to and expressions used in connection with financial calculations, valuations, accounting or financial reporting functions or their description in this Agreement bear the respective meanings ascribed to like expressions or expressions to similar intent in accordance with IRD Order;

 

	 	
			(e)

				
			Singular includes plural

			

The singular includes the plural and vice versa:

 

	 	
			(f)

				
			Person includes successors

			

A reference to a person includes a reference to the person's executors, administrators, successors, substitutes (including, but not limited to, persons taking by novation) and permitted assigns;

 

	 	
			(g)

				
			Gender

			

Words importing one gender include the other gender;

 

	 	
			(h)

				
			Vendor's knowledge

			

A reference in the Disclosure Letter or this Agreement to the knowledge, belief or awareness (or similar expression) of the Vendor is a reference to the knowledge, belief or awareness, as the case may be, of the management of Vendor (being the Key Executives) after making due and careful inquiry, whether or not that inquiry is undertaken; and

 

	 	
			(i)

				
			Dates and times

			

References to dates and times are to New Zealand dates and times.

 

	
			1.4

				
			Headings and Table of Contents

			

 

Headings and the table of contents are to be ignored in construing this Agreement.

 

	
			1.5

				
			Nominee

			

 

The Purchaser may nominate any other wholly owned subsidiary of the Purchaser or a holding company of the Purchaser or any wholly owned subsidiary of the holding company of the Purchaser to be the purchaser of the Shares provided that such nomination shall in no way release the Purchaser from any of its obligations under this Agreement whatsoever.

 

	
			2 

				
			SALE AND PURCHASE OF SHARES

			

 

	
			2.1

				
			Agreement to Sell Shares and Current Account

			

 

Each of the Vendor severally agrees to sell to the Purchaser, and the Purchaser agrees to purchase, legal and beneficial title to their respective shares and Current Account for the Purchase Price and on the other terms and conditions set out in this Agreement. The Shares will be purchased and sold free from any security interests.

 

9

 

 

	
			2.2

				
			Rights and Privileges

			

 

The Shares will be purchased and sold with all rights, options, privileges and entitlements which attach to them as at or following the date of this Agreement including the right to all dividends and other distributions declared, made or to be paid on the Shares on or after the date of this agreement, other than the dividend to be declared in order with the below clause (Dividend Payment).

 

	
			2.3

				
			Dividend Payment

			

 

The Purchaser acknowledges and agrees that, prior to Completion, Vendor shall procure that the Company declare a dividend as at 31 March 2020 and that the dividend declared shall be credited to the shareholder current accounts

 

	
			2.4

				
			Omitted Assets

			

 

Subject to the below clause 2.5, the Vendor agrees that should it be discovered after Completion that other assets historically used predominantly in connection with the Business are located, in the name of the Vendor or in the name of a Related Company of a Vendor or an associate of a Vendor (Additional Assets) then the Vendor shall procure the Additional Assets and arrange transference immediately to the ownership and control of the Company (or its nominee) and the Additional Assets shall be transferred free of any encumbrance whatsoever (the consideration for such Additional Assets being deemed to be included in the Purchase Price previously paid for the Shares).

 

	
			2.5

				
			Notwithstanding anything else in this Agreement the parties agree the following assets of the Company do not form part of the assets of the Company for the purposes of this Agreement and are intended to be retained by the Vendor following Completion:

			

 

Hyundai Santa Fe

Computer

Telephone

Trailer

 

	
			3 

				
			CONDITIONS

			

 

	
			3.1

				
			Conditions Precedent

			

 

Completion of this agreement is subject to:

 

	 	
			(a)

				
			Due Diligence Conditions

			

The Parties have agreed that the consummation of this Agreement is subject to the satisfactory completion of due diligence by Purchaser, that it is conditional upon Purchaser being entirely satisfied with a due diligence investigation of the business by the due diligence date specified as the Conditions Date. In such an event the following shall apply:

 

	 	
			(i)

				
			The investigation will consider such aspects of the business as Purchaser reasonably determine are pertinent to evaluate the business, its worth, and Purchaser's decision to buy it and may include (without limitation):

			

	 	
			●

				
			Age, condition and functionality of the plant, equipment, and stock;

			

	 	
			●

				
			An independent valuation of the fixed assets in order to determine their fair market value;

			

	 	
			●

				
			Past and potential financial performance of the business;

			

	 	
			●

				
			Commercial risk to the business including competitors, supplier and customer contracts and relationships, products and/or services, and markets;

			

	 	
			●

				
			Intellectual property and other contractual entitlements;

			

	 	
			●

				
			Litigation and insurance risks, and risks to reputation and goodwill of the business;

			

	 	
			●

				
			Legal framework of the business including regulatory approvals and licenses;

			

	 	
			●

				
			Staff relationships, staff performance, compliance by staff and by Vendor with respect to respective legal; and contractual obligations;

			

	 	
			●

				
			The Facilities lease;

			

	 	
			●

				
			The ability of Vendor to comply with pre-settlement and post settlement obligations; and

			

	 	
			●

				
			The timely receipt, and acceptance of, the Target Statement Balance as at 29 February 2020 by the Purchaser in its sole and absolute discretion; and

			

	 	
			●

				
			such other matters as are specific to the business and/or pertinent to the purchaser’s evaluation.

			

 

10

 

 

	 	
			(ii)

				
			To enable the purchaser to conduct this investigation, the Vendor will, but subject to as provided below, as soon as reasonably practicable after this agreement is signed by all parties, provide to the purchaser and any employees, contractors, and advisors of Purchaser authorised by Purchaser in writing to assist it with this investigation, access to all business records and financial records and to the premises and staff; provided, however, that Vendor may first attach conditions to providing these things which are reasonably required to protect Vendor and the business from loss or harm. These may include requiring any person receiving information to agree to confidentiality obligations and requiring that any access to the premises is only in a way that minimizes disruption to the business, and that access to staff occurs only once Purchaser has confirmed all other aspects of due diligence.

			

 

	 	
			(iii)

				
			In any event, Purchaser agrees that in the absence of specific agreement to the contrary any confidential information received by Purchaser in connection with this Agreement must only be used for the purpose for which it was disclosed and must be returned to its owner when it is no longer required for that purpose; provided however that Purchaser will not have any liability to Vendor or other owner of confidential information if it is required by law to disclose it to another party.

			

 

	
			(b)

				
			Lease

			

As an integral component of the Agreement, Purchaser requires a secure lease for the Premises. Prior to the Completion Date, Vendor shall make an introduction to the Landlord of the Premises and Purchaser shall either be successful in (a) negotiating a new Lease on behalf of the Company which is satisfactory to Purchaser in their sole opinion, or (b) obtaining consent from Landlord to continue the existing Lease on behalf of Company with knowledge of an ownership change.

 

	
			(c)

				
			Guarantees

			

Release of personal guarantees, and specifically but not limited to, the personal guarantees given by Graham Eric Eagle in respect of the obligations of the Company, shall be released;

 

	
			(d)

				
			Approvals

			

The approval of the Purchaser’s directors and shareholders; and

 

Any other regulatory approvals or consents required to be given on terms satisfactory to the party or parties applying for approval or consent and to the Company.

 

	
			3.4

				
			Non-fulfilment of Conditions

			

 

This Agreement may be cancelled by written notice to the other Party if, by 5.00 pm on Conditions Date:

	 	
			(a)

				
			Any condition in this Agreement is not satisfied, or waived; and

			

 

	 	
			(b)

				
			Confirmation of satisfaction, or waiver as the case may be, of that condition is not notified by a party for whose benefit the condition is inserted to the other party or parties.

			

 

	
			3.5

				
			Consequences of Termination

			

 

If this Agreement is terminated under clause 3.4:

 

	 	
			(a)

				
			No further effect: this Agreement is to be of no further effect, except as set out in clause 12;

			

 

	 	
			(b)

				
			No claim: no party is to have any claim against any other party arising under or in connection with that termination other than in relation to any breach of clauses 3.5; and

			

 

	 	
			(c)

				
			Accrued rights unaffected: a termination under clause 3.4 does not affect accrued rights arising from any breach of this Agreement occurring before termination.

			

 

	 	
			(d)

				
			Return of deposit: The Vendor must immediately procure the return of any money paid to the Vendor or the Vendor's Solicitor by the Purchaser.

			

  

11

 

 

	
			4 

				
			PAYMENT OF THE PURCHASE PRICE

			

 

	
			4.1

				
			Purchase Price

			

 

The Purchase Price payable by the Purchaser to the Vendor for the Shares is the aggregate of the value of the Current Account and the Shares being:

 

	 	
			(a)

				
			NZ$190,000.00 (being the deposit paid to an attorney trust account as agreed between the Parties and to be credited to the Vendor under this Agreement); and

			

 

	 	
			(b)

				
			NZ$1,310,000.00; and

			

 

	 	
			(c)

				
			NZ$400,000 plus or minus the Adjustment Amount.

			

 

	
			4.2

				
			Payment

			

 

The Purchaser shall satisfy and discharge its obligations to pay the Purchase Price to the Vendor under clause 4.1 by:

 

	 	
			(a)

				
			Crediting the deposit paid to the agreed upon attorney trust account under this Agreement and to be released by said attorney to Vendor; and

			

 

	 	
			(b)

				
			Paying NZ$1,310,000 to the Vendor on the Completion Date; and

			

 

	 	
			(c)

				
			Paying NZ$400,000 to the Vendor, subject to increase or decrease pursuant to the Adjustment Amounts as detailed in clause 5 herein, on or before the 90th calendar day from the Completion Date.

			

 

	
			4.3 

				
			Security for Unpaid Portion of Purchase Price

			

 

	 	
			(a)

				
			The Purchaser hereby grants the Vendor a security interest over the Shares as security for the unpaid portion of the purchase price.

			

 

	
			5 

				
			DETERMINATION OF ADJUSTMENT AMOUNT

			

 

	
			5.1

				
			Preparation of Closing Statement

			

 

	 	
			(a)

				
			As soon as is practicable after the Completion Date, the Purchaser must arrange for the Company to prepare the Closing Statement. The Closing Statement must be prepared in accordance with the following, in order of priority:

			

 

	 	
			(i)

				
			the accounting principles, policies and procedures set out in Part B of Schedule 3 (the Specific Policies); and

			

 

	 	
			(ii)

				
			to the extent not addressed by the Specific Policies, the accounting principles, policies and procedures adopted in the preparation of the March Financial Statements (the Consistent Policies); and

			

 

	 	
			(iii)

				
			to the extent not addressed by the Specific Policies and the Consistent Policies, in compliance with IRD Order as at the Completion Date.

			

 

	 	(A)	Purchaser and Vendor will cooperate with the conclusion and delivery of the Closing Statement as soon as is reasonably possible after the Completion Date. Purchaser reserves the right to engage an independent auditor to review and opine to the Closing Statement.

 

	
			5.2

				
			Adjustment Amount

			

 

If:

 

	 	
			(a)

				
			The Closing Statement Balance as calculated under schedule 3 part A exceeds the Target Statement Balance as calculated under schedule 3 part A, the difference is expressed as a positive amount; or

			

	 	
			(b)

				
			The Target Statement Balance as calculated under schedule 3 part A exceeds the Closing Statement Balance as calculated under schedule 3 part A, the difference is expressed as a negative amount.

			

 

12

 

 

Notwithstanding anything else in this Agreement under no circumstances however should the negative amount referred to in clause 5.2(b) above be more than $400,000.

 

	
			5.3

				
			Agreement on Closing Statement

			

 

	 	
			(a)

				
			The Closing Statement shall become final and binding upon the parties 10 business days following the Vendor's Representative's receipt thereof unless the Vendor Representative gives written notice of its disagreement with any component of the Closing Statement (Dispute Notice) to the Purchaser prior to such date, setting out:

			

 

	 	
			(i)

				
			details of each of the matters in dispute;

			

 

	 	
			(ii)

				
			a separate dollar value for each of those matters; and

			

 

	 	
			(iii)

				
			full details of the reasons why each of those matters is disputed,

			

 

	 	
			(b)

				
			If a Dispute Notice is received by Purchaser in accordance with clause 5.3(a), then the Closing Statement shall become final and binding upon the earlier of:

			

 

 

	 	
			(i)

				
			the date on which any disputes with respect to the matters specified in the Dispute Notice are resolved in writing by mutual agreement of the Vendor and the Purchaser; or

			

 

	 	
			(ii)

				
			the date on which any such disputes are finally resolved in writing by the Expert in accordance with clause 5.4.

			

 

	 	
			(c)

				
			During the 10 business day period following the delivery of a Dispute Notice, Vendor Representative and Purchaser shall seek in good faith to resolve any disputes with respect to the matters specified in the Dispute Notice. If Vendor Representative and Purchaser do not resolve all such disputes during that 10 business day period, the matters that remain in dispute in relation to the Closing Statement shall be referred for determination in accordance with clause 5.4.

			

 

	
			5.4

				
			Determination of Disputes in Relation to the Closing Statement

			

 

If a matter in dispute is required to be referred for determination pursuant to clause 5.3 then:

 

	 	
			(a)

				
			the matter in dispute must be referred to an independent internationally recognized firm of chartered accountants (the Expert) agreed by Vendor Representative and Purchaser or, in default of such agreement, appointed by the President for the time being of the Chartered Accountants of Australia and New Zealand or his/her New Zealand nominee, which firm will be requested to deliver its determination on the matter in dispute within 20 business days of being instructed to do so. Either Vendor Representative or Purchaser may make the referral;

			

 

	 	
			(b)

				
			Expert shall consider only such matters that remain in dispute. For the avoidance of doubt, to the extent Expert's written statement purports to make any determination with respect to anything other than the disputed items and amounts submitted to Expert, it shall be disregarded by the Parties;

			

 

	 	
			(c)

				
			Expert shall determine any disputed items based solely on the provisions of this Agreement and the submissions of Vendor Representative and Purchaser and the responses to those submissions, and shall not conduct an independent review of any related financial statements;

			

 

	 	
			(d)

				
			Expert's determination of any value must be within the range for such items claimed by Vendor Representative and Purchaser. To the extent that Expert's determination assigns a value outside of this range, the value for such items claimed by either the Vendor Representative or the Purchaser that is closest to the Expert's determination shall be used instead;

			

 

	 	
			(e)

				
			Expert will review all relevant documents and information (including any submissions made by Vendor Representative and Purchaser) and it will state in a signed decision its opinion regarding the disputed item or items and, what adjustments (if any) are necessary to the Closing Statement and upon delivery of that decision to the Vendor Representative and the Purchaser the Closing Statement will be so adjusted and will become the final Closing Statement for the purposes of determining the Adjustment Amount;

			

 

13

 

 

	 	
			(f)

				
			that determination:

			

 

	 	
			(i)

				
			must be made by that firm as an expert, and not as an arbitrator (and the Arbitration Act of 1996 will not apply to the firm's consideration of the matter); and

			

 

	 	
			(ii)

				
			must be delivered within 10 business days of that firm receiving its instructions or as soon as practicable thereafter; and

			

 

	 	
			(iii)

				
			will be in English and in writing, and will be final and binding on the parties; and

			

 

	 	
			(g)

				
			the Parties will co-operate with each other to provide the relevant firm with all information reasonably required by it to complete its determination.

			

 

	
			5.5

				
			Fees and Disbursements of Expert

			

 

The fees and disbursements of Expert are to be borne by Vendor and Purchaser in equal shares. Each of the Vendor and the Purchaser must bear its own costs of any dispute under clause 5.3 and 5.4.

 

	
			5.6

				
			Purchaser to Provide Access/Information

			

 

Following Completion and for the period of 3 months after Completion, Purchaser will permit Vendor Representative and Vendor's advisers to have access to Company premises during normal working hours and to the records of the Business and the Company as shall be reasonably necessary to permit the Vendor to:

 

	 	
			(a)

				
			review the Closing Statement;

			

 

	 	
			(b)

				
			comply with other statutory or regulatory obligations of Vendor;

			

 

provided that in exercising its rights under this clause 5.6:

 

	 	
			(i)

				
			Vendor Representative will ensure that the least possible interference or disruption is caused to the operation of the Business;

			

 

	 	
			(ii)

				
			Vendor Representative and Vendor's advisers will comply with all reasonable requirements of Purchaser, including confidentiality, health and safety requirements;

			

 

	 	
			(iii)

				
			Vendor Representative and Vendor's advisers have no rights to direct or provide instructions in relation to the operations of the Business;

			

 

	 	
			(iv)

				
			access to employees of Company will only be provided with the prior approval of the Purchaser, acting reasonably; and

			

 

	 	
			(v)

				
			Vendor Representative and Vendor's advisers (as applicable) shall only have access to records to defend a warranty, indemnity or other claims against Vendor under the terms of this Agreement, with the prior approval of the Purchaser, acting reasonably.

			

 

	
			5.7

				
			Payment of the Adjustment Amount

			

 

If the Adjustment Amount is:

 

	 	
			(a)

				
			A positive amount, the Purchaser must add that amount to the final payment to be made pursuant to clause 4.2(c); or

			

 

	 	
			(b)

				
			A negative amount, the Purchaser must subtract that amount from the final payment to be made pursuant to clause 4.2(c);

			

 

	
			5.8

				
			No Capitalized Interest [lowest price clause]

			

 

For the purposes of the financial arrangement rules in the Income Tax Act, the parties agree that:

 

	 	
			(a)

				
			the Purchase Price is the lowest price the parties would have agreed for the sale and purchase of the Shares and Current Account, on the date this Agreement was entered into, if payment would have been required in full at the time the first right in the contracted property (being the Shares) was transferred;

			

 

14

 

 

	 	
			(b)

				
			the Purchase Price is the value of the Shares and Current Account; and

			

 

	 	
			(c)

				
			they will compute their taxable income for the relevant period on the basis that the Purchase Price includes no capitalized interest and will file their Tax returns accordingly.

			

 

	
			5.9

				
			Default Interest

			

 

If any party fails to pay on the due date any sum payable by it under or in accordance with this Agreement (including the whole or any part of the Purchase Price (or any adjustment to the Purchase Price), that party must pay interest on that sum at the Default Rate for the period from the due date for payment until but excluding the day on which that sum (and all interest on it) is paid in full.

 

	
			5.10

				
			Calculation of Interest

			

 

Any interest payable under this Agreement must be calculated on a daily basis and must be compounded every 30 days.

 

	
			5.11

				
			Payments

			

 

Any payment made under this Agreement must be made in cleared immediately available funds before 3.00 p.m. on the due date for payment, unless another time for payment is specified in this Agreement.

 

	6

			 

				
			STOCK ADJUSTMENT

			

 

	
			6.1

				
			Estimated Stock

			

 

The Vendor has estimated the in-store cost of the stock in trade at the Completion Date to be that as on the Target Statement Balance.

 

	
			6.2

				
			Stocktake

			

 

The actual value of the stock in trade as at the giving and taking of possession shall be determined by joint stock-take by Vendor and Purchaser and an independent accounting firm with qualification for conducting an audit in accordance with PCAOB certification. Due allowance shall be made for obsolete or damaged stock. Both parties agree that the findings of the independent accounting firm shall be final and not subject to dispute under this Agreement.

 

The value of the stock determined by joint stock-take should be used when preparing the closing statement in Schedule 3 Part A.

 

	
			6.3

				
			GST

			

 

In this Agreement where reference is made to the value of stock, such value shall be net of the GST content of any supply made to the Vendor of or in relation to that stock.

 

	
			7 

				
			INTERIM PERIOD

			

 

	
			7.1

				
			Target Statement Balance

			

 

Vendor understands and acknowledges that Purchaser has entered into this Agreement, and agreed to pay the Purchase Price for the Shares and Current Account, based upon the Company’s financial statements as of March 2019 as provided by Vendor. Purchaser has proceeded in good faith with the understanding from Vendor that there have been no material changes to the balance sheet and financial condition of the Company since March 2019. As a condition precedent to Completion, Vendor hereby agrees that no later than 16 March 2020 the Vendor shall deliver to Purchaser the Company’s balance sheet as of 29 February 2020. Further, the balance sheet as at 29 February 2020 will become the basis for the Target Statement Balance in the form set out on Schedule 3. The Vendor shall adjust the amount of aggregate Cash in the company's account(s) at Completion so that the balance is $100,000.

 

15

 

 

	
			7.2

				
			Conduct of the Business

			

 

During the Interim Period the Vendor must do all things it is reasonably able to do to ensure that the Company will properly manage the Business as a going concern in accordance with good business practice and in particular to ensure that from the date when this Agreement is unconditional:

 

	 	
			(a)

				
			turnover and profitability are maintained and all assets, including goodwill, are conserved and protected; and

			

 

	 	
			(b)

				
			the Company does not change its name nor grant to any other person the right to use its name; and

			

 

	 	
			(c)

				
			the Company does not grant any right to any other person to use any of its Intellectual Property; and

			

 

	 	
			(d)

				
			the Company does not without the consent of the Purchaser dispose of any of its assets, or purchase any assets except in the ordinary course of trade, nor enter into any contract or arrangement to do so. If the Company does (with the consent of the Purchaser) enter into any such contract it must be on an arm's length commercial basis and for fair market value; and

			

 

	 	
			(e)

				
			the Company does not terminate or materially vary an existing contract; and

			

 

	 	
			(f)

				
			the Company does not borrow, grant security over any of its assets, or guarantee the obligations of a Third Party; and

			

 

	 	
			(g)

				
			the Company does not enter into any capital commitment in excess of NZ$10,000 without prior notification to the Purchaser;

			

 

	 	
			(h)

				
			the Company does not make any material change to any of its prices or trading terms; and

			

 

	 	
			(i)

				
			the assets and profitability of the Company will remain fully insured against all usual risks; and

			

 

	 	
			(j)

				
			in respect of any lease, the Company does not negotiate or grant a renewal, surrender, variation, or rent review; and

			

 

	 	
			(j)

				
			the Company does not increase, reduce, or otherwise alter its share capital or grant any option for the issue of shares or other securities; and

			

 

	 	
			(I)

				
			the Company does not alter its constitution; and

			

 

	 	
			(m)

				
			the Purchaser is promptly notified of any legal claims or proceedings, investigations or adverse events affecting the Company (whether as claimant or defendant) or involving its directors, officers, or employees, and also of any threatened claims or proceedings or circumstances likely to lead to them, and will not admit, settle, compromise or otherwise deal with any such matter except in consultation with the Purchaser, and with the Purchaser's prior written consent;

			

 

	 	
			(n)

				
			if the Company wishes to employ or engage the service of any further person it does not do so without the Purchaser's consent (not to be unreasonably withheld).

			

 

	
			7.3

				
			Vendor to notify Changes

			

 

In the event that the Vendor becomes aware of any changes to the Company or the Business or circumstances or events, as are described in clause 7.1 above, occurring after this Agreement is signed the Vendor will immediately notify the Purchaser and provide any details requested by the Purchaser.

 

	
			8 

				
			COMPLETION

			

 

	
			8.1

				
			Time and Place of Completion

			

 

Subject to mutual agreement on Completion being undertaken by the exchange of solicitor's undertakings, Completion must take place at 3.00 pm on the Completion Date at the offices of the Vendor's Solicitors in Tauranga or at any other time or place as the Vendor and the Purchaser may agree in writing.

 

16

 

 

	
			8.2

				
			Repayment of Shareholder Debts

			

 

Except as otherwise agreed with the Purchaser in writing the Vendor and the Covenantor shall ensure that prior to Completion any moneys owed by the Vendor to the Company or by any trust or any person controlled or associated with the Vendor are repaid.

 

	
			8.3

				
			Repayment of Advances and Releases

			

 

The Vendor will procure that, prior to Completion, the Company repays or otherwise is released from or discharges all of its Financial Indebtedness such that at Completion the Company will not have any outstanding Financial Indebtedness of any nature.

 

	
			8.4

				
			Obligations of Vendor at Completion

			

 

At Completion, the Vendor must give to the Purchaser title to and ownership of the Shares and Current Account, free from security interests, and must for this purpose deliver or cause to be delivered to the Purchaser:

 

	 	
			(a)

				
			Share Transfers and Certificates

			

instruments of transfer of the Shares and Current Account in favour of the Purchaser, or the Purchaser's designated nominee, which have been duly executed by the respective holders and are in registrable form together with the relevant share certificates or, if there are no share certificates, a certificate from a director of the Company certifying that no share certificates have been issued;

 

	 	
			(b)

				
			Waivers

			

any waivers or consents, whether under the Company's constitution or otherwise, which are required to enable the Purchaser or its nominee to be registered as the holder of the Shares, each waiver or consent to be in a form acceptable to the Purchaser acting reasonably together with evidence that there are no outstanding convertible notes or similar securities whatsoever satisfactory to the Purchaser acting reasonably;

 

	 	
			(c)

				
			Other documents

			

Any other document that the Purchaser reasonably requires to be satisfied that it will obtain good title to the Shares and Current Account and to enable them to be registered into the Purchaser's (or nominee's) name. This includes (without limitation) any power of attorney under which a document delivered under this Agreement has been signed;

 

	 	
			(d)

				
			Resolution

			

A copy of a valid resolution of the directors of the Company (including retiring directors) approving the transfer(s) of the Shares and Current Account to the Purchaser (or nominee) and directing that upon production of the signed share transfers to the Company the Purchaser (or its nominee) are to be entered into the Company's register of shareholders; and

 

	 	
			(e)

				
			Resignations

			

Written resignations from the Covenantor, and any other directors of the Company who represent the Vendor, together in each case with acknowledgements satisfactory to the Purchaser to the effect that no monies are owing by the Company to the resigning director (whether by way of fees, salary or otherwise); the acknowledgment also to be to the effect that no such person has a claim of any nature against the Company (such resignations and acknowledgements to be effective as from Settlement);

 

	 	
			(f)

				
			Appointments

			

Where the Purchaser will be entitled to appoint a director or directors, signed resolutions appointing any person or persons nominated by the Purchaser as a director; and

 

 

	 	
			(g)

				
			Non-Competition Deed

			

A non-competition deed (reflecting the restraint in clause 9) in a form approved by and acceptable to the Purchaser, signed by the Vendor and by each of the retiring directors who were appointed by the Vendor;

 

	 	
			(h)

				
			Consent

			

Where available, the written consent of all financiers, lenders, security holders, landlords and other parties that have contracted with the Company and who are required (under the terms of such contracts) to consent to the any change in shareholding or any change in control of the Company;

 

17

 

 

	 	
			(i)

				
			Evidence

			

Evidence satisfactory to the Purchaser that the Vendor and the Covenantor have fulfilled all their obligations under clause 7.2;

 

	 	
			(j)

				
			Release of Securities

			

Evidence of the release of all securities or charges registered against the Shares or Current Account, or the assets of the Company on the Personal Property Securities Register, except in relation to any security or charge that the Vendor and Purchaser have agreed will not be released;

 

	 	
			(k)

				
			All Business Records of the Company including:

			

 

	 	
			(i)

				
			All accounting records for the seven (7) year period preceding the Settlement Date (as are required by the Tax Administration Act 1984 and by the Companies Act); and

			

 

	 	
			(ii)

				
			All documents of title, certificates, licenses, deeds and other documents in respect of property and rights entitling the Company to carry on Business; and

			

 

	 	
			(iii)

				
			All policies of insurance held by or on behalf of the Company together with evidence that all premiums due to Completion have been paid in full

			

 

	 	
			(l)

				
			Banking

			

If required by the Purchaser, and where available, a letter of assurance from the Company's bankers and financiers that they will continue to provide all banking and credit facilities required by the Company to properly conduct the Business; and

 

	 	
			(m)

				
			Bank Authorities

			

A director's resolution cancelling all of the Company's existing bank authorities and nominating the Purchaser and/or their appointees(s) as signatory to operate the accounts of the Company and evidence these changes have been made and the relevant bank(s) have accepted these changes;

 

	
			8.5

				
			Payment of Purchase Price

			

 

At Completion, after the Vendor has delivered the documents set out in clause 8.4 to the Purchaser, the Purchaser shall pay the Purchase Price to the Vendor in accordance with clause 4.1.

 

	
			8.6

				
			Transfer of Ownership

			

 

Full legal and beneficial ownership in the Shares and Current Account will pass to the Purchaser at Completion. Completion occurs when the Vendor and Purchaser have satisfied their respective obligations under clauses 8.4 and 8.5.

 

	
			9 

				
			DEFAULT AND REMEDIES

			

 

	
			9.1

				
			Payment Default

			

 

If any part of the Purchase Price is not paid when it is due to be paid then (but provided the Vendor is not itself then also in default) the Purchaser will, if demanded by the Vendor to do so, pay Default Interest on the unpaid monies. Such Default Interest will be calculated daily from and including the date for payment until and including the day the payment default is remedied in full. For the purposes of this clause any payment made after 4.00 pm will be deemed to have been paid on the next Working Day.

 

	
			9.2

				
			Settlement Notice

			

 

If Completion has not occurred by 4.00 pm on the Completion Date (a later Completion on Completion Date being deemed to take place on the next Working Day) the Vendor or the Purchaser (provided they are not themselves then in default) may serve a Settlement Notice on the other. The Settlement Notice will require Completion to be completed by a specified date. The date specified may not however be earlier than the twelfth (12th) Working Day after the day it is served.

 

18

 

 

	
			9.3

				
			Failure to comply with Settlement Notice

			

 

Subject to clause 9.6, if by 4.00pm on the day when a Settlement Notice expires (or by such later date as the Party serving the notice agrees in writing to extend it) the Party receiving a Settlement Notice has not effected Completion, time being of the essence in any case, the following actions may be taken:

 

	 	
			(a)

				
			If the Settlement Notice was served by the Vendor, the Vendor may:

			

	 	
			(i)

				
			Sue the Purchaser for specific performance; or

			

	 	
			(ii)

				
			Cancel this Agreement by written notice to the Purchaser and either (A) forfeit and retain the Deposit as compensation; or (B) sue the Purchaser for damages.

			

 

	 	
			(b)

				If the Settlement Notice was served by the Purchaser, the Purchaser may:

	 	
			(i)

				
			Sue the Vendor for specific performance; or

			

	 	
			(ii)

				
			Cancel this Agreement by written notice to the Vendor and require repayment of the deposit and any other moneys paid by the Purchaser under it. The Purchaser will in such event also be entitled to demand from the Vendor Default Interest on the moneys paid by it under this Agreement calculated on a daily basis from the date they were first paid out by the Purchaser until the date they are repaid by the Vendor.

			

 

	
			9.4

				
			Calculation of Damages

			

 

In calculating a claim for damages under subclause 9.3(a)(i)(B) the Vendor may include any amount claimable at law or in equity and also any bona fide loss on resale completed within the period ending twelve (12) calendar months after expiry of the Settlement Notice. The loss may include all costs of resale, any expenses or losses incurred in retaining the Shares pending resale, and also Default Interest calculated on the Purchase Price during that Period. The Purchaser will not be entitled to claim any of the proceeds of a resale of the Shares under this clause.

 

	
			9.5

				
			Deemed Cancellation on Resale

			

 

If following expiry of a Settlement Notice, the Vendor enters into a binding agreement for resale of the Shares without first cancelling this Agreement under sub clause 9.3(a)(i)(A) this Agreement will be deemed cancelled when the resale Agreement is binding on the Vendor.

 

	
			9.6

				
			Actions / Inactions without Prejudice to Other Rights

			

 

Any action taken under this clause will be without prejudice to other rights a Party may have at law or in equity. Failure to serve a Settlement Notice will not prevent a Party pursuing other remedies, including a claim for specific performance.

 

	
			9.7

				
			No Presumed Breach of Essential Term

			

 

If a party serves a Settlement Notice they will not be deemed to be in breach of an essential term by reason only of not being ready, willing, and able to settle when the notice expires.

 

	
			10 

				
			WARRANTIES AND CLAIMS GENERALLY

			

 

	
			10.1

				
			Effective Warranties

			

 

The Covenantor represents and warrants to the Purchaser that the Warranties are, as at the date of this Agreement, in all respects true, complete, and accurate.

 

	
			10.2

				
			Continuing Warranties

			

 

The Warranties are deemed to be repeated on the Completion Date.

 

	
			10.3

				
			limitations on Warranties

			

 

The Warranties are given subject to:

 

	 	
			(a)

				
			Any exception or qualification disclosed in a Disclosure Letter which is given to the Purchaser prior to Settlement; and

			

 

	 	
			(b)

				
			Anything which is authorised by or required to be done in accordance with this Agreement; and

			

 

	 	
			(c)

				
			Any other exception expressly agreed by the Parties; and

			

 

	 	
			(d)

				
			Anything which is disclosed or is actually known to the Purchaser or is within the public domain; and

			

 

	 	
			(e)

				
			Any matter discoverable by a search of any public registers.

			

 

19

 

 

	
			10.4

				
			Best of Knowledge and Belief

			

 

Where any Warranty is qualified by the expression "to the best of (a Party's) knowledge and belief' or any similar expression, the giver of the Warranty is nevertheless required to have made due and careful enquiry and reasonable endeavours to ensure that all information given is true, complete, and accurate in all respects, and will not be relieved from liability if they have not done so.

 

	
			10.5

				
			Pre-Settlement

			

 

During the Interim Period the Covenantor will exercise every reasonable endeavour to ensure that the Company refrains from doing, or omitting to do, any act or thing which would enable any of the Warranties to become untrue or inaccurate in any respect.

 

	
			10.6

				
			Duty to Disclose Breach

			

 

If at any time prior to Completion it becomes apparent to the Covenantor that any Warranty will as at Completion be breached, then the Covenantor shall immediately give written notice to the Purchaser of that fact and the circumstances giving rise to it.

 

	
			10.7

				
			Cancellation Notice

			

 

If at any time prior to Completion, it becomes apparent to the Purchaser that any Warranty will be breached to any material extent then the Purchaser shall be entitled to cancel this Agreement by notice in writing to the Vendor. Any cancellation will be without prejudice to any other right or remedy the Purchaser may have. If in such event the Purchaser does not cancel this shall not be regarded as a waiver or loss of any other right or remedy the Purchaser may have.

 

	
			10.8

				
			Independency

			

 

Each of the Warranties is separate and independent from the others and, except as expressly provided, are not limited in any respect.

 

	
			10.9

				
			Reliance on Warranties

			

 

The Covenantor acknowledges that the Purchaser has entered into this Agreement in reliance upon the Warranties. However, the Purchaser acknowledges that it otherwise enters into this Agreement and purchases the Shares and Current Account in reliance upon its own enquiries and due diligence and not upon any other representation, warranties or statements of the Vendor or the Covenantor.

 

	
			10.10

				
			Limitation of Claims for Breach of Warranty

			

 

Any Claim made by the Purchaser for breach of any single Warranty must be made in writing to the Vendor not later than the first anniversary of Completion. In any event, the maximum liability for breach of any single Warranty is $1,000,000. Additionally, the Purchaser shall not be entitled to claim a breach of any Warranty unless such Claim is in each case excess of $100,000 or where a number of Claims are submitted together, the total sum of the Claims submitted exceeds that amount.

 

	
			10.11

				
			Reduction of Purchase Price

			

 

Any monetary compensation received by the Purchaser as a result of any Claim must be in reduction and refund of the Purchase Price.

 

	
			10.12

				
			Exclusions from Claims

			

 

No Claim or any other claim under or in relation to this Agreement whatsoever may be made in respect of Any loss arising which is fully recovered under an insurance policy in force at the date of loss or is otherwise made fully good without any other cost or loss to the Purchaser or Company.

 

20

 

 

	
			10.13

				
			Claims Procedures

			

 

If any event occurs or any claim arises against the Purchaser or a Company in respect of which the Purchaser may seek to make a Claim the following provisions will apply:

 

	 	
			(a)

				
			the Purchaser shall promptly take all reasonable steps to mitigate any loss;

			

 

	 	
			(b)

				
			the shall not be liable to the Purchaser to the extent that the Purchaser or the Company actually received payment from a third party (including any relevant insurer) in respect of any relevant loss and if the Purchaser has received any payment from the in respect of any relevant loss, the Purchaser or the Company will be required to account to the for any amount received from any third party (including any relevant insurer) the intent being that the Purchaser should not receive a double recovery;

			

 

	 	
			(c)

				
			the Purchaser will within the relevant period specified in clause 10.10 give notice to the 's Solicitors and will ensure that the Purchaser does not (and the Company does not) make any payment or admission of any liability (whether to an insurer, any third party, or otherwise) in respect of that event or claim, without the prior written consent of the 's Solicitors, such consent not to be unreasonably withheld or delayed;

			

 

	
			10.14

				
			Allowances

			

 

The liability under any Claim or a claim under clause 10 will be assessed after taking into account:

 

	 	
			(a)

				
			the amount by which any Tax for which any Company is reduced or extinguished as a result of any such liability; and

			

 

	 	
			(b)

				
			the extent (if any) to which a specific provision has been made in the final Closing Statement in respect of the matter which is the subject of that claim as evidenced by relevant work papers and books of account.

			

 

	
			10.15

				
			No Double Claims

			

 

The Purchaser will only be entitled to make a Claim once in respect of the same or any inter-related factual circumstances where those circumstances, when reasonably considered, should form the basis of a single Claim against, with the intent that the same loss should not be recovered more than once.

 

	
			11 

				
			NON-COMPETITION

			

 

	
			11.1

				
			Undertakings

			

 

As further consideration for the Purchaser agreeing to purchase the Shares and Current Account from the Vendor on the terms contained in this Agreement, the Vendor and each of the Covenantors covenant that they will not, and will not permit any Related Party of theirs to:

 

	 	
			(a)

				
			During the Restraint Period within the Restraint Area directly or indirectly carry on or be interested, engaged or concerned (whether on their own account or in partnership with or as manager, agent, director, shareholder, employee or beneficiary under a trust, or in any other capacity), in any business, venture or other activity that is the same or substantially similar to the Business; or

			

 

	 	
			(b)

				
			During the Restraint Period, whether on their own account or for any other person, solicit, entice, or endeavour to entice away any employee, officer or consultant of the Company, any customer of the Company, or any employee, officer, consultant, or customer of a Related Party of the Company; or

			

 

	 	
			(c)

				
			At any time disclose or use Confidential Information or other Intellectual Property Rights of the Company or its Related Parties.

			

 

	
			11.2

				
			Undertakings Independent

			

 

Each undertaking contained in clause 11.1 must be read and construed independently of the other undertakings contained in that clause so that if one or more is held to be invalid as an unreasonable restraint of trade or for any other reason whatsoever then the remaining undertakings are to be valid to the extent that they are not held to be so invalid.

 

	
			11.3

				
			Exceptions

			

 

Nothing in clause 11.1prohibits the Vendor holding (as an investor only) up to five per cent of the issued share capital, or holding any debentures or other non-voting securities, of any company the securities of which are listed on any recognised stock exchange.

 

21

 

 

	
			11.4

				
			Reasonable Undertakings

			

 

The Vendor acknowledge that:

 

	 	
			(a)

				
			the value of the Shares and Current Account upon which the Purchase Price has been set and accepted by the Purchaser is dependent upon the giving the undertaking contained in clause 11.1; and

			
	 	 	 

	 	
			(b)

				
			the undertaking contained in clause 11.1 is reasonable; and

			
	 	 	 

	 	
			(c)

				
			the undertaking contained in clause 11.1 has been given for the protection of the Goodwill.

			

 

	
			11.5

				
			Modification

			

 

If the undertaking contained in clause 11.1 is held to be invalid as an unreasonable restraint of trade or for any other reason, but would have been valid if part of its wording had been deleted or the period reduced or the range of activities or area dealt with reduced in scope, that undertaking must apply with those modifications necessary to make it valid and effective.

 

	
			11.6

				
			Assignment

			

 

The Purchaser may assign the benefit of the undertaking contained in clause 11.1, in whole or in part in connection with the sale of the Companies or the Business to a bona fide third party purchaser.

 

	
			11.7

				
			Equitable Relief

			

 

Each signatory of this Agreement (excluding the Purchaser) acknowledges that, if there is an alleged breach of this clause 11, the Purchaser and any of the Companies may seek equitable relief in addition to damages.

 

	
			11.8

				
			Privity

			

 

The undertaking contained in this clause 11.1 is (for the purposes of the Contract and Commercial Law Act 2017 intended to create a benefit in favour of, and to be enforceable by, the Purchaser and each of the Companies.

 

	
			12 

				
			CONFIDENTIALITY AND ANNOUNCEMENTS

			

 

	
			12.1

				
			Confidentiality

			

 

Subject to clause 12.2, each party must keep confidential any information obtained during the course of negotiations or under this Agreement including any information about the existence and terms of this Agreement and any draft of this Agreement, and must not disclose such information to any person except:

 

	 	
			(a)

				
			where the information is in the public domain as at the date of this Agreement (or subsequently becomes in the public domain other than by reason of a breach of this clause by a party or a Related Company of that party);

			

 

	 	
			(b)

				
			with the prior written consent of the other parties;

			

 

	 	
			(c)

				
			to any associated entity of the party that has a legitimate need to use that information;

			

 

	 	
			(d)

				
			to any director, officer, employee, financier or adviser of the party who has a clear and legitimate need to use that information in relation to the transaction contemplated by this Agreement; or

			

 

	 	
			(e)

				
			pursuant to any applicable law or the rules of any relevant stock exchange or an order of any Court of competent jurisdiction or any Governmental Authority provided that if disclosure is required to be made under this clause 12.1(e), to the extent permitted by law or by the rules of any relevant stock exchange, notice of such disclosure will be given by the party required to make the disclosure, to any party(ies) to whom the disclosure may affect, at least two business days prior to such disclosure being made.

			

 

	
			12.2

				
			Public Announcements

			

 

Subject to the law and stock exchange requirements in any jurisdiction to which a party (including a Related Company of the Purchaser) is bound to comply with, no party may make any public or press announcements or statement concerning this Agreement or Completion without the prior approval of the other parties (including as to the text of such announcement or statement), such agreement not to be unreasonably withheld.

 

22

 

 

	
			13 

				
			ASSIGNMENT

			

 

	
			13.1

				
			Successors

			

 

This Agreement must be binding on and will continue for the benefit of the parties and their respective successors and permitted assignees or transferees.

 

	
			13.2

				
			No Assignment by Vendor

			

 

The Vendor may not assign or transfer its rights and obligations under this Agreement without the consent in writing of the Purchaser.

 

	
			14 

				
			NOTICES

			

 

	
			14.1

				
			Addresses and References

			

 

Subject to clause 1.3(i), each notice or other communication under this Agreement (including any service of proceedings) must be made in writing and sent by personal delivery, by post or by email to the addressee at address or email address, and marked for the attention of the person or office holder (if any), from time to time designated for the purpose by the addressee to the other parties. Subject to clause 1.3(i), the initial address, email address and relevant person or office holder of each party is set out below under its name at the end of this Agreement.

 

	
			14.2

				
			Deemed Delivery

			

 

No communication (including proceedings) will be effective until received. A communication (including proceedings) is, however, deemed to be received:

 

	 	
			(a)

				
			in the case of a couriered letter or parcel, on the second business day after couriering; and

			

 

	 	
			(b)

				
			in the case of a communication sent by email, on the business day on which it was dispatched or, if dispatched after 5.00pm (in the place of receipt) on a business day, on the next business day (in the place of receipt) after the date of Dispatch provided in each case the computer system used to transmit the communication:

			

 

	 	
			(i)

				
			has received an acknowledgement of receipt to the email address of the person transmitting the communication; and

			

 

	 	
			(ii)

				
			has not generated a record that the communication has failed to be transmitted.

			

 

	
			15 

				
			COSTS

			

 

Whether or not any of the transactions contemplated by this Agreement are completed, each party must bear its own costs and other expenses of and incidental to the preparation, execution and Completion of this Agreement.

 

Notwithstanding the above, the Purchaser shall pay the costs in connection with the preparation and documentation of the independent valuation of the stock-take and the independent valuation of the fixed assets.

 

	
			16 

				
			REMEDIES AND WAIVERS

			

 

	
			16.1

				
			Exercise of Rights and Waivers

			

 

Time is of the essence in respect of all dates and times for compliance by the parties with their obligations under this Agreement. However, no failure to exercise, and no delay in exercising, a right of a party under this Agreement will operate as a waiver of that right, nor will a single or partial exercise of a right preclude another or further exercise of that right or the exercise of another right. No waiver by a party of its rights under this Agreement is effective unless it is in writing signed by that party.

 

	
			16.2

				
			Remedies Cumulative

			

 

The rights of the parties under this Agreement are cumulative and not exclusive of any rights provided by law.

 

23

 

 

	
			17 

				
			DISPUTE RESOLUTION

			

 

	
			17.1

				
			Dispute Resolution Process

			

 

Unless otherwise provided in this Agreement, if a party considers that there is a dispute in respect of any matter arising out of, or in connection with it, then that party may immediately give a Dispute Notice to the other party or parties setting out details of the dispute. The parties will then endeavour in good faith to resolve the dispute between themselves. If they are unable to do so within five (5) Working Days of the receipt of the Dispute Notice, then:

 

	 	
			(a)

				
			the matter shall be referred for a decision to a suitably qualified independent Expert appointed by the Vendor and the Purchaser (or. if they cannot reach agreement on such appointment within two (2) Working Days, by a person appointed by the President for the time being of the Auckland District Law Society Inc., on application of either the Vendor or the Purchaser); and

			

 

	 	
			(b)

				
			the Expert may, at his or her discretion accept written and/or oral submissions from the Vendor and/or the Purchaser in respect of the dispute; and

			

 

	 	
			(c)

				
			in reaching their decision the Expert is to act as an expert and not as an arbitrator; and

			

 

	 	
			(d)

				
			the Expert must give his or her determination in writing, with reasons; and

			

 

	 	
			(e)

				
			the Vendor and the Purchaser shall each bear their own costs and expenses in connection with the determination. All costs and expenses of the Expert shall be borne between the Parties as the Expert may determine; and

			

 

	 	
			(f)

				
			the determination of any matter under this clause shall be final and binding upon the parties.

			

 

	
			17.2

				
			Primacy of Dispute Resolution Process

			

 

Except as otherwise provided in this Agreement. No party will commence legal proceedings against another before following the procedure set out in this clause 17, provided that this provision will not prevent a party seeking urgent interlocutory relief.

 

	
			18 

				
			MISCELLANEOUS

			

 

	
			18.1

				
			Amendments

			

 

No amendment to this Agreement is effective unless it is in writing signed by all parties.

 

	
			18.2

				
			Partial Invalidity

			

 

The illegality, invalidity or unenforceability of a provision of this Agreement under any law will not affect the legality, validity or enforceability of that provision under another law or the legality, validity or enforceability of another provision.

 

	
			18.3

				
			No Merger

			

 

Notwithstanding any rule of law to the contrary, the agreement and undertakings set out in this Agreement will not merge in the instruments of transfer executed pursuant to this Agreement but (to the extent they have not been completed by performance at the completion of Completion) will remain in full force and effect and enforceable to the fullest extent.

 

	
			18.4

				
			Further Assurances

			

 

The parties will execute and deliver any documents, including transfers of title, and do all things as may reasonably be required to enable the parties, to obtain the full benefit of this Agreement according to its true intent.

 

	
			18.5

				
			Entire Agreement

			

 

This Agreement, the accompanying Schedules and the Disclosure Letter constitute the entire agreement of the parties in respect of the sale and purchase of the Shares and Current Account and supersede all previous agreements including the Prior Agreement.

 

24

 

 

	
			18.6

				
			Counterparts

			

 

	 	
			(a)

				
			This Agreement may be executed (including signatures shown on PDF copies) in any number of counterparts each of which is to be deemed an original, but all of which together will constitute a single instrument.

			

 

	 	
			(b)

				
			A party may enter into this Agreement by executing any counterpart.

			

 

	 	
			(c)

				
			This Agreement may be executed on the basis of an exchange of facsimile or PDF copies and execution of this Agreement by such means is to be a valid and sufficient execution.

			

 

	
			18.7

				
			Process Agent

			

 

The Purchaser appoints Harris Tate Lawyers, 29 Brown Street, Tauranga, 3110 to accept service of proceedings in New Zealand on its behalf.

 

The Vendor appoint Lunn & Associates 17 Shakespeare Road, Bluff Hill, Napier 4110 to accept service of proceedings in New Zealand on their behalf.

 

	
			18.8

				
			Governing Law

			

 

This Agreement is governed by, and is to be construed in accordance with, New Zealand law.

 

	
			18.9

				
			Jurisdiction

			

 

The parties irrevocably and unconditionally submit to the non-exclusive jurisdiction of the Courts of New Zealand in relation to any dispute or proceeding arising out of or in connection with this Agreement.

 

	
			18.10 

				
			Limitation of Liability 

			

 

The liability of Stephen Peter Lunn under this Agreement is limited to the assets of the GE LJ Eagle Family Trust held by the Trustees and available to meet the liability at the time when demand for payment is made in writing.

 

EXECUTED AS AN AGREEMENT

 

 

 

Signed by

Graham Eric Eagle as Vendor and Covenantor in the presence of:

 

 

 

Witness Signature:

Name:

Address:

Occupation:

 

 

Signed by

Linda Janice Eagle as Vendor and

Covenantor in the presence of:

 

 

 

Witness Signature:

Name:

Address:

Occupation:

 

25

 

 

Signed by

Stephen Peter Lunn as Vendor and

Covenantor in the presence of:

 

 

 

Witness Signature:

Name:

Address:

 

Occupation:

 

 

 

Graham Eric Eagle as Covenantor in the

presence of:

 

 

 

Witness Signature:

Name:

Address:

 

Occupation:

 

26

 

 

Signed by

GOURMET FOODS LIMITED as the Purchaser by its Directors in the presence of:

 

 

 

 

DIRECTOR: Bryce Cole as in the presence of:

 

 

 

Witness Signature:

Name:

Address:

Occupation:

 

 

 

DIRECTOR: David Neibert as in the presence of:

 

 

 

Witness Signature:

Name:

Address:

Occupation:

 

 

 

DIRECTOR: Nicholas Gerber as in the presence of:

 

 

 

Witness Signature:

Name:

Address:

Occupation:

 

 

 

Address details for the Purchaser:

 

	Address:	144 Birch Avenue
	 	Judea
	 	Tauranga 3110
	Email Address:	bryce@gourmetfoodsltd.co.nz:
	Contact Name:	Bryce Cole
	 	 
	 	 
	 	 
	 	 
	 	Michelle Carabine
	 	Harris Tate
	 	29 Brown Street, Tauranga, 3110
	Email:	michelle@harristate.co.nz
	Contact Name:	Michelle Carabine

   

27

 

 

Address details for the Vendor:

 

	Address:	Graham Eagle
	 	7 Breckenridge Lane,
	 	Rd 3,
	 	Napier, 4183
	Email address:	graham@printstock.co.nz
	Contact Name:	Graham Eagle
	 	 
	 	 
	 	 
	 	 
	 	Lunn & Associates
	 	17 Shakepeare Rd
	 	Bluff Hill
	 	Napier 4110
	 	New Zealand
	Email address:	Steve@lunns.co.nz
	Contact Name:	Steve Lunn

 

28

 

 

SCHEDULE 1: WARRANTIES

 

	
			1 

				
			THE SHARES

			

 

	
			1.1

				
			The Sale Shares

			

 

	 	
			(a)

				
			The Vendor is the only owner of the Shares.

			

 

	 	
			(b)

				
			The Vendor's right to sell them to the Purchaser is not restricted in any way. There are no pre- emptive rights, options or rights of first refusal or rights to acquire shares or like rights granted to any other person, other than those which will be waived by other shareholders at Completion. The Purchaser will, on Completion, acquire full legal and beneficial ownership of the Shares, free of any Encumbrance.

			

 

	 	
			(c)

				
			The Shares are all of the issued shares of the Company.

			

 

	 	
			(d)

				
			The Shares have been lawfully issued.

			

 

	 	
			(e)

				
			The Company is not under any obligation to issue further shares or like rights and has not granted any person the right to call for the issue of any shares or other rights in the Company at any time.

			

 

	 	
			(f)

				
			The Company has not passed a resolution to alter its share capital, nor to alter rights attaching to any Shares and the Vendor will not permit it to do so before Completion.

			

 

	 	
			(g)

				
			There are no known restrictions or obligations which could affect the Vendor's ability to give full effect to this Agreement.

			

 

	
			1.2

				
			Authorisations

			

 

	 	
			(a)

				
			The Vendor has obtained all corporate and other authorisations necessary to become bound by it, and there are no restrictions or other obligations known to the Vendor which could affect the Vendor's ability to give full effect to this agreement.

			

 

	
			2 

				
			THE COMPANY STRUCTURE

			

 

	
			2.1

				
			Corporate Organisation

			

 

	 	
			(a)

				
			The Company is a limited liability company that has been properly incorporated under the Companies Act.

			

 

	 	
			(b)

				
			The Company has done all things required for it to carry on business in all jurisdictions in which it trades.

			

 

	 	
			(c)

				
			The Company has no subsidiaries.

			

 

	
			2.2

				
			Company Name

			

 

The Vendor will not change, nor allow the Company to change, the Company's name during the Interim Period.

 

	
			3 

				
			SOLVENCY

			

 

The Company is able to pay its debts as they fall due for payment from its own resources, and its assets exceed its liabilities, and that no action has been taken (such as, by way of example, the issue of a statutory demand) or threat made by any third party to wind up the Company or to appoint a receiver or administrator.

 

	
			4 

				
			ADVERSE EFFECT

			

 

	
			4.1

				
			Material Contracts

			

 

Neither the Vendor nor the Company has received any notice or indication of, or has a reasonable expectation of, the actual or potential termination of any of the Company's material contracts (such material contracts being those disclosed to the Purchaser during due diligence).

 

29

 

 

	
			4.2

				
			Notice

			

 

The Vendor has not received any notice or demand and has no knowledge of any requisition or outstanding requirement:

 

	 	
			(a)

				
			from any local or government authority or other statutory body; or

			

	 	
			(b)

				
			under the Resource Management Act 1991and its amendments; or

			

	 	
			(c)

				
			from a landlord of the Premises; or

			

	 	
			(d)

				
			from any other party

			

 

which adversely affects the Business or the Premises and which has not been disclosed in writing to the Purchaser.

 

	
			4.3

				
			Consent

			

 

The Vendor has not given any consent or waiver which adversely affects the Business or the Premises and which has not been disclosed in writing to the Purchaser.

 

	
			5 

				
			CONDUCT OF THE BUSINESS

			

 

	
			5.1

				
			Interim Period

			

 

During the Interim Period the Company has complied with the provisions of clause 7.2 of this Agreement.

 

	
			6 

				
			TURNOVER

			

 

	
			6.1

				
			Turnover

			

 

The Company's turnover for the period 1 April 2018 to 31 March 2019 was NZ$3,709,292 (being GST exclusive sales net of rebates, not including interest income or sundry income).

 

	
			7 

				
			FINANCIAL STATEMENTS

			

 

	
			7.1

				
			Accounts

			

 

	 	
			(a)

				
			The Accounts present a true and fair view of the Company's financial affairs and have been prepared in the manner customarily adopted by the Company and in accordance with the requirements of the Financial Reporting Act 2013 (or earlier applicable legislation) and in accordance with the requirements of the IRD Order; and

			

	 	
			(i)

				
			are not affected by any unusual or non-recurring item; and

			

	 	
			(ii)

				
			Take into account all gains and losses (whether realized or unrealized, arising from foreign currency transactions); and

			

	 	
			(iii)

				
			Include all reserves and provisions that are necessary to cover any liability for Tax of the Company; and

			

	 	
			(iv)

				
			Subject to subclause (b) below, include all actual and contingent liabilities of the Company as at the Balance Date.

			

 

	 	
			(b)

				
			The Accounts include accruals for Employee Entitlements including Holiday Pay

			

 

	 	
			(c)

				
			Except as provided for in the Accounts, all receivables, loans, and all other amounts recoverable by the Company shown in the Accounts can be recovered in the ordinary course of business and in accordance with their usual terms. The recorded value of each account is actually the amount recoverable by the Company.

			

 

	
			8 

				
			Tax

			

 

	
			8.1

				
			Tax Representations and Warranties

			

 

	 	
			(a)

				
			The Company has completed and filed all returns, notices, information and disclosures which are required to be completed and filed for the purpose of Tax on or before their due date, and will continue to do so until Completion.

			

 

	 	
			(b)

				
			All Tax returns were accurate and correctly completed and have not been disputed by a Tax Authority.

			

 

	 	
			(c)

				
			All liability for Tax for the periods up to and including the Completion Date has been properly and fully provided for in the Accounts.

			

 

30

 

 

	 	
			(d)

				
			The Business Records include all accounts, returns, documents and information which are required to be maintained or retained for Tax purposes.

			

 

	 	
			(e)

				
			The has paid all Tax when due and has complied with its withholding tax and similar obligations (including PAVE and KiwiSaver).

			

 

31

 

 

SCHEDULE 2: SHAREHOLDING

 

The Shares

 

	
			Name of Shareholder / Vendor

				
			Number of Shares

				
			Type of Share Sold

			 

			
	
			Graham Eric Eagle, Linda Janice Eagle, Stephen Peter Lunn, as trustees of the GE and LJ Eagle Family Trust

			 

				
			266,850

				
			Ordinary

			
	
			Graham Eric Eagle

			 

				
			  29,650

				
			Ordinary

			
	
			TOTAL SHARES

			 

				
			296,500

				
			Ordinary

			
	
			 

			 

			 

				 	 

 

32

 

 

SCHEDULE 3: COMPLETION STATEMENT

 

 

 

Completion Statement and Accounting Policies

 

 

 

Part A – Calculation of the Adjustment Amount

 

	 	 	
			Target Statement

				 	 	
			Closing Statement

				 
	
			Current Assets

				 	 	 	 	 	 
	
			Cash

				
			$

				
			100,000

				 	
			$

				 	 
	
			Accounts Rec

				 	 	 	 	 	 
	
			Prepayments

				 	 	 	 	 	 
	
			Inventories

				 	 	 	 	 	 
	
			Total Current Assets

				 	 	 	 	 	 
	
			Fixed Assets

				 	 	 	 	 	 
	
			Cost

				 	 	 	 	 	 
	
			Less accumulated depreciation

				 	 	
			)

				 	 	
			)

			
	
			Net fixed assets

				 	 	 	 	 	 
	
			Total Assets

				 	 	 	 	 	 
	 	 	 	 	 	 	 
	
			Liabilities

				 	 	 	 	 	 
	
			Accounts Payable

				 	 	 	 	 	 
	
			Employee Accruals

				 	 	 	 	 	 
	
			Tax and GST

				 	 	 	 	 	 
	
			Total Liabilities

				 	 	 	 	 	 
	 	 	 	 	 	 	 
	
			Net Assets

				
			$

				 	 	
			$

				 	 
	 	 	 	 	 	 	 
	
			Adjustments

				 	 	 	 	 	 
	 	 	 	 	 	 	 
	
			Balance

				 	 	 	 	 	 

 

 

Part B- Specific Policies for the Closing Statement

 

 

	 	
			1.

				
			The Closing Statement shall be drawn up as soon as is reasonably possible after the Completion Date (the Effective Time). No account shall be taken of events taking place after the Effective Time apart from recording transactions that had occurred or liabilities accrued due to actions taken yet unaccounted for prior to the Effective Time.

			

 

	 	
			2.

				
			The Closing Statement shall be prepared with those specific procedures that would be adopted at a financial year end, including detailed analysis of accruals and cut-off procedures.

			

 

	 	
			3.

				
			For the purposes of the Closing Statement, the Completion Date shall be treated as the end of a Tax accounting period. Any unpaid income tax, fringe benefits tax, GST or payroll tax liabilities which are referable to any period up to and including Completion which relate to the conduct of the Business but which are not due for payment by the Vendors or the Company until after Completion will be provided for in the Completion Accounts.

			

 

	 	
			4.

				
			No amounts shall be included in the Closing Statement in relation to deferred tax assets or deferred tax liabilities.

			

 

	 	
			5.

				
			The Target Statement and Closing Statement should exclude any moneys owed to the Vendor by the Company or to any trust or any person controlled by or associated with the Vendor.

			

 

33

 

 

	 	
			6.

				
			The provisions of this Schedule 3 shall be interpreted so as to avoid double counting (whether positive or negative) of any item to be included in the Closing Statement.

			

 

	 	
			7.

				
			No minimum materiality limits shall be applied in the preparation and review of the Closing Statement.

			

 

	 	
			8.

				
			The Closing statement shall include an accrual for any obligation as at the Effective Time with respect to Employee Entitlements, including an accrual for relevant on-costs including but not limited to superannuation, payroll tax and workers compensation. For the avoidance of doubt the Closing Statement will not include an accrual for sick leave.

			

 

	 	
			9.

				
			Accounts Payable shall include a full accrual for all amounts payable by the Company after Completion for goods and services received prior to Completion.

			

 

	 	
			10.

				
			Any accounts receivable aged more than 21days, and where the customer is in liquidation, receivership or administration, where the debt has been placed into the hands of lawyers or collection agents for collection or for any other debt where there is a doubt about the full collection being foreseeable will not form part of the Accounts receivable.

			

 

	 	
			11.

				
			Prepayments shall be excluded to the extent that the benefit of such goods and services are not received or receivable by the Company after Completion.

			

 

	 	
			12.

				
			In calculating the Target Statement Balance the aggregate cash will be recorded as $100,000 and any excess cash will be withdrawn by the Vendor or deficit cash will be introduced by the Vendor prior to Completion.Exhibit
4.1

 

DESCRIPTION
OF THE REGISTRANT’S SECURITIES

REGISTERED
PURSUANT TO SECTION 12 OF THE SECURITIES

EXCHANGE
ACT OF 1934

 

ScoutCam
Inc. has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), our shares of common stock, par value $0.001 (the “Common Stock”). The following is a summary of some
of the terms of our Common Stock based on our Amended and Restated Articles of Incorporation (the “Articles of Incorporation”)
and our Amended and Restated Bylaws (the “Bylaws”). The following summary is not complete and is subject to, and is
qualified in its entirety by reference to, the provisions of our Articles of Incorporation, our Bylaws as well as the Nevada Revised
Statutes (“NRS”) and any other documents referenced in the summary and from which the summary is derived.

 

Name
of exchange on which registered

 

Our
Common Stock is quoted on the OTC Market, Pink Tier, under the symbol “SCTC”. Prior to December 30, 2019, our Common
Stock was quoted under the symbol “INLL”.

 

Registration

 

ScoutCam
Inc. was incorporated on March 22, 2013 in the State of Nevada under the name Intellisense Solutions Inc.

 

Common
Stock

 

We
are authorized to issue up to a total of 75,000,000 shares of Common Stock. Holders of our Common Stock are entitled to one vote
for each share held on all matters submitted to a vote of our stockholders.

 

As
of December 31, 2019, there were 26,884,921 shares of Common Stock issued and outstanding and there were approximately 90 holders
of record of our Common Stock.

 

Voting
Rights

 

Holders
of Common Stock are entitled to one vote per share on all matters voted on generally by the stockholders, including the election
of directors, and the holders of Common Stock possess all voting power of our stockholders. Holders of Common Stock do not have
cumulative voting rights.

 

Liquidation
Rights

 

If
any, upon any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, holders
of shares of Common Stock are entitled to share equally and ratably in the assets of the Company to be distributed among the holders
of outstanding shares of Common Stock.

 

Dividends

 

In
general, the holders of outstanding shares of our common stock are entitled to receive dividends out of assets legally available
therefor at such times and in such amounts as our board of directors may from time to time determine. As a Nevada corporation,
we are subject to the limitations of Nevada law, which allows us to pay dividends unless, after such dividend, we would not be
able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our
total liabilities plus any amount that would be needed if we were to be dissolved at the time of the dividend payment to satisfy
the preferential rights of stockholders whose preferential rights are superior to those receiving the dividend.

 

    	 

    	- 2 -

    

 

Anti-Takeover
Effects of Nevada Law and Our Articles of Incorporation and Bylaws

 

General.
Certain provisions of our Articles of Incorporation and our Bylaws, and certain provisions of the NRS could make our acquisition
by a third party, a change in our incumbent management, or a similar change of control more difficult. These provisions, which
are summarized below, are likely to reduce our vulnerability to an unsolicited proposal for the restructuring or sale of all or
substantially all of our assets or an unsolicited takeover attempt. The summary of the provisions set forth below does not purport
to be complete and is qualified in its entirety by reference to our Articles of Incorporation and our Bylaws and the applicable
provisions of the NRS.

 

Advance
Notice Requirements. Stockholders wishing to nominate or re-nominate persons for election to our board of directors at an
annual meeting or to propose any business to be considered by our stockholders at an annual meeting must comply with certain advance
notice and other requirements set forth in our Bylaws. Likewise, if our board of directors has determined that directors shall
be elected at a special meeting of stockholders, stockholders wishing to nominate or re-nominate persons for election to our board
of directors at such special meeting must comply with certain advance notice and other requirements set forth in our Bylaws.

 

Special
Meetings. Our Bylaws provides that special meetings of stockholders may only be called by the Chairman of the Board of Directors,
the President or by a majority of the entire Board of Directors.

 

Board
Vacancies. Any vacancy on our board of directors, howsoever resulting, may be filled by a majority vote of the directors then
in office even if less than a quorum is present. Any director elected to fill a vacancy shall hold office for a term expiring
at the next annual meeting of stockholders and when their successors are elected or appointed, at which the term of the class
to which he or she has been elected expires, or until his or her earlier resignation or removal.

 

Removal
of Directors. Our Bylaws provide that if any, and except as otherwise provided in the NRS, any director may be removed from
office with or without cause only by the affirmative vote of the holders of two-thirds of the outstanding shares of stock entitled
to vote generally in the election of directors. NRS 78.335 generally requires the vote of stockholders representing not less than
two-thirds of the voting power of the issued and outstanding stock entitled to vote in order to remove an incumbent director.

 

Nevada
Anti-Takeover Statutes. The Nevada Revised Statutes contain provisions governing the acquisition of a controlling interest
in certain Nevada corporations. Nevada’s “acquisition of controlling interest” statutes (NRS 78.378 through
78.3793, inclusive) contain provisions governing the acquisition of a controlling interest in certain Nevada corporations. These
“control share” laws provide generally that any person that acquires a “controlling interest” in certain
Nevada corporations may be denied voting rights, unless a majority of the disinterested stockholders of the corporation elects
to restore such voting rights. These laws will apply to us as of a particular date if we were to have 200 or more stockholders
of record (at least 100 of whom have addresses in Nevada appearing on our stock ledger at all times during the 90 days immediately
preceding that date) and do business in the State of Nevada directly or through an affiliated corporation, unless our articles
of incorporation or bylaws in effect on the tenth day after the acquisition of a controlling interest provide otherwise. These
laws provide that a person acquires a “controlling interest” whenever a person acquires shares of a subject corporation
that, but for the application of these provisions of the NRS, would enable that person to exercise (1) one-fifth or more, but
less than one-third, (2) one-third or more, but less than a majority or (3) a majority or more, of all of the voting power of
the corporation in the election of directors. Once an acquirer crosses one of these thresholds, shares which it acquired in the
transaction taking it over the threshold and within the 90 days immediately preceding the date when the acquiring person acquired
or offered to acquire a controlling interest become “control shares” to which the voting restrictions described above
apply. These laws may have a chilling effect on certain transactions if our Articles of Incorporation or Bylaws are not amended
to provide that these provisions generally do not apply to us or to an acquisition of a controlling interest, or if our disinterested
stockholders do not confer voting rights in the control shares. Our original Articles of Incorporation include a provision electing
that the Company not be governed by these laws.

 

    	 

    	- 3 -

    

 

Nevada’s
“combinations with interested stockholders” statutes (NRS 78.411 through 78.444, inclusive) provide that specified
types of business “combinations” between certain Nevada corporations and any person deemed to be an “interested
stockholder” of the corporation are prohibited for two years after such person first becomes an “interested stockholder”
unless the corporation’s board of directors approves the combination (or the transaction by which such person becomes an
“interested stockholder”) in advance, or unless the combination is approved by the board of directors and sixty percent
of the corporation’s voting power not beneficially owned by the interested stockholder, its affiliates and associates. Furthermore,
in the absence of prior approval certain restrictions may apply even after such two-year period. For purposes of these statutes,
an “interested stockholder” is any person who is (1) the beneficial owner, directly or indirectly, of 10% or more
of the voting power of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and
at any time within the two previous years was the beneficial owner, directly or indirectly, of 10% or more of the voting power
of the then-outstanding shares of the corporation. The definition of the term “combination” is sufficiently broad
to cover most significant transactions between a corporation and an “interested stockholder”. These laws generally
apply to Nevada corporations with 200 or more stockholders of record. Our original Articles of Incorporation include a provision
electing that the Company not be governed by these laws. Our original Articles of Incorporation include a provision electing that
the Company not be governed by these laws.

 

In
addition, NRS 78.139 also provides that directors may resist a change or potential change in control of the corporation if the
board of directors determines that the change or potential change is opposed to or not in the best interest of the corporation
upon consideration of any relevant facts, circumstances, contingencies or constituencies pursuant to NRS 78.138(4).

 

Transfer
Agent 

 

The
transfer agent and registrar for our common stock is Action Stock Transfer. The transfer agent and registrar’s address is
2469 E. Fort Union Blvd, Suite 214, Salt Lake City, UT 84121. The transfer agent’s telephone number is (801) 274-1088.

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